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Google, Canon, Dropbox and Others Pool Patents to Ward Off Trolls

The point is to defang patents before they get into the hands of patent trolls.

A coalition of technology companies large and small has created a sort of arms-control treaty to prevent future abuses of their intellectual property.

Among Google, Canon, SAP, Newegg, Dropbox and Asana, there are nearly 300,000 patent assets on the line. But the companies aren’t licensing all of each others’ patents today. Instead, by agreeing to join the License on Transfer network, they promise to grant licenses to one another whenever one of those patents is sold.

The point is to defang patents before they get into the hands of patent trolls, who use intellectual property to extort money from other companies rather than make products.

LOT is the followup to a call by Google last year for companies to join together to fight trolls. It’s open to additional membership.

Google legal director Eric Schulman, who led the initiative, said it is particularly aimed at the fact that while troll suits are at an all-time high — more than 60 percent of patent litigation in 2012 was started by trolls, up from 20 percent in 2006 — at the same time, more than 70 percent of the patents used by trolls were generated by companies that are still operating, according to RPX Research.

That is to say, patent trolls aren’t just gathering up patents abandoned by failed companies and independent inventors. The defendants in these cases are often the very companies that pay for the research and development that gets patented in the first place.

While patent reform is going nowhere in the U.S. government, this is one of a few efforts to change the system by companies that feel they have to patent their employees’ work in order to play defense against intellectual property aggressors. For instance, Twitter has committed to giving its inventors more control over how their patents are used.

And while companies have somewhat altruistically banded together on patents before — for instance, around the Linux operating system — LOT is different because it is portfolio-wide and it only applies to patents that are transferred, so participating companies could still use their patents against each other while they own them.

The appeal of LOT, said Dropbox IP counsel Brett Alten, is that “it’s an inclusive model that doesn’t strongly favor large or small companies. Large companies are most likely to sell or transfer assets out of the network. Small companies will be basically inoculated from that kind of threat. And large companies benefit because when small companies fail they often sell patents to trolls.”

The small starter group includes the productivity startup Asana, which only has three accepted patents and has never faced a patent troll threat. Co-founder Dustin Moskovitz described the move as an assurance that the company’s defensive patent strategy wouldn’t change. “It was really important to our employees that we did something that was more than good intentions,” he said.

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