Back in April, Google launched a pop-up, temporary marketplace for companies to sell patents, with Google being the sole buyer. Today, the search and mobile giant is expanding that marketplace in the other direction: Google has started a program for startups to give away up to two non-organic patent families off Google, as well as potentially make offers to buy patents from it in the future. It’s tying up the offer with a requirement to join the LOT Network, a cross-company licensing push (others in the group include Dropbox, SAP and Canon) aimed at driving down the number of patent-trolling suits.
If you are interested, you should get in touch quickly. Initially, this will only be open to the first 50 eligible startups.
As for what makes you eligible, there are a few caveats and requirements. First, a company’s 2014 revenues had to be between $500,000 and $20 million.
Then, Google will not let you pick what you would like to have. The company says that after you apply, if you meet the revenue requirement, it will send to you, within 30 days, a list of three to five families of patents, and you can select two of them. “Google will retain a broad, nonexclusive license to all divested assets,” the company notes.
Google tells us that “non-organic” patents are those it has purchased from third parties rather than developed in-house. But Kurt Brasch, senior patent licensing manager at Google, tells us that those non-organic patents could still be very central to Google’s business.
Interestingly, as part of a startup’s application process, even if you don’t end up getting anything, Google says it will give your startup partial access to its own database of patents — presumably covering only non-organic patents.
That in itself can potentially be valuable. “Participants will have access to part of Google’s portfolio and may inquire of us regarding the potential purchase of any such assets,” the company notes. It says it will assess those offers on a case-by-case basis. It seems that those purchases may not hold the same restrictions.
The patents themselves will come with some restrictions. Google says they will only be able to be used defensively — that is, to protect a company against another patent suit, not to file one against another company. If you try to sue based on the patent, ownership reverts back to Google.
And you also have to agree to join the LOT Network for two years before you can buy any patents.
The LOT Network is essentially like a patent owners’ club. Members get free licenses to use patents whenever one of those patents is commercially licensed to a non-member. There are some 325,000 patent assets in the LOT database already, and the idea here is for Google to help the group get stronger, as a way of warding off patent trolls.
While membership usually costs between $1,500 and $20,000 per year (depending on company size), LOT is waiving the fees for two years for startups joining through this program.
Brasch notes that for now none of the other members of the LOT Network will be launching patent transfer programs similar to what Google is doing. “It’s a Google initiative at this point,” he said.
Google’s moves to transfer and sell off patents comes on the heels of its earlier effort in April to buy patents from third parties, also in a limited offer. Talking for the first time about how that went, Brasch said that Google “considered the experiment quite a success.”
Among the companies who appealed to sell patents were both operating companies but also many patent brokers.
“What that told us was that there is definitely a problem in the secondary market and people in the industry feel it,” he said. “People are looking for a different solution and there are ways for us to do that that could help both buyers and sellers.”
He said that Google paid prices between $3,000 and $250,000 for patents in the period, buying about 28 percent of the total offered, focusing on “patents that were clearly of interest and relevance” to Google. Those have directly gone into Google’s wider patent portfolio, becoming a part of the non-organic set that is now being offered in parts to interested startups.
Together with today’s news, all this highlights a couple of interesting developments for the company.
First, it underscores Google’s bigger push in getting more tech companies to collectively act together to fight some of the negative aspects of intellectual property ownership, specifically around lawsuits that are less about safeguarding IP and more about making money.
Second, it’s yet another example of how Google is positioning itself as a broker and portal for all things patent-related.
Just last week Google made a significant upgrade to its patent search features, by incorporating search results from Google Scholar and its prior art database. And although the patent marketplace has been launched on a very limited basis so far, it seems like a good way of testing out features that could potentially be made more permanent in the long run.
Indeed, that’s something that Brasch highlighted, too. “I would expect something else coming out in the future, whether from Google or a broader group of organizations,” he said. On the earlier project to buy patents in April, he noted: “I think what we would ultimately say is that it was a significant success not only in patents but in terms of the information we gleaned. I think something more will happen here.”
More generally, Google has made a lot of headway into verticals like shopping, travel and media. And as the company continues to grow, I would not be surprised to see more vertical search/marketplaces like this crop up.
Updated with correction and clarification: There are two tiers to this program. The first is giving away two patent families for free to qualified startups. The second is potentially purchasing patents from Google beyond this.