In some cases PAEs are setup by multiple companies in order to strengthen their market position against a big threat. Microsoft and Apple were involved in one of these are they continue to fight against the dominance of the Android operating system. This is one part of patent law that has many companies outraged. Patents were put in place to protect an inventor from someone profiting off of their work, but they were not meant to be forever. They were also not intended to be use offensively in the market or to be held by corporations that had nothing to do with the creation of the technology (at first a business could not own a patent, only an individual or group of individuals).

To help fight the waste of time and money that PAEs create in the market a group of tech companies put together and organization called the License on Transfer Network. It was setup with Google, Canon, Dropbox, SAP, Newegg and Ansana. This group has agreed to automatically license everyone else in the group when a patent is sold or transferred to another company. This would prevent a PAE from using a purchased patent to sue for infringement.

In a recent post on Newegg’s blog they put it very clearly:

The License on Transfer Network “is a major milestone in the fight against patent trolls because more than 80% of patents litigated are acquired from operating companies. These companies are enablers that sell their patents for pennies on the dollar so patent trolls can then sue other companies. This is known as “patent privateering” and starts a vicious cycle where small companies benefit by being granted protection from patents sold off by big companies, and big companies benefit if small companies end up failing. Clearly, this is something that not only hurts companies, but shareholders, employees and customers as well.”

Currently the LOT is a small group, but it is also open to anyone and can create a buffer against these patent trolls where none exists. It will be very interesting to see if this takes off and how it will impact the number of suits filed each month.

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