The Wall Street Journal reports today that Google, Cisco, Verizon and other large companies created an alliance to defend themselves against patent trolls. The alliance, which will be called Allied Security Trust, will purchase patents, grant nonexclusive licenses to all members, and then resell the patents.
By reselling the patents, the alliance avoids any hint of non-competitive behavior, and at the same time the alliance members are shielded against disputes over those particular patents. The alliance will work with Intellectual Ventures LLC, a large patent-hoarding firm that — currently — doesn't plan to generate revenue via trolling.
This may be good business but it's likely to be ultimately bad policy for the member companies and disastrous for the industry as a whole. The alliance creates a market for otherwise worthless intellectual property, which is likely to drive up prices and encourage the creation of even more worthless patent claims, which will driver costs for the alliance members ever upwards. Smaller companies that cannot join the alliance will be required to purchase licenses — once a large company establishes the precedent, the owner of the intellectual property has a stronger legal claim to patent royalties.
Finally, I believe that the industry giants will soon surrender to the temptation to regard the problem of patent trolls as solved; but they and the industry as a whole must continue to push for comprehensive patent reform before patent trolls strangle the innovations that drive the US economy.
Topics: · intellectual+property
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