Tech giants sign patent pact to keep trolls at bay

The Boardroom

by Byomakesh Biswal| 10 July 2014

The deal will give the members royalty-free cross-license access to patents .

A group of major technology enterprises SAP, Google, Canon, Dropbox and Newegg have signed a cooperative patent-licensing agreement.

The group, known as the License on Transfer (LOT) Network to prevent exploitation by patent trolls, amidst growing litigation over patent licensing.

After signing the agreement, the members of LOT will get royalty-free cross-license access to patents which have been transferred out of the LOT group.

It means the companies will retain their right to enforce a patent so long as they have ownership of it.

However, after the licenses are transferred out of the group, a license to the other members becomes effective, protecting them from attacks by the troll to which the patent was sold.

Google deputy general counsel for patents Allen Lo said, "The LOT Network is a sort of arms control for the patent world. By working together, we can cut down on patent litigation, allowing us to focus instead on building great products."

Dropbox IP counsel Brett Alten said, "We believe that patents should never be used to stifle innovation. The LOT network is a creative solution to fight patent abuse that becomes more effective with each company that joins. The more participants there are, the better off we'll all be."

Initial members of the LOT network would be start ups and major tech companies which claimed to own 300,000 patents and generate more than $117bn.

Teamwork software provider Asana cofounder Dustin Moskovitz said, "Startups need to overcome many risks before they can become mature, thriving companies. The LOT Network is a powerful and creative new idea that will help ensure that patent abuse need not be one of them."

The patent licensing agreement mainly aimed at preventing litigation from patent trolls, the non-practicing entities who don't have a business outside of licensing and litigating patents.

The number of patent litigations last year reached 6,000 with more than 70% of the patents used by trolls come from still operating companies.

SAP senior vice president and chief IP counsel Anthony DiBartolomeo said, "The structure of the LOT Network helps protect innovative patent owners from unwarranted litigation, without stifling valid, beneficial uses of patents, such as cross-licensing."

"As long as a company owns their patent they retain all their rights to it," DiBartolomeo said.

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