IT Industry Leaders Hope to Operate More Freely Via a Patent Trust

A number of IT industry leaders, including Cisco Systems Inc, Google Inc, Hewlett-Packard Co, Motorola Inc, Sun Microsystems Inc, Telefon AB LM Ericsson, and Verizon Communications, have banded together to form a trust with the goal of obtaining cost-effective licenses to patents of interest to its members. The "Allied Security Trust" (Trust) was formed mainly in response to increased litigation risks from so called "patent trolls", companies which acquire patents and leverage them to extract royalties from companies whose products rely on the patented invention. As an example, many observers would point to NTP's suit against Canada's Research and Motion Ltd (RIM), which ended in a settlement involving a payment by RIM of $612.5 million for a license to NTP's patented technology (see E-TIPS®, "RIM/NTP Dispute Generates Calls for Patent Reform", Vol 4, No 18, March 15, 2006). The Trust will not hold any patents for the long term, but will purchase patents that third parties might use to bring infringement claims, will grant non-exclusive, life-of-patent licenses of the patents to its interested members, and then sell or donate the ownership of the purchased patents, subject to the licenses. The Trust's CEO, Brian Hinman, has said that he does not expect that this business model will raise any anti-trust concerns, because the Trust will not own any patents, nor will it be in the business of making a profit. Its primary goal will be giving its members freedom to operate. Moreover, the Trust is apparently to be open to anyone who wishes to join, albeit for a price of $250,000 plus annual dues. Members are also required to place $5 million into escrow with the Trust towards future patent purchases. For commentary, see: http://www.dailyherald.com/story/?id=214988; and http://tinyurl.com/6k5aub Summary by: Michael Migus