Tuesday 17 November 2015
Google's License on Transfer Network: A Good Way to Avoid Patent Trolls?
Google, along with a number of other companies, started the License On Transfer (LOT) Network on July 9, 2014. The general purpose of the program is to reduce the risk of being sued by a Patent Assertion Entity (PAE) for network participants. The danger present for all market participants is that an operating company with patent assets may fall on hard times and have to sell their patents to a PAE or may just choose to do so. The LOT Network protects its members from suit from patents acquired by PAEs from their members. Essentially, all parties agree that if one of the patents potentially subject to the license (the network members' patent portfolios) is transferred to a PAE then the license is effective as to that patent. This means that the members of the LOT Network are basically immune from an infringement suit under that patent from the PAE once the transfer to a PAE occurs. The agreement is carefully drafted to exclude “triggering events” from including transfers to non-PAE’s. The agreement can be found, here. According to a presentation concerning the program, the members of the group have been insulated from at least one transfer of a subject patent to a Japanese PAE.
There are currently 325,000 patent assets, including 99,000 US patents subject to the LOT Network. The current membership of 47 companies includes: 3D Robotics, Inc., AddShoppers, Inc., Asana, Be Labs, Binatone Electronics, Breezy Print, CAN Telematics, Canon, Cinfo Contenidos Informativos Personalizados SL, Civis Analytics, Cloudability, Corvado, Cyclica, Dropbox, Edyt, Emaldo Techonolgies, Enplug, EPHE Corp., Ford Motor Company, GitHub, Google, Great Wave Tech, HLCA Media, Indri, Inductive Automation, JPMorgan Chase Bank, Kairos AR Inc., Khan Academy, Marine Traffic, Mazda Motor Corp., Naehas, Newegg, Pandora Media, Pure Storage, Red Hat, Ring Partner, Rocket Matter, SAASPASS, Sabai Technology, SAP SE, SAS Institute, SilverEdge, Sipree, SolarCity, Theralytics, Uber Technologies, and the Wikipedia Foundation. This appears to be a particularly attractive option for companies without a lot of patents that may be sued by PAEs. To join, you only need to pay a reasonable fee based on your companies’ annual revenue. I suppose one downside is that the value of your patent may be less given that a potential PAE buyer will have fewer entities to sue. Are there any other downsides?