The polite term for them is a patent assertion entity (PAE), but they are often more rudely referred to as patent trolls – and can be the bane of any company’s legal department. They often claim huge amounts in damages for products or ideas that they don’t legally own, but hope that multinational corporations would fork over the dough to make them go away.
To combat any potential patent trolls in the future, Dropbox, Google, Asana, Canon, Newegg and SAP has pooled their forces to create the License on Transfer Network (LOTNet), an entity for working together to help stop patent trolls.
“Patents were originally intended to motivate people to come up with new ideas. However, today they’re often abused to extort payment. Companies and third-party patent trolls harass more than 100,000 companies each year, generating bills upwards of $29 billion,” Dropbox said in a press statement.
The network is a sharing of licences, of sorts. Once a member company (in this case one of the founding six) sells a patent to a non-member company, the other LOT members will receive a licence to that particular patent, thus reducing the number of entities that the would-be patent troll can sue for any patent infringement.
“By reducing the number of patents potentially available to PAEs, it mitigates the risk of costly litigation and allows such companies instead to focus on making and selling innovative products and services,” LOT explains on their website.
The LOT Network is open to any company, and it might just be the right step towards warding off patent trolls. Between the six founding companies, there are almost 300 000 patent assets which includes more than 50 000 issued US patents in the LOT Network.
“More than 50% of all companies that have been a defendant in PAE litigation had less than $10 million in annual revenue. However, because larger companies are sued many times by PAEs, they are even more exposed to the problem,” LOT concluded.
[Image – CC by 2.0/Kai Schreiber]