Canon, Google, SAP and three U.S. startups have joined forces in a patent-licensing network to defend against rent-seeking infringement lawsuits. Asana, Canon, Dropbox, Google, Newegg and SAP formed the License on Transfer (LOT) Network, a cooperative patent-licensing agreement that will cut down on patent troll litigation and the growing practice of patent privateering.
Patent litigation reached an all-time peak last year, with more than 6,000 lawsuits filed. Most of those suits came from non-practicing entities, also known as patent trolls?companies that don't have a business outside of licensing and litigating patents.
More than 70 percent of the patents used by trolls come from operating companies,
According to RPX Research, more than 70 percent of the patents used by trolls come from operating companies, in a
growing trend called privateering. Companies are selling patents to trolls that then use those patents to attack other companies.
The LOT agreement is a royalty-free cross-license meant to address these systemic problems. Member companies receive a license when the patents are transferred out of the LOT group. That means that companies retain their right to enforce a patent so long as they retain ownership of it. However, as soon as it is sold, a license to the other members becomes effective, protecting them from attacks by the troll to which the patent was sold.
The agreement includes several other provisions that preserve a patent portfolio?s value, including carve-outs for certain M&A transactions and change of control.
The initial members of the LOT Network range from early-stage startups to established technology companies. Together they own almost 300,000 patent assets, generate more than $117 billion in revenue and employ more than 310,000 people.