The License on Transfer (LOT) Network, an open, royalty-free, patent-licensing program designed to reduce patent litigation and the growing practice of patent privateering, today announced that GitHub, Khan Academy, Pure Storage, Red Hat, SAS, and SolarCity have joined Asana, Canon, Dropbox, Google, Newegg and SAP as members.

Patent litigation reached an all-time peak last year, with over 6,000 lawsuits filed. Most came from non-practicing entities, also known as patent trolls—companies that have no business outside of asserting and litigating patents.

Over 70 percent of the patents used by trolls come from operating companies. And, in a growing trend called “privateering,” companies are selling patents to trolls that then use those patents to attack the companies’ rivals. Sometimes, those companies receive a cut of revenue generated from the trolls’ attacks.

The LOT agreement is a new royalty-free cross-license meant to address these growing systemic problems. Member companies receive a license when patents are transferred out of the LOT Network—but preserve their right to enforce patents they continue to own. As soon as a patent is sold by a member, a license to the other members becomes effective, protecting them from attacks if the patent was sold to a troll.

The agreement includes other provisions that preserve a patent portfolio’s value, including carve-outs for mergers, acquisitions and changes of control.

The members of the LOT Network range from early-stage startups to established technology companies. Together they own around 300,000 patent assets, generate about $120 billion in revenue and employ more than 315,000 people.

“Nobody is immune to patent trolls, not even open source projects. Patent trolls hurt collaborative innovation, which is what GitHub and our community are all about,” said Tal Niv, GitHub head of IP and open source. “We are excited to join the LOT network to fight patent trolls together with our peers, as well as to host the LOT agreement as an open source project on GitHub so everyone can access, reuse, and contribute to it.”

“When patents fall into the hands of patent trolls or others that might use them to create a tax on disruptive companies, it stifles the innovation needed to power technology evolution. It is clear that the U.S. patent system is in need of a serious retrofit and organizations like LOT are helping to inspire this kind of change,” said Joe FitzGerald, Vice President, Legal of Pure Storage and LOT Network board member. “As one of LOT’s earliest members, Pure is excited to be working continuously with the Network to address the widespread patent litigation responsible for inhibiting, rather than promoting, the innovation that drives us forward.”

“Vexatious lawsuits by patent assertion entities using low quality patents are a drain on innovation, business creation, jobs and open source software. We are pleased to join the efforts of the LOT Network to address this problem at the source,” said Michael Cunningham, Executive Vice President of Red Hat, and LOT Network board member.

“SAS has vigorously defended itself against patent trolls. LOT Network gives us another weapon in the fight. We encourage other companies to join and strengthen the effort,” said John Boswell, Executive Vice President and Chief Legal Officer of SAS.

“Companies, regardless of size and industry, are being sued by patent assertion entities. A diverse LOT membership, which now includes an energy company, benefits all its members because they increasingly rely on a broad set of patented technologies. Every new member strengthens the LOT Network and reduces the number of patents that can be used against it and other members,” according to Brett Alten, Associate General Counsel and Head of IP at SolarCity Corporation.

More information, including a copy of the LOT agreement, is available at http://lotnet.com. The agreement has also been open-sourced and is now available as a CC-BY (Creative Commons with attribution) project on GitHub, so anyone can read and provide comments on the agreement.

Contacts

press@lotnet.com