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Tech and Auto Firms Join Google-Led Patent Purchase Program

May 18, 2016, 1:02 PM UTC
Jared Lazarus/Feature Photo Service for IBM
IBM software engineer Jeremy Greenberg, 23, sketches out a patent he has pending at the company's headquarter's in Research Triangle Park, NC. (Jared Lazarus/Feature Photo Service for IBM)
Jared Lazarus/Feature Photo Serv Jared Lazarus/Feature Photo Serv

Have some extra patents lying around? A diverse group of industry giants, including IBM (IBM), Facebook (FB), Ford (F), and Cisco (CSCO), may want to buy them. But you better act fast.

On Wednesday morning, the companies announced that patent owners can offer them up through a special portal that will be open from May 25 to June 8. If a firm is interested, the owner will receive a take-it-or-leave-it offer by the end of July.

The new program, known as IP3 (Industry Patent Purchase Program), is being run by a nonprofit industry group called the Allied Security Trust (AST). It amounts to a broad expansion of a similar program tried last year by Google (GOOGL), and other members include Verizon (VZ), Microsoft (MSFT), Honda, Hyundai, SAP (SAP), Kia Motors, and Adobe (ADBE).

News of the program is a significant development in the intellectual property landscape, which has been marked in recent years by major patent battles between tech industry giants, and by controversy over so-called “patent trolls,” which are shell firms that acquire patents solely to extract payments from productive companies.

According to Russell Binns Jr., the CEO of AST, the point of the program is to create an easy way for patent owners to sell and for the member companies to acquire strategic intellectual property.

In a phone interview, Binns Jr. would not say how much the group is prepared to spend but did say it will be “a significant amount of money from 20 companies.” He expects thousands of patents will be shopped through the portal, and that this will lead to hundreds of transactions.

Google’s purchase program, which ran for a short period last year, may be a helpful source of prediction for IP3. According to a company spokesperson, Google purchased 28% of the patents that came before it, and spent $3,000 to $250,000 on individual patent, with an average purchase price of $48,000.

The IP3 program will call for patents related to variety of industry activities, including enterprise software, cloud computing, automotive, and networking.

Perhaps the most remarkable aspect of the program is that a number of companies that are fierce competitors are participating together. It’s especially unusual, for instance, to see Microsoft (MSFT) and Google, which have slugged it out in bitter patent battles for years, sharing the same intellectual property umbrella.

The launch of IP3 also reflects an expansion of Google’s attempt to neutralize an eruption of patent litigation by creating a web of interlocking company alliances. The strategy works by requiring companies that participate in the alliance to pledge not to sue each other. Google has also expanded this web by handing out patents to dozens of startups, which are likewise required to join a nonaggression pact.

But what about the problem of patent trolls or, as some call them, NPEs (nonpracticing entities)?

“There’s no one silver bullet to protect yourself against patent trolls,” said Binns Jr. “Proactive companies use every tool in the toolbox to mitigate risk.”

The IP3 program also comes at a time when patent reform litigation, which enjoyed bipartisan support in the House and Senate, has sputtered once again.

(This story was updated at 7pm ET to include details related to Google’s patent purchase program)