LOT Network, the non-profit that helps companies of all sizes and throughout industries defend themselves in opposition to patent trolls by making a shared pool of patents to immunize themselves in opposition to them, at this time introduced that TikTik parent ByteDance is becoming a member of its group.
ByteDance has acquired its fair proportion of patents lately and is itself embroiled in a patent struggle with its rival Triller. That’s not what becoming a member of the LOT Network is about, although. ByteDance is becoming a member of a group of firms right here that features the likes of IBM, the Coca-Cola Company, Cisco, Lyft, Microsoft, Oracle, Target, Tencent, Tesla, VW, Ford, Waymo, Xiaomi and Zelle. In complete, the group now has over 1,300 members.
As LOT CEO Ken Seddon informed me, the six-year-old group had a report yr in 2020, with 574 firms becoming a member of it and bringing its set of immunized patents to over 3 million, together with 14% of all patents issued within the U.S.
Among the core options of LOT, which solely prices members who make greater than $25 million in annual income, is that its members aren’t shedding management over the patents they add to the pool. They can nonetheless purchase and commerce them as earlier than, but when they determine to promote to what the trade calls a ‘patent assertion entity,’ (PAE) that’s, a patent troll, they robotically present a free licence to that patent to each different member of the group. This primarily turns LOT into what Seddon calls a ‘flu shot ‘ against patent trolls (and one that’s free for startups).
“The conclusion that people are waking up to is, is that we’re basically like a herd, we’re herd immunization, effectively,” Seddon stated. “And every time a company joins, people realize that the community of non-members shrinks by one. It’s like those that don’t have the vaccination shrinks — and they are, ‘wait a minute, that makes me a higher risk of getting sued. I’m a bigger target.’ And they’re like, ‘wait a minute, I don’t want to be the target.’”
ByteDance, he argues, is an effective instance for an organization that may revenue from membership in LOT. While it’s possible you’ll consider patents as purely an indication of an organization’s innovativeness, for company attorneys, they’re additionally extremely efficient protection instruments (that can be utilized aggressively as nicely, if wanted). But it might probably take a small firm years to construct up a patent portfolio. But a fast-growing, profitable firm additionally turns into an apparent goal for patent trolls.
“When you are a successful company, you naturally become a target,” Seddon stated. “People become jealous and they become threatened by you. And they covet your money and your revenue and your success. One of the ways that companies can defend themselves and protect their innovation is through patents. Some companies grow so fast, they become so successful, that their revenue grows faster than they can grow their patent portfolio organically.” He cited Instacart, which acquired 250 patents from IBM earlier this month, and Airbnb, which was sued by IBM over patent infringement in early 2020 (the businesses settled in December), as examples.
ByteDance, because of the success of TikTok, now finds itself in a scenario the place it, too, is prone to change into a goal of patent trolls. The firm has began buying patents itself to develop its portfolio quicker and now it’s becoming a member of LOT to strengthen its protection there.
“[ByteDance] is being a visionary and trying to get ahead of the wave,” Seddon famous. “They are a successful global company that needs to develop a global IP strategy. Historically, PAEs were just a US problem, but now ByteDance has to worry about PAEs being an issue in China and Europe as well. By joining LOT, they protect themselves and their investments from over 3 million patents should they ever fall into the hands of a PAE.”
Lynn Wu, Director and Chief IP Counsel, Global IP and Digital Licensing Strategy at ByteDance, agrees. “Innovation is core to the culture at ByteDance, and we believe it’s important to protect our diverse technical and creative community,” she stated in at this time’s announcement. “As champions for the fair use of IP, we encourage other companies to help us make the industry safer by joining LOT Network. If we work together, we can protect the industry from exploitation and continue advancing innovation, which is key to the growth and success of the entire community.”
There’s another excuse firms are so keen to affix the group now, although, and that’s as a result of these patent assertion entities, which had light into the background a bit within the mid- to late-2010s, could also be making a comeback. The core assumption here’s a bit gloomy: many firms appear to imagine we’re in for an financial downturn. If we hit a recession, a number of patent holders will begin their patent portfolios and begin promoting off some their extra priceless patents with the intention to keep afloat. Since beggars can’t be choosers, that always means they’ll promote to a patent troll if that troll is the best bidder. Last yr, a patent troll sued Uber utilizing a patent bought by IBM, for instance (and IBM will get a little bit of a nasty rap for this, however, hey, it’s enterprise).
That’s what occurred after the final recession — although it usually takes a number of years for the impact to be felt. Nothing within the patent world strikes rapidly.
Now, when LOT members promote to a troll, that troll can’t sue different LOT members over it. Take IBM, for instance, which joined LOT final yr.
“People give IBM a lot of grief and criticism for selling to PAEs, but at least IBM is giving everybody a chance to get a free license,” Seddon informed me. “IBM joined LOT last year and what IBM is effectively doing is saying to everybody, ‘look, I joined LOT.’ And they put all of their entire patent portfolio into LOT. And they’re saying to everybody, ‘look, I have the right to sell my patents to anybody I want, and I’m going to sell it to the highest bidder. And if I sell it to a patent troll and you don’t join LOT — and if you get sued by a troll, is that my fault or your fault? Because if you join LOT, you could have gotten a free license.’”