An interesting new development in the patent wars — Tech Giants Join Together To Head Off Patent Suits – WSJ.com:
The new Allied Security Trust aims to buy patents that others might use to bring infringement claims against its members. Companies will pay roughly $250,000 to join the group and will each put about $5 million into escrow with the organization, to go toward future patent purchases, the people familiar with the initiative said.
Tech companies have tried various ways to protect themselves, including investing in Intellectual Ventures LLC, a patent-holding firm founded by former Microsoft Corp. executive Nathan Myhrvold. The companies provide money to help Mr. Myhrvold buy patents, and he in turn grants them a license to his portfolio. But some in the tech industry fear Mr. Myhrvold’s venture, which has collected thousands of patents in areas such as networking and software, may itself become an aggressive patent enforcer down the road. Mr. Myhrvold has said litigation isn’t part of IV’s strategy, but hasn’t ruled it out.
To head off such concerns, companies in the new group will sell the patents they acquire after they have granted themselves a nonexclusive license to the underlying technology. “It will never be an enforcement vehicle,” said the group’s chief executive, Brian Hinman, a former vice president of intellectual property and licensing at International Business Machines Corp. “It isn’t the intent of the companies to make money on the transactions.” He declined to confirm who the group’s member companies are.
This last bit is the interesting twist. The companies won’t own the patents but will sell them off to someone else. That someone else could very well be an investment trust type entity. Since the patents will have already been licensed, they will presumably have a royalty stream attached and therefore could be securitized. The trick here for the parent companies will be the pricing of the licensing royalties. Priced too low, then resale value is also low. The companies might have to sell the patents at a deep discount. Conceivably, the companies might have to either donate the patents or abandon them all together. They could also simply put them into the public domain.
Another issue will come up with the enforcement. Are the companies willing to enforce the patents against non-contributing companies? And what is the value of the patent resell if enforcement rights are somehow curtailed?
A patent pool with an investment twist. Very interesting.