OTTAWA, Ontario and Plano, Texas – November 14, 2013 – Amidst growing calls from business and the United States Congress to rein in patent trolls, one of the industry’s leading patent licensors today issued a groundbreaking set of guidelines for ethical patent licensing practices – and called for public response.
Executives at Conversant Intellectual Property Management Inc. said the company and its employees publicly condemn the abusive behavior by a small handful of patent owners that is threatening innovation and needlessly raising costs, particularly for small businesses and inventors.
“Some companies are abusing the U.S. patent system by using poor-quality patents to extract settlements from companies unable to pay the cost of standing up to them in court,” said John Lindgren, Chief Executive Officer of Conversant.
“These bad actors often send demand letters to hundreds or even thousands of small companies and entrepreneurs claiming, with scant evidence, that their patents are infringed,” Lindgren explained. “The goal of their aggressive tactics is to seek a nuisance settlement that’s less than what it would cost to challenge the validity of the patent and the infringement claims in court.”
Added Scott Burt, Conversant’s Senior Vice President and Chief Intellectual Property Officer: “It’s time for patent licensing professionals who are concerned about the integrity of the patent system to stand up for ethical practices that will help curb these abuses.”
Today, Conversant is committing itself to a 10-point set of ethical patent licensing principles.
These include specific pledges to:
- Never seek a license from or threaten litigation against a startup company, a local retailer, or an end-user customer.
- Only license quality patents for which material resources have been invested in due diligence that confirms their validity and technical merit.
- Initiate litigation only as a last resort in order to obtain fair compensation for the use of its patented technology — and never for the purpose of obtaining a nuisance or litigation-cost-based settlement.
- Always disclose a patent’s true ownership and never hide behind shell or sham companies.
Click here for the full list of Conversant’s 10 Patent Licensing Principles.
“Our goal in proposing these guidelines is to spark conversation about how our industry should be operating,” said Scott Burt, who developed Conversant’s principles. “Principled patent licensing is a two-way street that requires licensors and licensees alike to conduct themselves ethically and responsibly in order to achieve mutual economic benefits. We look forward to public response and debate on this issue.”
One early response came from Marshall Phelps, CEO of the patent quality research firm Article One Partners and the former chief of intellectual property at both IBM and Microsoft. “Conversant has started a very important discussion that needs to take place in the licensing industry,” Phelps observed. “They deserve credit for it.”
Also issuing a statement was Bernard J. “Barney” Cassidy, a patent policy expert and former president of Tessera Intellectual Property Corp., who has testified frequently on Capitol Hill on patent issues.
“Conversant’s principles are a breath of fresh air,” Cassidy noted. “These principles, or ones like them, should be embraced by all legitimate patent licensors. Conversant has made an important contribution to the ongoing dialogue about abusive litigation tactics.”
Adam Mossof, Professor of Law at George Mason University School of Law and Senior Scholar at the Center for the Protection of Intellectual Property, wrote that “Conversant’s statement of principles confirms that when rhetoric and epithets are stripped away from the policy debates, the companies in the innovation industries are working to ensure a vibrant patent licensing market continues to function properly.”
Much is at stake in this discussion. “The U.S. has the best patent licensing system in the world,” said Conversant CEO John Lindgren. “If we want to preserve and strengthen it, then we in the industry must demonstrate leadership by helping to curb patent licensing abuses and ensuring a healthy system for patent licensors and licensees alike.”
Concluded Lindgren: “We hope that by committing to operate according to these patent licensing principles, Conversant’s actions will encourage others to do the same.”
Conversant is a global intellectual property management company known for its principled approach to patent licensing and its consistent delivery of results to companies with extensive intellectual property holdings. With a portfolio of more than 12,500 patents and patent applications under management, Conversant has expertise in semiconductors, communications, and automotive technology. The company also develops innovative Flash memory technology for mass storage applications. Founded in 1975, Conversant has offices in Ottawa, Ontario; Plano, Texas; and Luxembourg.
Conversant is owned by a consortium of investors led by Sterling Partners of Chicago (www.sterlingpartners.com).
Conversant Intellectual Property Management, Inc. is the new name for MOSAID Technologies, Inc. The name change will take effect legally on January 1, 2014.
For more information, please visit www.conversantip.com.
Senior Director, Investor Relations and Corporate Communications