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Google’s decision to give away some of its patents to thriving tech companies is a positive attempt to address some of the problems affecting the patent marketplace, but it is not necessarily an opportunity that is right for all.
The company’s Patent Starter Program is offering 50 technology companies, with revenues of between $500,000 and $20m, two free patents each from Google’s portfolio.
On making an application, the company selected for the scheme will be offered between three and five patents and will be able to choose two of them.
While it might seem like a good proposition, the benefits for companies opting to join are more limited than might first appear.
Restrictions mean that the free patents can only be used defensively by the company in a counter-claim if it is first sued for infringement. In reality, this means they have limited value.
Crucially, on joining the Patent Starter Program, firms will also be required to sign up to the License on Transfer (LOT) network for a minimum of two years – this is a network co-founded by Google that promotes intellectual property (IP) sharing and facilitates cross-licensing.
This is a significant step and is part of Google’s quest to block the activities of patent trolls – organisations that essentially acquire patents solely for the purpose of aggressively pursuing financial gains.
Unlike other patent pools, the LOT network places few restrictions on the use of IP by rights holders in the pool. The only restrictions apply when a patent is sold to an organisation outside the group. At this point, the buyer must agree to license the patent on a royalty-free basis to all members of the network.
Of course, this limits the commercial value of the patent and means the company that has invested in developing the technology in the first place would realise less reward from selling its rights. However, it also means that patent trolls are theoretically prevented from using any of the rights that have been submitted to the pool against members.
Despite the appeal of Google’s goals, many tech companies will think twice before signing up to the scheme because it will not necessarily be right for all. For example, startups that have an exit strategy largely based on the sale of their IP will certainly have little interest.
Fundamentally, Google’s patent giveaway is an attempt to encourage tech companies to engage with IP and the patent marketplace at an early stage and, in this sense, it is an entirely positive step. Earlier this year, a temporary patent portal was established which allows tech companies to offer their patents to Google. A new search tool was also launched to help companies uncover ‘prior art’ and so help to prevent bad patents from being granted in the first place.
Attempts like these, although tentative and experimental, to draw attention to the patent marketplace and the valuation and monetisation of patents, are opening up some interesting possibilities for tech companies in the UK and elsewhere.
However, before signing up to such initiatives, they should consider carefully how it might affect their business now and in the future.
Denis Keseris is a partner at intellectual property firm Withers & Rogers