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Friday, 1 May 2015

Google says "We want your patent. Maybe."

The IPKat recently noticed Google’s latest initiative, which the search giant has alliteratively dubbed the “Patent Purchase Promotion”.This Kat belatedly spotted that Mike Mireles had already covered this over at our sister blog IP Finance, but thought that the initiative by Google might be of general interest to this blog's readers as well as providing a timely opportunity to highlight the IP Finance blog for readers interested in those issues that arise when money meets intellectual property rights.

Put at its simplest, Google is looking to buy patents. It is going to open a process where sellers can offer their patents to Google. The seller sets a price for each individual patent (must be a US patent, and not a portfolio or a family), and Google will decide to buy or not, with no negotiation taking place. As described on the Google Public Policy Blog post “Announcing the Patent Purchase Promotion”:
So today we’re announcing the Patent Purchase Promotion as an experiment to remove friction from the patent market. From May 8, 2015 through May 22, 2015, we’ll open a streamlined portal for patent holders to tell Google about patents they’re willing to sell at a price they set. As soon as the portal closes, we’ll review all the submissions, and let the submitters know whether we’re interested in buying their patents by June 26, 2015. If we contact you about purchasing your patent, we’ll work through some additional diligence with you and look to close a transaction in short order. We anticipate everyone we transact with getting paid by late August.
(There is one slightly arcane restriction on which patents are eligible to be sold. Google says it is not interested in any patent subject to a terminal disclaimer, due to the complications arising from splitting ownership between such a patent and other patents related to the terminal disclaimer.)

The terms of the deal are relatively straightforward. Assuming that the patent survives scrutiny of due diligence, the seller will assign it to Google, and will be granted a licence to use the invention. As to the terms of that licence, the FAQ says:
Question: If Google ends up buying my patent, can I still practice the invention?
Answer: Yes. As part of our Patent Acquisition Agreement ( see section 4.4), sellers will retain a license back to their patent. For you lawyers out there, the license is “irrevocable, nonexclusive, nontransferable, nonassignable (including by operation of law or otherwise), nonsublicensable, worldwide, [and] fully paidup.”
As one would expect by now, this rather clever company has framed its offer pretty shrewdly. They tell the world that they are open to purchasing patents, with no hint of any characteristics that might make those patents desirable (for example what fields of technology they are interested in), and no hint of what they might be willing to pay for any patent.

The IPKat expects that there will be a considerable flood of submissions from people hoping to make a killing at Google’s expense. Of these, it is natural to expect that many if not most will be overvalued by the seller (at least from Google’s standpoint), and that a much smaller percentage will be fairly priced or significantly underpriced (again from Google’s standpoint).

Having made no commitment to purchase anything yet, Google can confine itself to cherrypicking the bargains that it spots. While it might choose to buy very large numbers of patents as long as they are fairly priced, this Kat suspects that this is not about adding significant numbers of patents as a mere numbers game, but rather is intended to flush out some real gems. The IPKat may be wrong. It’s happened before.

Given this expectation, the IPKat is not sure that he is entirely convinced by the Google’s averred reason for the initiative:
We are looking for ways to help improve the patent landscape, and we hope that by removing some of the friction that exists in the secondary market for patents, this program might yield better, more immediate results for patent owners versus partnering with nonpracticing entities.
Of course it can’t be entirely selfless, and the IPKat suspects that Google is not expecting anyone to believe that it is purely an altruistic move. However, if it works, it’s probably a win-win for both parties when a patent is selected for purchase. Google (presumably) gets a patent it wants at a very good price, and the seller gets exactly what they asked for. A bird in the hand, and all that.

The IPKat will watch with interest and hopes that at the conclusion of the process there is some high level analysis released of the numbers of patents submitted and the percentage actually purchased. Finding out the price per patent actually purchased would be wonderful but this might be too much to hope for.

4 comments:

Jeremy N. said...

A couple more possible knock-on effects may be:

a) previously hesitant applicants may now be motived to file, possibly leading to a boom in US filings,

b) for small applicants, an EP filing suddenly looks a bit lacklustre when compared to a US filing with its added Google spice.

Anonymous said...

As a search company (or should I say: keeping-track-of-everybody's-life-company), Google should be in an excellent position to find infringers of any patent it might buy.

Kuifje said...

Doesn't it strike anybody as odd that Google would offer a world-wide licence on a US Patent?

And how about the value of the CN,JP, EP,CA,UK,DE etc equivalents of the US patents that Google buys? They will become very valuable, IMHO.

Anonymous said...

A "world wide" license on something that is strictly valuable in one country is more than a bit of sensationalist overkill.

You pay a premium for "fancy words" that have no effect.

One more reason for caveat emptor.

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