Patent trolls have long been a scourge to innovators and entrepreneurs, using their claim on overly vague patents to pursue legal action against businesses with the intent of winning a settlement, while never actually attempting to use the patent to develop their own product. But now a cadre of tech companies has joined together in an effort to curb patent litigation and protect themselves from future trolling, save the type found in internet comment sections.
The tech companies Asana, Canon, Dropbox, Google, Newegg, Pure Storage, and SAP have banded together to form the License on Transfer (LOT) Network. The network’s aim is to reduce the number of lawsuits stemming from the purchase of old patents by patent trolls (politely referred to by the LOT Network as patent assertion entities) who then use that patent to either file suit against companies that are “infringing,” or extorting a licensing fee from those businesses looking avoid a costly court case. As part of their agreement, when any patent held by a LOT member is transferred to an entity that is not a member of the LOT network, all members of the network receive a free license to that patent. In the event that a LOT Network member be acquired by a patent troll, or become a patent troll itself, all patents owned by the entity are licensed to the network. Until such time as a patent is transferred, however, the individual entities retain the rights to their patents, allowing them to continue to license and enforce them as they see fit. And members can freely sell patents to other members of the LOT Network without triggering the issuance of licenses. Membership in the network is open to any company, with the only cost being what the network’s website calls a “nominal annual fee to cover administrative costs.”
The ability to defend against potential patent trolls is vital to any small business. Most startups can’t afford the considerable legal fees required to fight a lawsuit, or the licensing fee that the patent trolls demand. And the risk is rising; according to a report on patent assertion and U.S. innovation by the President’s Council of Economic Advisors prepared in June 2013, patent trolls account for 62 percent of all infringement lawsuits, with the majority of suits targeting small and inventor-driven companies. Of a sampling of affected technology startups, 40 percent reported that a suit, or threat of a suit, had created one or more significant operational impacts on their business. Given the current climate, it has never been more imperative for a business to ensure that their intellectual property is protected.
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