Bringing a new company into the world means manifesting a great idea while simultaneously persevering through a number of risks and struggles. You have to recruit a team of people who want to work together, convince outside investors to support you, defend against competitors, and more. In most cases, these hurdles serve as a Darwinian funnel that makes the ecosystem better and optimizes the allocation of resources.
Defending against frivolous patent litigation, however, is not one of those hurdles and instead functions as a punitive and unfair tax on the ecosystem.
In the worst cases, a damaging suit can stop your company before it even gets started. Most of the time, companies settle out of court to avoid facing that risk, even when they believe they are on the right side of the law. They pay the toll to pass the troll. Even if your company is lucky enough to avoid being on the receiving end of a suit, you still must spend time mitigating the possibility by assembling a defensive patent portfolio.
Today, we’re joining the LOT Network — along with leaders like Google, Dropbox, NewEgg, Canon and SAP — to fight back against patent abuse.
The patents owned by the member companies are licensed such that they cannot be used by a patent troll to litigate against any other member company. This agreement functions as a sort of arms control for the industry by effectively preventing the member companies from inadvertently introducing “loose nukes” in the legal environment. It was explicitly designed as a response to the introduction of opportunists (who literally describe themselves as thugs) who see patents as assets to exploit for value rather than legal protections for hard-fought discoveries.
“Patent lawsuits are costly to defendants, both in legal costs and in costs to their business and market value. Rising litigation has driven up these costs to over $60 billion per year for publicly listed defendants alone.” — James Bessen, Vox Media
The LOT Network is a powerful new idea that we hope will grow rapidly. Because of the inherent network effects, every additional company that joins the coalition will be a new nail in the patent troll coffin, diminishing the size of their potential market. As this happens, everyone will be able to direct more of their energy back to creating value.
As exciting as this development is, it is but one part of a larger movement that seeks to return the patent system to its original purpose: encouraging innovation. We also still need regulatory reform to prevent the specious creation of overly broad software patents and to improve the efficiency and consistency of the litigation system, so that it can be employed effectively and fairly when it’s needed.
In the meantime, our membership represents a commitment to our team that we will do everything we can to avoid their patented inventions being used for anything but defensive purposes. Too often, employees are asked to file patents for that reason, only to later have them purchased by an assertion entity. Our first engineering hire, Malcolm Handley, shares his personal story on our engineering blog. The LOT Network is not a complete solution to this problem, but nonetheless represents an exciting step in the right direction.
Our hope is that this initiative will prove to have a positive impact on our community, the eventual viability of many startups, and creators who want to spend more time building great things.
If you’re unfamiliar with how patent trolls operate and why the current state of software patents is a terrible plague on our industry, check out this great article on Vox Media.