The Best Defense Is A Good Offense - Even In Patents

It is commonly heard in the sporting world that the best defense is a good offense.  The same is true in the world of patent litigation.  Large companies develop huge patent portfolios, both to protect their products and to provide an offense against a party claiming patent infringement.  IBM, for example, obtains more than 3000 patent a year.  If you sue IBM for patent infringement (or even copyright infringement or trade secret misappropriation) you will likely see multiple counterclaims unleashing IBM's intellectual property guns.  Just ask SCO.  With tens of thousands of patents, if you have patents that IBM might infringe, odds a pretty good that IBM has several that you might infringe.

The one exception to the defensive use of patents is the patent holding company - or patent trolls as they are commonly called.  Patent holding companies buy up patent portfolios that either look promising or that they can acquire cheaply.  The trolls then go out and look for products that would infringe.  Because the trolls do not make any products, they are essentially exempt from patent counterclaims.  This is why they are so despised by the large IP holders like IBM, Microsoft, etc.

While the proprietary software providers build their patent war chests, those involved in open source have been left vulnerable.  Open source operating systems, such as Linux, have very decentralized development.  If a thousand different companies each invent something new and obtain a patent, each lacks the ability to effectively use their patents as a deterrent to being sued.  This could leave Linux in a state where providers are being sued for infringement by proprietary providers without the ability to counterclaim.

So who will defend the Linux commons?  Novell - well not exactly Novell - but an organization that started there.

Novell's years in the proprietary world taught it how to play the patent numbers game.  Linux and the open source community needed to be defended - but how?  With the lack of a proprietary stake holder - no one had an adequate patent base to defend against those claiming that Linux and its users were infringing their rights.  Enter the Open invention Network (OIN).  The goal of OIN was to own, manage, license and assert patents in defense of Linux.   While OIN could be seeded with patents that those joining would contribute, it needed more to have fire power.

At about the same time as the first patent threats to Linux started surfacing, a large number of patents relating to widely used network technologies (i.e. web services) were coming up for auction in a bankruptcy proceeding.  Many in the IT industry assumed the patents would fall into the hands of the dreaded patent trolls - which would certainly be followed by lawsuits galore.

At the bankruptcy auction, two patent holding companies bid back and forth for the patents.  When the last call for bids came in, an unknown company entered the fray.  JGR Acquisition, Inc. outbid the final troll left standing.   But who was JGR Acquisition, Inc.  - no one knew and it wasn't talking.  News stories ran about the mysterious company that had paid $15.5M for the patents.

Months later people going through Novell's SEC filings discovered that Novell had acquired a certain patent portfolio for $15.5M.   Someone connected the dots and the mystery buyer was revealed.

In November 2005, having an adequate war chest, the OIN was founded by Novell, IBM, Sony, Philips and Red Hat.  NEC joined as the sixth member a year later.

The OIN's goal is to encourage a patent free zone (or at least a zone free of asserted patents) in the Linux Commons.  OIN licenses its licensees for all products and services on a royalty free basis under all OIN patents.  As a requirement to get a license, licensees must license their patents to all other OIN licensees and members on a royalty free basis for Linux.  Covered technologies include Apache web server, OpenOffice and the FireFox web browser. 

There are exceptions in the OIN License so it should be read carefully.  For example, an OIN licensee can defensively suspend its license to another OIN Licensee if the other licensee asserts a patent against a product of the suspending licensee that performs substantially the same function as Linux.

While the OIN does little to protect those in the Linux Commons against trolls, it does give them some fire power to defend against proprietary providers who would like nothing better than to crush Linux or those who support it.

Congratulations to Novell for a creative solution to a perplexing problem.



 

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