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Earlier this week, the website of the Defensive Patent License (DPL) initiative went live. The blurb on the new website (replete with loaded language) reads as follows:
The Defensive Patent License (DPL) is a new legal mechanism to protect innovators by networking patents into powerful, mutually-beneficial legal shields that are 100% committed to defending innovation – no bullies, trolls, or other leeches allowed. It also helps prevent evildoers from patenting open technologies and pulling them out of the public domain.
The DPL is being created by a team led by Berkeley professors Jason Schultz and Jennifer Urban, whose paper on the concept can be downloaded here. It looks as if entities that sign up for the DPL will agree to offer all of their patents to other members on a royalty-free basis. Each DPL holder pledges not to initiate litigation against any other holder. However, those patent holders that do sign up to the DPL will be free to enter return-generating licence agreements with (or file lawsuits against) non-holders.
In many ways the DPL comes from the same play book that saw Twitter develop its Innovator's Patent Agreement (IPA). Essentially, the idea is for patent owners to group together to prevent their IP being owned in a way that might lead to exclusion. The problem, of course, is that for most companies the exclusionary potential that patents offer is one of the things that makes them so attractive in the first place. If you take that power away, all you are left with is counter-assertion in cases where you are being sued. For companies that build businesses on their ability to innovate that is not necessarily the most attractive of propositions. Why give up strategic flexibility and freedom in this way if you don’t have to? Obviously some, such as Twitter, believe there are positives in shackling themselves, but many more do not. On that basis, it is unlikely that we will see a host of key players rushing to sign up. What’s more, there may well be the potential for the DPL to be abused.
What is to stop a company with weak patents that protect nothing of importance signing up to gain access to the potentially valuable intellectual property of others, while offering nothing in return? It is not beyond the bounds of possibility that the freeloader in question might be funded by a much larger company from outside the collective and would therefore be in a position to compete unfairly against the other members. If the intention of the DPL is to empower small-time patent holders, then surely the agreement would require some form of quality threshold for aspirant licensees to avoid this scenario.
Furthermore, the type of entity that might find the DPL attractive is one that may well already have a sceptical view of the patent system and the benefits it could get from it; a view that means it has held back from obtaining patents in the first place. Therefore, there may already be little incentive for such entities to get involved.
But even those who don’t want to sign up for the DPL may have an interest in seeing it succeed if it means that potentially problematic patents remain out of the hands of NPEs and operating company competitors. So here is another scenario that may be worth contemplating: larger companies may use the DPL for spin-outs that do not own weak, uninteresting patents, but actually hold ones that others may want to use. It could be a means of getting others to adopt technologies whose use can be leveraged in other ways than monetisation.
We don’t yet know precisely how the DPL might work and the creators have been clear that this project is still in its development stage. But whatever its potential flaws or benefits, the DPL initiative is worth watching for one key reason: it is not an exercise in ignoring the patent system. Instead, it is about engaging with the system to find a solution to a problem that some perceive exists. On the basis that engagement is always more constructive than sticking your head in the sand, the DPL has to be viewed as a positive move. And if it does attract an active and significant set of licensees, then more power to its elbow.
IP management, Licensing, IP litigation, Patents, IP business