Google wants companies to cross-license patents

Google offers four options for patent cross-licensing between companies

Google has created a new website describing four types of patent cross-licensing agreements and is inviting other companies to vote on which one it should adopt.

"We think companies should cooperate to reduce patent litigation -- what's been compared to nuclear arms control for the patent world," wrote Google's legal director, Eric Schulman, on the company's public policy blog Tuesday.

To accomplish this, Google launched a website where it outlines four types of royalty-free patent licensing agreements, based on recent legislative proposals and some current approaches, that "increase companies' freedom to operate while reducing patent assertions, especially by trolls," said Schulman.

Patent trolls, also known as "non-practicing entities" (NPEs), are individuals and firms that own patents but do not directly use their patented technology to produce goods or services and instead assert their patent rights against companies that do. In 2011, patent litigation caused by NPEs cost U.S. software and hardware companies US$29 billion, a study from the Boston University School of Law found in June last year.

The problem of lawsuits caused by patent trolls is huge and getting worse, Schulman said. "Additionally, in a growing trend, companies are selling patents to trolls that then use those patents to attack other companies. In some cases, those companies arrange to get a cut of revenue generated from the trolls' suits," he added. Companies need to protect themselves against those practices, he said.

To do that, Google for instance proposes a License on Transfer (LOT) Agreement in which participating companies agree that when a patent is transferred, the transferred patent automatically becomes licensed to other participating companies, Schulman said. Google also proposed three other approaches:

--The Sticky Defensive Patent License (DPL), a nonexclusive, perpetual license that is irrevocable unless a licensee stops licensing its own portfolio under the DPL, or the licensee sues a DPL user offensively.

--The Non-Sticky Defensive Patent License, which automatically terminates both inbound and outbound licenses at the time a participant withdraws from the agreement. If a participant joins under outlined cross-licensing conditions and then regrets doing so, that participant can withdraw, terminating the DPL licenses at the end of the withdrawal notice period, Google noted.

--A Field-of-Use Agreement similar to the Open Invention Network (OIN) cross-license approach, under which patents are licensed royalty free to any company, institution or individual that agrees not to assert its patents against the Linux System. The OIN license is a community-wide license; the major difference between OIN and the non-sticky DPL is that it has a certain scope. In OIN's case that is the Linux System, whereas the non-sticky DPL is a portfolio-wide license, Google said. A Field-of-Use Agreement similar to OIN could be useful and be applied to other areas of technology as well, Google said.

Google is conducting a survey to determine which of the approaches is of greatest interest to operating companies. Interested companies have until April 19 to let Google know if they are interested, and once the survey is complete, Google plans to reach out to those companies to discuss potential next steps.

"This straw poll seems to seek ideas aimed at reducing patent litigation. The motivations are noble; reducing litigation should be a global goal, since top technology companies are now spending more on patent acquisition and litigation than they are spending on research & development (R&D)," said James Waterworth, vice president, Europe for the Computer and Communications Industry Association (CCIA), an organization that represents a wide range of companies in the computer, Internet, information technology and telecommunications industries, in an email on Wednesday. The CCIA advises members and policy makers on issues including intellectual property, international trade and Internet regulation.

"Reducing patent assertions and improving companies' freedom to bring innovative products to market is a useful goal; whether this particular effort achieves that remains to be seen," Waterworth added.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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