Companies Differ on Patent-Pledging

Engineering, software development and Internet information representatives differed Friday on the recent push toward patent-pledging and limited-enforcement policies. Google and Red Hat participate in certain cross-licensing and defensive-patent programs to reduce litigation, prevent lawsuits from patent-assertion entities (PAEs) and prevent nonpracticing entities (NPEs) from acquiring idle patents, said Tim Kowalski, Google senior patent counsel, and Mark Bohannon, Red Hat vice president-global public policy, during a symposium at the American University Washington College of Law. The House Judiciary Committee Thursday passed the Innovation Act (see 1506120027), which addresses PAEs and increased patent litigation.

Google and Red Hat are members of the Open Invention Network (OIN), a "defensive patent pool," and the License on Transfer (LOT) Network, a royalty-free, cross-licensing group made up of companies such as Philips and Sony. "OIN was a practical business decision," Bohannon said. "There needed to be some demonstrable effort to get together to reduce the risk of litigation exposure." Although Bohannon said the programs have been "effective," he said they "aren't the complete solution." Kowalski said it's too early to tell how effective the programs have been, but thinks they have provided a benefit, "one tool in the toolbox to solve a particular issue."

More companies are developing and touting certain patent initiatives, while Cisco, IBM, Intel and Verizon made company-specific pledges. Thaddeus Burns, General Electric senior counsel-intellectual property and technology, said his company, while "involved in many standard-setting bodies," doesn't necessarily subscribe to the theory of patent-pledging. "There are a lot of good intentions, but our sense was that if they're patents that we aren't using, we might as well let them lapse," Burns said. "If we don't see a use, we are not going to maintain an asset" just so the company can pledge not to sue, he added.

Burns said he wonders if patent-pledging and membership in defensive patent groups has alleviated the problem of NPEs. GE would rather allow assets to drop into the public domain than allow other entities to incur maintenance costs, he said.

On how companies that make certain patent pledges are being held accountable, or to what level of accountability they should be held, Bohannan said: "One of the biggest ways of enforcement is pressure. Think broadly about how to get an industry to keep its commitments. People are going to hold you to it if you put it out there publicly."

Burns agreed that moral, public persuasion can be effective, but suggested the U.S. move to a "deferred litigation regime," such as used in Japan. The FTC has enforced rulings on standard-setting issues in the past, said Neal Hannan, FTC intellectual property adviser, on a separate panel. Community pledges, such as standards-setting organizations, and unilateral pledges, such as website statements and news releases, make up most current patent pledges, according to a database of the University of Utah College of Law.

The FTC recently has been focused on intervening on issues of fair, reasonable and non-discriminatory (FRAND) agreements, Hannan said. As of May 2014, FRAND agreements make up the second-highest number of pledges beyond nonassertion or royalty-free licensing, the University of Utah database says.