Linked by Thom Holwerda on Wed 9th Jul 2014 23:41 UTC
Legal

A coalition of technology companies large and small has created a sort of arms-control treaty to prevent future abuses of their intellectual property.

Among Google, Canon, SAP, Newegg, Dropbox and Asana, there are nearly 300,000 patent assets on the line. But the companies aren't licensing all of each others' patents today. Instead, by agreeing to join the License on Transfer network, they promise to grant licenses to one another whenever one of those patents is sold.

Clever. Sad, though, that companies have to resort to complicated tricks like this instead of just having the damn law changed to align with reality.

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Don't forget the real issues
by sj87 on Thu 10th Jul 2014 09:50 UTC
sj87
Member since:
2007-12-16

You should remember, Thom, why the big companies want this and are most likely just happy to come out with these kinds of patent pools. It is to kill of any upcoming competition and to strengthen their own position on the market. These pools just make it easier for the big players to access the tech without the hazzle of slow and expensive negotiations. But it doesn't help anyone outside the pool.

Reply Score: 5

RE: Don't forget the real issues
by Alfman on Thu 10th Jul 2014 14:15 in reply to "Don't forget the real issues"
Alfman Member since:
2011-01-28

sj87,

You should remember, Thom, why the big companies want this and are most likely just happy to come out with these kinds of patent pools. It is to kill of any upcoming competition and to strengthen their own position on the market. These pools just make it easier for the big players to access the tech without the hazzle of slow and expensive negotiations. But it doesn't help anyone outside the pool.


Most patent pools do work that way. However this one in particular does seem to exist for a completely different purpose. They are encouraging as many to join as possible, membership dues start at $1,500 for small businesses. The incentive to join is to help fend off attacks from these "patent asserting entities", at least to the extent that their patents are being bought from LOTNET participating members.

To be effective, LOTNET needs to sign up many companies holding patents and keep them away from PAEs. My question is whether the companies joining LOTNET are the same ones who would have sold their patents to PAEs to begin with? If yes, than joining LOTNET seems like a baffling business decision, since membership will result in patents being worthless to PAEs. If no, then joining LOTNET is good but it means the benefits are largely theoretical, as the patents were not going to be sold to PAEs in the first place. In other words, how likely is it that the kinds of companies who sell patents to PAEs are going to be the same kinds of companies who will be joining LOTNET?

Does anyone else think LOTNET member patents will become much less valuable than non-member patents? And by extension, it seems logical that the valuation of a business would be negatively affected by membership. I'm interested to see where this goes in the future. I agree with galvanash, it's a good attempt at dealing with a faulty patent system, but we're still in need of major patent reform.

Edited 2014-07-10 14:27 UTC

Reply Parent Score: 2

Alfman Member since:
2011-01-28

A couple downvotes, ouch! I guess my post was controversial, but it wasn't meant to be. Let me rephrase the point as a series of questions, to which the answers are fairly obvious and hopefully not too controversial:

When a patent is covered by "license on transfer" obligations, what happens to the number of entities that the patent can be asserted against after a transfer?

When the number of entities that a patent can be asserted against decreases, what happens to the potential income the patent can make for a PAE?

When a PAE can make less income on a patent, what effect does this have on how much a PAE will bid for the patent?

When a PAE bids less for a patent, what effect does this have on free market value of the patent?

When the free market value of one & more patents decreases, what happens to the valuation of the company holding these assets?

While I do appreciate the conclusion may be unpopular with those who want LOTNET to work (including myself, BTW), I'm only trying to take a serious look at the economics involved.

Reply Parent Score: 2

galvanash Member since:
2006-01-25

I think your post was unfairly down voted... You brought up some good points...

Does anyone else think LOTNET member patents will become much less valuable than non-member patents?


Absolutely - at least to anyone outside of the pool. To other members of the pool they are just as valuable as they would be otherwise. It only makes a difference if sold to companies outside of the pool.

I think what you will find is most of the companies who jump into this will be small companies primarily holding defensive patents, and really big companies where most of their net worth is not tied to IP but instead to market performance. Google for sure, but I'm actually kind of surprised by Canon - they have alot of valuable IP...

Anyway there is no place in the pool for pure IP companies or companies which derive most of their valuation from patent holdings - IBM would never go near this thing me things...

But I think there is a genuine disgust that has developed around patents in some sectors (software in particular)... There really are companies that believe that patents are nothing more than a necessary evil, and their only interest in them is defensive. They have no interest in selling/licensing IP - they want to make shit. Patents are just a reality they can't avoid.

Hardly anyone seems to believe it, but I really do think that Google is one of these companies. In Google's perfect work there would be no patents, no obstructions to creativity, no legal ramifications for trying to come up with new products. Unfortunately Google's world doesn't exist, so they have to figure out how to make it work in the real world...

If your a small company trying to get a product off the ground and are filing patents primarily just to fend off lawsuits, whats the harm? Your in it to make shit, not sell your idea to someone else. Joining this pool not only protects you from at least some possible lawsuits in the future, it also makes a statement about your company. Your in it for the long haul, and your not going to let your patent fall into irresponsible hands.

And by extension, it seems logical that the valuation of a business would be negatively affected by membership.


I don't know. Maybe. Like I said, I think it depends on the company.

Reply Parent Score: 3