Some questions about the Defensive Patent License

Jason Schultz and Jennifer Urban of UC Berkeley School of Law have distributed a paper which provides an interesting analysis of the state of the patent system and its relationship to open development. In essence, they suggest that rather than avoiding the patent system, open development communities should instead engage with it, seeking to patent and benefit from inventions they create. The authors identify the barriers to this that they see operating now and propose a new cross-licensing agreement process which might breach some of these barriers. At the heart of the scheme is a new licence, the Defensive Patent License or DPL. While I would recommend reading the licence (it’s not l0ng) it’s fair to say that it broadly seeks to embody the following principles (from the paper):

1) Every DPL user (i.e. licensor or licensee) will forgo any offensive patent infringement actions against any other DPL user;

2) Subject to Condition 4, every DPL user will offer her entire current and future patent portfolio under the DPL;

3) Every DPL user will bind any successor-in-interest to any part of her patent portfolio to her obligations under the DPL; and

4) If a DPL user wishes to stop offering her patents under the DPL, she may do so but only with six months’ notice to existing DPL users and future parties. She must continue to grant, and may not revoke, any licenses that are in place before the end of the notice period. Once she stops offering the DPL, other DPL users are free to revoke their licenses to her at will.

So the deal here is that, if you opt into the scheme with all your patents (and you cannot opt in with any fewer) then you will enjoy a licence to utilise all the patents of all other members. In exchange you grant them licences to all your patents, and agree to make sure that even if you sell a patent on, you will try to make sure that it remains covered by the scheme. You can opt out of the scheme again provided you give everyone six months notice. On the face of it it seems like  a good idea; as members join the benefits of membership increase exponentially, and a larger and larger island of technology becomes a venue for free competition on implementation within the group. Members remain free to litigate offensively against those outside the group, and consequently retain a market for separate paid licences. How this model addresses what the authors perceive as barriers within the community is too large a subject for summarisation here, but I would recommend reading the paper to anyone interested in the academic study of open communities and their motivations.

Given  this model, I find myself with many questions in mind. Some of them are probably the result of my own misunderstanding, but I’d thought I’d note them down anyway.

What is an ‘offensive patent infringement action’?

The authors define it this way: “Offensive patent infringement actions are defined as actions that are not filed in direct response to a previously filed patent infringement suit involving the same parties.” This definition is important because it pins down a circumstance in which a scheme member might have their licence revoked – and licence revocation could get very ugly and expensive for an active tech company or project. So I would be keen to see what is and is not a ‘direct response’ more rigidly defined. For example, if a party is subject to informal threats related to patent infringement from another member of the scheme, are they prevented from seeking a declaratory judgement that they are not infringing? Construably this could be the ‘first link’ in a chain of actions and could therefore be classed as offensive under that definition. I would also like to know whether ‘involving the same parties’ means involving only those parties, or at least those parties. In the latter case a ‘defensive’ action could be used to attack other scheme members once an initial offensive action had been taken.

 What about the transmission of obligations?

Point (3) seeks to fix the potential problem that patents might be lost to the scheme by changing hands. In the paper itself the authors respond to one putative criticism of this mechanism – that bankruptcy of a patent holding entity might result in a patent being used outside the terms of the scheme – by pointing out that the US bankruptcy code places a responsibility on recipients of patents to honour pre-existent licences. While I imagine this is true, it does bring up an issue: the ‘orphan’ patents that are licensed in this way going to be available to members who join after the transfer due to bankruptcy? Taking the licence at face value I would assume so, but some aspects of the description of the operation of the scheme in the paper give me pause. The authors describe a situation in which a new member is invited to indicate acceptance of the licence offers of pre-existent patents in the scheme by clicking a button:

She then receives access to the pages for every other DPL user with an option to accept any or all of their DPLs for their  portfolios. One can also imagine an option to accept all known DPLs in a single click. The website then distributes an acknowledgment of all license offers and acceptances to the participating parties and records them in its internal database. The licenses take effect immediately.

This seems to be attempting to embody some degree of contractual communication of acceptance, something that free and open source licensing has traditionally been believed to not require to have effect. In the case of the scheme, it’s easy to see why this is beneficial; it gives greater formality to the legal relationships while alerting licensees to the patents available to them. However I wonder if a recipient of a patent from a bankruptcy would feel the need to honour any subsequent licences accepted in this way. I could see an argument that maintained that while pre-existent, accepted licences needed to persist, they had no responsibility to grant new ones in the way that the original bankrupt member had agreed. Either way, the simple model of ‘willing licensor+their portfolio’ will necessarily become fragmented in time through processes like bankruptcy, and the scheme will need robust methods for dealing with reluctant successor patent holders.

Isn’t six months a bit scary?

This is a simple one. Six months is a scarily short lead-time to engineer around an embodied patent in the case of its licence’s revocation. If I have a physical product in the marketplace in which I have embodied a DPL’s patent, how realistic is it to expect me to either withdraw it or negotiate a new, economically viable licence in that six months – particularly when the licensor knows how desperately I need it? How widely used would free and open source software be if the licences were not effectively perpetual and could be rolled up and taken away in six months?

What about Trolls?

The scheme seeks to foster patent peace between technology practitioners, and if widely joined it could perhaps do that. Unfortunately it does nothing to restrain non-practitioner patent holders – the so-called trolls. Trolls do not need defensive portfolios as they do nothing that might infringe anyone’s patent, and their business model makes restraining their offensive use of patents suicidal. So even if the scheme succeeds famously in attracting practitioner patent holders, it will leave a large area of risk untouched. Indeed it could be argued that by encouraging the shared use of patents within the scheme and their associated technologies, it communicates risk of infringement of a troll’s patents between members. If one of the scheme’s well-utilised patents was found to be invalid by reason of prior art in a troll’s patent, the troll would have a neat scheme-created list of potential targets for litigation.

While I do have questions, I think that the aims of the scheme are laudable and I do hope that it finds a means of continuation and growth. The web site associated with the licence and paper provides many ways to feed back and shape the initiative, and I’d recommend registering your views.