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.
The GPL has nothing on software patents when it comes to virality.
Edited 2014-07-10 00:01 UTC
It worse than that even… You have to actually be exposed to a virus in order to contract it. The GPL loudly proclaims what it does and how it works, you can decide if you want to play along or not. Getting “accidentally” bit by the GPL bug is pretty hard to do (assuming your not just incompetent).
Violating copyright (GPL or not) is an intentional act – you can’t really do it accidentally. Sure maybe you somehow got ahold of code that your thought was licensed one way but actually wasn’t – but either way you copied code – that was not an accident. If you really want to avoid dealing with a copyright license you ALWAYS have the option of just doing the work yourself.
You cannot do that with patents. You can license them, assuming the license holder is agreeable. Short of that, go f*ck off or risk a lawsuit. You can try to work around the patent of course, and often that will work just fine – but in order to pursue licensing or work around them you have to first know about their existence…
Its a catch 22. If you know about a patent and create an implementation that violates it’s claims, you are performing willful infringement and are opening yourself up to treble damages in court. Since it is practically impossible to know about all patents, it is almost always better to NOT know about ANY patents, therefore you ignore the existence of them entirely – that is why many companies forbid their developers from researching them.
So the people creating the software are not allowed to interact with the patent system at all. It is left up to lawyers to deal with in review – deciding how to deal with problems as they are discovered, i.e. do you have the developers go back and work around, pursue licensing, or take the risk (if the rewards justify it) and just do it anyway. And yes, “do it anyway” is often done quite deliberate – lawyers are very good at keeping evidence of this non-discoverable when they want to.
The people who actual have patents filed in their names almost never write them and are actually often forbidden from even reading them. Let’s let the lawyers run the show… Makes perfect sense right?
Or rather, it can’t have anything to do with trolls since those (by definition) don’t produce anything so there’s nothing to counter-sue over.
This is just a straight up “let’s not invoke the mutual assured destruction option” deal AFAICT.
Edited 2014-07-10 01:29 UTC
I don’t understand… It has everything to do with trolls.
The whole point is to make the patents in the pool worthless to trolls – because every member of the pool is automatically licensed to use the patent in the event it is sold (to anyone, including a NPE) outside of the pool. The new owner can sue other companies, but everyone in the pool is automatically eliminated as a prospective target. The more companies in the pool, the less targets for NPEs…
Edited 2014-07-10 01:44 UTC
Just to clarify…
This is very different from a conventional patent pool. Joining the pool and placing a patent in it does not license that patent to anyone else. Members can in fact sue the crap out of other members for infringement – in point of fact unless a patent is transferred to an entity outside of the pool the pool has no effect at all.
Members can license, not license, or sue anyone they want to – pool member or not. There is no compulsory licensing at all until there is a transfer, and even then only if the transfer is to someone outside of the pool.
This is a neat way to use compulsory licensing to protect the pool against bad actors – but that really is all it does. It is not a patent reform measure, it is actually embracing the patent system – it only addresses the NPE problem and nothing more. That said, it is still imo a good idea (something is better than nothing).
Edited 2014-07-10 02:23 UTC
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.
sj87,
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
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.
I think your post was unfairly down voted… You brought up some good points…
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.
I don’t know. Maybe. Like I said, I think it depends on the company.
galvanash,
Yes, I agree with all this. Still, it infuriates me to no end that software developers have to waste time and money on defensive patents in the first place. I think you could join this pool without many patents to get benefits of the pool while not having to waste too much money investing in defensive patents. But if everyone in the pool played this strategy then the pool wouldn’t be very effective at all.
Absolutely, companies who’s worth gets based mostly on their intellectual property would have much more at stake. You mentioned google, they are astronomically unlikely to be bought out. Also since they need defensive patents far more than they need the money, the trigger clause will probably never get invoked for them.
Canon, although less certain than google, may still have no intention of selling themselves or their patents either. There’s another benefit that hasn’t been discussed yet. Since LOTNET member patents loose value when transferred to non-member companies, it means companies like Canon and Google can bid lower to buy LOTNET member patents since they don’t have to compete with bids from IBM, Microsoft, Apple, Oracle, etc.