Tech Companies Work to Tame Patent Trolls without Government Help

In the wake of Congress failing to pass patent litigation reform this year, the private sector has gotten into gear and has taken matters into its own hands. Tech companies have formed LOTNet. This article from Motherboard sums up this new idea:

As they say, if you can’t go through, go around. Enter the License on Transfer Network, or LOTNet. It works sort of like a non-aggression pact for patent-owning companies. When a member of the network sells a patent to a non participating company, the company selling the patent will automatically extend a royalty-free license to all members.

Basically, it’s creating a legal force field for all the businesses in the group. If a LOTNet company sells a patent to a company that ends up being a patent troll, the troll can’t sue any of the LOTNet members, because of the way the terms of the deal would be written.

In other words, any company that joins the network is protected from any other company in the network—presuming the patent is actually sold. Canon can’t go about making Google Glass, for instance, because Google isn’t going to be selling the patents that make the technology work to anyone anytime soon.

LOTNet members estimate that had they formed this organization in 2005, they would have saved over $100 billion in costs of litigation.

While it is unfortunate that Congress did not pass reform legislation, how appropriate it is to see innovation in the war against trolls coming from the private sector. This is yet another lesson that if we are going to tame the trolls, don’t wait for the government to act, but instead come up with innovative ways cut into troll power.

William J. Watkins, Jr. is a Research Fellow at the Independent Institute and author of the Independent books, Crossroads for Liberty, Reclaiming the American Revolution, and Patent Trolls.
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