When a company called Allied Security Trust came out of hiding in late June, it caused new light to be shed on the increasing popularity of patent pools involving high tech titans. It’s less than clear, though, whether these pools are benign defensive organizations or trade-restraining innovation killers.
Allied Security Trust is just the latest consortium of large technology companies created to purchase and pool critical patents. The idea of a patent pool is simple: Companies coordinate their intellectual property efforts by buying critical patents and granting all members of the consortium non-exclusive licensing rights to use them. First used in the 1800s, patent pools minimize risk and cost for participating firms by avoiding expensive litigation.
In recent years, technology firms have been increasingly using patent pools to do just that. Besides Allied, whose members include Verizon, Google, Cisco and others, there are a number of other technology patent pools, each with a slightly different strategy and roster of players. Open Innovation Network, a pro-Linux group counting Novell, IBM and others as members, was organized in 2005. Intellectual Ventures, said to be backed by Microsoft and Intel, has been acquiring its patent portfolio since 2003.
Battling Trolls
Companies involved in these organizations claim they are strictly defensive, combating other companies whose sole business is to buy intellectual property and hold it hostage. These so-called trolls are at once loathed and feared because litigation can be expensive, time consuming, and distracting. More favorably called PLECs, patent licensing and enforcement companies, these trolls patrol the intellectual property landscape seeking overlooked patents that have wide-ranging applicability to the technology world. Once they own intellectual property they consider to be infringed, they contact users of the patented technology and demand payment. In a friendly transaction, the PLEC licenses the technology to other companies. In an adversarial situation, litigation ensues. Continue Reading