82: How the LOT Network Are Disarming Patent Trolls
It seems on a regular basis we’re constantly reading about the effects of trolls online. We all know trolls exist on social media. What we don’t hear about very often are Patent trolls. These blood suckers wait around not just for large tech companies but small to medium size businesses and start-ups and by finding loopholes in patent laws they can actually destroy an entire company.
Thankfully there is a company called the LOT Network. This is a nonprofit company first launched by Google that has recently become a hot topic among tech companies. 2015 was the biggest year ever for Patent trolls with nearly 80 percent of lawsuits in tech. I invited Ken Seddon, the CEO of LOT Network, to talk about why technology companies of all sizes are patent troll targets but more importantly why tech companies are finally fighting back and what is unique about them.
Can you tell me a little about yourself and your role at LOT Network?
I come from the high tech community. My background is large companies with a deep respect for patents. These are companies with large patent portfolios but at the same time a real patent troll problem. I was hired last year to be LOTS CEO. LOT is a non-profit trade association. We currently have 76 companies that are working together to solve what we call the patent assertion entity or PAE or what’s commonly referred to as the patent troll problem.
You have an interesting background. Weren’t you the former IP leader at Apple as well?
I didn’t lead the organization but I did work there for three years doing IP strategy work, patent purchasing, and licensing agreements. Certainly, Apple being as successful a company had more than its fair share of patent lawsuits that I got involved with.
My understanding of the LOT Network is that it’s a non-profit first launched by Google. Can you tell me a little about those early days and what you guys do?
The original concept and idea for LOT originally originated from Google. The idea resonated with a lot of companies, in particular Cannon, SAP, and Red Hat who made up the core team of companies who worked together to form LOT.
On average patent trolls file about 3,500 new law suits in the United States alone each year. A study was done to try to figure out where these trolls were getting these patents they use to file these law suits. It turns out that 80 percent of the patents that these trolls use in these litigation campaigns actually originated from other companies. At the end of the day companies only have themselves to blame for the patent troll problem.
That’s why the founders of LOT came up with an agreement that solves this issue while at the same time they wanted to preserve the traditional use of the patents. That’s where the LOT agreement came about. It was originally released in July 2014 and then simplified last fall and the way it works under the agreement is companies agree that if any of their patents fall into the hands of a troll then the rest of the members, get a free license to it. The result of this is all of the community members become immunized if you will against the patents when they are asserted by trolls.
For anyone new to the concept can you explain what a Patent troll is and more importantly how it can affect your business and how other businesses can help defend against them?
It’s an issue that affects all industries and companies of all sizes. LOT has members like GM, Hyundai, JP Morgan Chase, Logitech and even CBS. A patent troll is an entity that goes around acquiring patents in the open market either through an auction, bankruptcy or direct sale and then they go around suing companies for shakedown money.
Do you think small or medium size businesses are also in danger?
Absolutely and that’s what I find frustrating myself. Over the last two or three years, patent trolls have shifted their business models. They prefer to go after smaller companies because they see them as easier targets. They don’t have the legal or financial resources to defend themselves so hopefully, they will settle quickly. That’s why at the end of the day a lot of startup companies are joining LOT.
What do you think is unique about your non-profit solution at LOT Network?
What’s most unique about LOT is the fact that we are a non-profit. We’re not about the money, we don’t have shareholders, we’re not publically traded and we don’t have equity. We are simply this community of companies who want to be good corporate citizens and solve this troll problem.
What’s next for you guys?
With the new agreement that went into effect last fall in just these short months, we’ve gone from 15 to 76 members and we’re just scratching the surface.
What’s the best way to reach out to a member of your team or get more information?
You can go to our website at www.lotnet.com. We would be glad to meet with the legal or business executives of any company in person or over the phone. You can also reach me directly at my email email@example.com.