Google, Others Team Up for Defensive Patent Buy

Sept. 15 — A coalition of companies including Google Inc., Facebook Inc. and Microsoft Corp. bought patents from about 50 companies this summer in an effort to prevent the patents from being used against them in litigation, organizers told Bloomberg BNA.

The group purchased patent collections priced between $10,000 and $325,000, with an average price of $100,000, said Russell Binns, CEO of Allied Security Trust (AST), the association that organized the Industry Patent Purchase Program (IP3).

AST is a membership organization that buys patents on behalf of members for a negotiated price. The goal is to prevent litigious patent licensors from using those patents to demand outsized licensing fees from AST members.

IP3 was modeled on a 2015 patent buying program launched by Google. In both cases, patent owners were asked to offer patent collections at a set price that buyers could take or leave.

Reducing Risk

Like AST, IP3 will resell all the patents it buys on the open market with a provision requiring a free licenses for all its members.

Patents purchased during the IP3 program cover technologies within the software, automotive, healthcare and financial services sectors, among others, Binns said. Members chose from about 1,400 patent packages offered by roughly 450 sellers, he said.

“The sellers seemed to be very happy with the program,” Binns said. “Every seller gets, basically, two bites at the apple.” One condition of the sale was that anything that wasn’t bought during the program got fed into AST’s regular system, he said.

The IP3 coalition included 15 AST members and six nonmembers.  Among the IP3 members were IBM Corp., Verizon Communications Inc., Cisco Systems Inc., Adobe Systems Inc., SAP SE, Ford Motor Co., Honda Motor Co. Ltd., Hyundai, Kia Motors Corp. and Arris Group Inc.

About 50 percent of the IP3 submissions came from patent brokers, with the other half coming from companies and individual patent owners, Binns said. Some of the patents were offered by litigious patent licensors known as nonpracticing entities or patent trolls, though it’s not clear how many, he said.

The $100,000 average price for a patent package is similar to the AST patent purchase price for about the past two years, Binns said.

“It’s interesting to me that having sellers name their own price kind of came out to the same price as when we do negotiations with dealers,” he said. “The sellers went right to the price they would have got if they had negotiated a deal.”

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