Google And SAP Joins Few Other Companies To Announce New License on Transfer (LOT) Network To Avoid Patent Litigations

Google has joined Asana, Canon, Dropbox, Newegg and SAP to announce the formation of the License on Transfer (LOT) Network, a cooperative patent-licensing agreement that is expected to cut down on patent troll litigation. The agreement is simple, patents of LOT network member companies cannot be used to sue other LOT network member companies even after patent transfer to other companies.

The LOT agreement is a new kind of royalty-free cross-license meant to address these growing systemic problems. Member companies receive a license when the patents are transferred out of the LOT group. That means that companies retain their right to enforce a patent so long as they retain ownership of it. However, as soon as it is sold, a license to the other members becomes effective, protecting them from attacks by the troll to which the patent was sold.

The agreement includes several other provisions that preserve a patent portfolio’s value, including carve-outs for certain M&A transactions and change of control.

As of the launch of the organization in July 2014, the LOT Network had already contained nearly 300,000 patent assets, including over 50,000 US issued patents.  Two of the LOT Network Users can be found on the 2013 Top 10 US patent recipients list. The two major members are Google and Canon. Google already caused lots of lawsuits for its OEMs for developing Android violating lots of patents. I guess Google expects to reduce no.of lawsuits it will face in the future by lobbying other companies to join their LOT network. I highly doubt IBM, Microsoft, Apple and others will join this network for obvious reasons.

Read more about it here.