Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) and Canon have partnered to design a program that can supposedly curtail future infringement claims. Under the program, the member companies have to take a pledge that if they sell some patents, members of the group, known as the License on Transfer Network (LOT), are entitled to an automatic royalty fee.
Google efforts to bring down lawsuits
The program is committed to reducing the cases, where large technology companies sell patents to licensing firms with the core objective of demanding royalties and file infringements suits. At present, only six companies have showed interest in joining the group. Previously, also, Google created an open-source patent pledge, where the number of members eventually grew to 900 members.
Companies practice selling the patents that become obsolete for them, and in doing so they save on cost and aggravation of negotiating licensing deals.
Eric Schulman, legal director of Mountain View, Calif.-based Google Inc’s patent team said, “The hope is people will see the benefits of the network effect here and the cycle of selling patents to licensing companies will end.”
According to Schulman, licensing firms serve well for the research companies that do not make the products or the small inventors, who find it difficult to commercialize the ideas. Last year, Canon, the world leader in camera, received as much as 4,000 U.S. patents, taking the number 3 spot on a list assembled by the Intellectual Property Owners Association, a Washington-based trade group.
Other companies, apart from Google and Canon, that agreed to be the part of the group are SAP AG, Internet retailer Newegg Inc., data-storage Dropbox Inc., and Asana Inc., a software firm started by Facebook Inc. co-founder Dustin Moskovitz. These companies own around 300,000 patents, according to Schulman.
According to Moskovitz, whose company came up with a program that allows collaboration on projects, says the License on Transfer Network “will be a no-brainer for startups.”
A report by RPX Corp., a patent-risk management company, reveals that patents are bought by the firms, who earn profit by licensing deals. The report noted that at least 70% of the patents drawn in the litigation originated from operating companies. Paul Melin, chief intellectual property officer for Nokia Oyj, is in favor of the practice of selling the patents, saying the deferring payment is a usual way to pay for expensive properties.