# Canon Joins Cooperative Agreement to Reduce Patent Trolls



## Canon Rumors Guy (Jul 10, 2014)

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<p><span style="font-style: italic; color: #222222;">Asana, Canon, Dropbox, Google, Newegg and SAP Announce Formation of New Cooperative Patent-Licensing Agreement</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">TOKYO, July 10, 2014—Asana, Canon Inc., Dropbox, Google, Newegg and SAP today announced the formation of the License on Transfer (LOT) Network, a cooperative patent-licensing agreement that will cut down on patent troll litigation and the growing practice of patent privateering.</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">Patent litigation reached an all-time peak last year, with more than 6,000 lawsuits filed. Most of those suits came from non-practicing entities, also known as patent trolls—companies that don’t have a business outside of licensing and litigating patents.</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">More than 70 percent of the patents used by trolls come from still-operating companies. Indeed, in a growing trend called privateering, companies are selling patents to trolls that then use those patents to attack other companies. In some cases, those companies arrange to get a cut of revenue generated from the trolls’ suits.</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">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.</span></p>
<p><!--more--> <span style="color: #222222;">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.</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">The initial members of the LOT Network range from early-stage startups to established technology companies. Together they own almost 300,000 patent assets, generate more than $117 billion in revenue and employ more than 310,000 people.</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">“The LOT Network is a sort of arms control for the patent world,” said Allen Lo, deputy general counsel for patents at Google. “By working together, we can cut down on patent litigation, allowing us to focus instead on building great products.”</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">“Startups need to overcome many risks before they can become mature, thriving companies. The LOT Network is a powerful and creative new idea that will help ensure that patent abuse need not be one of them,” said Dustin Moskovitz, cofounder of teamwork software provider Asana.</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">“The LOT Network provides a unique mechanism for reducing patent troll threats while maintaining a portfolio’s primary significance and value,” said Kenichi Nagasawa, director and group executive of Canon Inc.’s Corporate Intellectual Property & Legal Headquarters. “Through the further expansion of the LOT Network, I look forward to the patent system restoring its sound functionality.”</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">“We believe that patents should never be used to stifle innovation,” said Brett Alten, IP counsel at Dropbox, “The LOT network is a creative solution to fight patent abuse that becomes more effective with each company that joins. The more participants there are, the better off we’ll all be.”</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">“Newegg has a very strong history of successfully battling patent trolls, and the License on Transfer Network is another valuable tool that helps protect participants from frivolous patent litigation,” said Soren Mills, chief marketing officer of Newegg North America. “We’re very happy to join forces with Google and other leading technology companies to preserve the spirit of innovation that’s so vital to our collective well-being.”</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">“The structure of the LOT Network helps protect innovative patent owners from unwarranted litigation, without stifling valid, beneficial uses of patents, such as cross-licensing,” said Anthony DiBartolomeo, senior vice president and chief IP counsel at SAP. “As long as a company owns their patent they retain all their rights to it.”</span><br style="color: #222222;" /><span style="color: #222222;"> </span><br style="color: #222222;" /><span style="color: #222222;">Read more at </span><a style="font-weight: bold; color: #003399;" href="http://www.lotnet.com/" target="_blank" rel="nofollow">http://www.lotnet.com</a><span style="color: #222222;">.</span></p>
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## Slyham (Jul 10, 2014)

I hate patent trolls.    I don't know how anyone can be okay with making money by charging someone for their own work. It would be similar to a photographer that sold a photo to a bunch of clients. Then someone else copywrites the photo and makes the the original photographer pay royalties.

Hopefully the LOT Network will cut down on patent trolls. They have started out with some big names. 

Now we just need a network for Photography Forum Trolls.


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## HurtinMinorKey (Jul 10, 2014)

Slyham said:


> I hate patent trolls.    I don't know how anyone can be okay with making money by charging someone for their own work. It would be similar to a photographer that sold a photo to a bunch of clients. Then someone else copywrites the photo and makes the the original photographer pay royalties.
> 
> Hopefully the LOT Network will cut down on patent trolls. They have started out with some big names.
> 
> Now we just need a network for Photography Forum Trolls.



I'm an economist that works in IP. I think this is one of those situations where it should work in theory, but doesn't. I see nothing wrong with companies selling their IP rights to people who specialize in defending those rights. It just allows companies to commoditized their IP. i.e companies specialize for a reason, some companies are good at coming with IP, some companies are good at producing and marketing products that use the IP, and some companies are good at defending IP. So on the surface, there is no problem. 

The real problem is that the patent office is a complete mess and the legal system for adjudicating this mess is even worse. In short, this allows trolls to hold up legitimate business with patents of questionable value. If the legal system got it's head out of it's ass, and started cracking down on people that tried to enforce questionable patents, then I think many of the problems would go away. Some patents are the result of legitimate and expensive R&D, and that type of thing needs/should be protected, even if it's done by a company that does not produce stuff. But sadly, the legitimate enforcement has been drowned out by the trolls.


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## Mt Spokane Photography (Jul 10, 2014)

I noticed the absence of Apple and Samsung  
They are not patent trolls as defined in the article, but Apple is well known for questionable patents and patenting things they did not invent. Amazon's patent on product lighting is beyond stupid.


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## Brymills (Jul 10, 2014)

Wouldn't it just have been easier to agree not to sell patents to trolls?


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## Antono Refa (Jul 11, 2014)

HurtinMinorKey said:


> Slyham said:
> 
> 
> > I hate patent trolls.    I don't know how anyone can be okay with making money by charging someone for their own work. It would be similar to a photographer that sold a photo to a bunch of clients. Then someone else copywrites the photo and makes the the original photographer pay royalties.
> ...



And in what way is selling the IP to said someone makes more sense and gives better protection than hiring said person to protect the company's IP w/o selling it?


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## HurtinMinorKey (Jul 11, 2014)

Antono Refa said:


> And in what way is selling the IP to said someone makes more sense and gives better protection than hiring said person to protect the company's IP w/o selling it?



I can think of a few reasons. Your company is risk averse (maybe because you are small) and you are willing to give up a premium to avoid that risk when you sell the asset (litigation is inherently risky). You want the people who are defending your rights to have an incentive to do a good job, so you give them a % of any award/settlement (aligning incentives).


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## jrista (Jul 11, 2014)

I think this debunks the notion in the Microsoft-Canon patent deal that Microsoft was the dominant or aggressive party in the deal. If Canon also joined this new patent coop, it sounds like CANON is looking to both reduce patent litigation and share their technology in good will.

Personally, I think when companies share patents or at least agree not to litigate like drunken monkeys over them, it's only better for the consumer in the end. I think interesting things could come of a more open world where patents are not wielded as a weapon. I still think it's a companies right to protect their intellectual property, but I've been pretty soured by Apple's patent tactics and litigation...they come off as petty and dishonest.


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## Antono Refa (Jul 12, 2014)

HurtinMinorKey said:


> Antono Refa said:
> 
> 
> > And in what way is selling the IP to said someone makes more sense and gives better protection than hiring said person to protect the company's IP w/o selling it?
> ...



A. And what risk would that be?

B. A company can give % of any award/settlement whether the lawyer works for her.


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