Several large tech companies have teamed up to try to defend themselves against patent lawsuits in a venture called Allied Security Trust, first announced to the Wall Street Journal.
Seven of AST's 11 members have been publicly identified and were confirmed by CEO Brian Hinman (at right) when I spoke to him yesterday; they are Sun Microsystems, Hewlett-Packard, Cisco Systems, Google, Ericsson, Motorola, and Verizon.
The basics: membership costs a bit less than $500,000, and each member has to put up $5 million for patent purchases. The strategy is what Hinman calls a "catch-and-release" model: AST will buy the patents, give nonexclusive licenses to members that want one, and return it to the marketplace. That will recoup some of the members' costs; it will also, of course, keep the litigation environment a few degrees hotter for non-members.
Hinman is quick to point out that the fund is just one part of patent defense strategy, not a panacea. "We are not obtaining all the patents in the universe that are problematic," says Hinman. But AST will negotiate—quietly, through brokers—to buy some of the really problematic ones. "Litigation costs and settlements continue to be on an upward trend," he notes, and a little dent in costs could go a long way.
Are there enough fuzzy-boundary technology patents out there to keep defendants jumping regardless? We'll all find out in due time; meanwhile, a burgeoning class of IP middlemen has cropped up to help clients navigate the economy's ever-costlier patent landscape.
On its website, AST describes its mission as "freedom of operation and cost reduction." No profits for the trust, and no lawsuits against anyone—a promise that Nathan Myhrvold at Intellectual Ventures hasn't quite been willing to make, to the consternation of many.
AST goes public just a few months after PatentFreedom, another patent consultancy with a defense-side business plan, made its debut. Both companies rise against the backdrop of a stalled patent reform bill in Congress and an explosion in patent assertions.
Interestingly, both Hinman and PatentFreedom CEO Dan McCurdy have long work histories at IBM. McCurdy spent about 12 years at Big Blue in various capacities, leaving in 1996; Hinman worked at the company for 15 years, and left his position as VP of Intellectual Property and Licensing just a few months ago to start up AST.
I'll have more on AST in the August issue of IPLB.
The spicy quote in AST coverage so far is from Acacia Research CEO Paul Ryan, who tells Bloomberg News that the formation of Allied Security Trust "is an acknowledgement" that its members are infringers. "Otherwise they wouldn't have any exposure," he says.
Just the sort of saber-rattling that can be good for the shield business, I imagine.
"Just the sort of saber-rattling that can be good for the shield business, I imagine." 'Tis a truly quotable quote and a great reference to an old Chinese parable. (http://www.chinapage.com/story/illogic.html) I'm tempted to say that, as is the case in the parable, the same person is making both the saber and the shield here.
Posted by: Joshua Kim | July 02, 2008 at 10:40 AM