Tech Giants Pooling Cash To Buy Patents

theodp writes with a link to a Reuters report, based on a WSJ story, that "Verizon, Google, Cisco, and HP are among the companies that have joined a secretive group called the Allied Security Trust. Each of the companies will reportedly put $5 million in escrow to allow AST to snap up intellectual property on their behalf before it falls into the hands of parties that could use it against them. Patents will be resold after AST member companies have granted themselves a nonexclusive license to the underlying technology. According to AST CEO Brian Hinman, a former VP of IP and Licensing at IBM, the arrangement will keep member companies out of antitrust trouble." (The WSJ's story itself is more detailed, but it's subscriber-only.)

Comments

Offensive or defensive?

[adpsimpson]

If this is to be used for defensive measures, it's another sign of how badly broken the US patent system is - and how expensive that brokenness is to big businesses.

If it's to be used for offensive measures, then it's another sign of how badly broken the US patent system is - and how expensive that brokenness is to small businesses.

Re:Offensive or defensive?

[dintech]

Offensiveness and defensiveness both fall in to the 'interests' catagory so expect it to be used for both of these as necessary.

Where it gets interesting is what happens if two members are in despute about a single patent. Could this trust be used to arbitrate between them or come to some solution outside of the courtroom? Are the patents open to everybody with the organisation then?

I think it could be a very interesting deal, for those on the inside that is.

Re:Offensive or defensive?

[Ngarrang]

The patents owners won't HAVE to sell, but if someone came to your door with a wheelbarrow full of money, you might be tempted to say "Sure, here it is." But, now that the 'secretive' group has been exposed, they are no longer, um, a secret. Yes? No?

Re:Offensive or defensive?

[xigxag]

It may be meant as a defensive measure, but its result is offensive, and anticompetitive.

The problem isn't that big businesses have to pay to keep themselves out of trouble. The problem is, what if this works as intended? Then ultimately, it will lower the relative risks of the member tech giants. So relatively speaking, every other small and medium business will have to pay a risk tax that does not exist for these large companies. Basically, AST will drive your mom & pop shop out of business, not through better products, but by unleveling the playing field, making it too risky for you to compete. Which will hobble the engine of American competitiveness, and in the long run, damage its place in the world economy. Not that Verizon et al. will care because they can always relocate to Europe or China if need be.

Re:Offensive or defensive?

[Migraineman]

Unfortunately, the "principled man" often doesn't stay in business, because the "principled" decisions don't jive with First Sale Doctrine. You listening to me, Dad?

Yes, The Dad went out of business because he refused to sell his products to people who might use them in ways he didn't like. There was always this uncomfortable pause between where he'd ask what the end use was and the customer declining to answer. That usually was immediately followed by the customer saying "no thanks" because they wouldn't enter into a sale contract that had strings attached. Funny, I wouldn't buy a car that could only be started if I justified the trip to someone else.

You can stand on your political soapbox all you like. Expect your customers to find a way around the obstruction you present. You are motivating them to do so. At the end of the day, all you've done is devalue your patent to the point of worthlessness.

Chief Executive Officer

[MRe_nl]

Brian Hinman is currently CEO of AST. Previously he was Vice President, Intellectual Property and Licensing for IBM Corporation. While at IBM, he held various positions including Business Development Executive for IBM Research at the Thomas J Watson Research Laboratory. Prior to IBM, he was Corporate Director of Business Development and Licensing at Westinghouse Corporation.

Freedom For The Rich

[Bob9113]

Nice to see that we're developing another system whereby giant corporations are free to operate, and smaller enterprises are barred from entry. I'm sure that is exactly what Adam Smith had in mind for free market competition.