As patent trolls fade, a group formed to combat them thrives

Remember the Open Invention Network (OIN)? That's the defensive software patent community set up to protect Linux against patent aggressors. Well, it recently passed 1,000 members, growing nearly 70 percent over the last year.  

Growth of this order is an interesting phenomenon. At a time when the tide seems to be turning on patent trolls as a result of the Supreme Court's decision on Alice Corporation v CLS Bank, why are so many companies still seeking mutual protection in use of the Linux System (a term defined by OIN to indicate a vast range of open source software, not just Linux)? Maybe the small trolls aren't the only problem.

I spoke to OIN's chief executive, Keith Bergelt, to find out more. Keith offered three interesting facts:

1. He's seeing plenty of interest from companies across Asia via the Asian Legal Network, which had been absent before. Having a venue for local specialists helps greatly in developing mutual help and understanding.
2. He's seeing many more startups considering OIN, which was much rarer before. It used to be an issue for the VCs funding them as they thought OIN's non-aggression network would threaten the patents they insisted were acquired, but OIN engagement is trending toward becoming a requirement.
3. So far, there's no activity in China yet despite a great deal of patent filing and activity in the country. 

Why all this interest in OIN? It offers little protection against nonpracticing entities -- patent trolls who are organizationally small companies, even if the threat they pose is expensive and large. But it does offer protection against an equally insidious threat: big trolls.

The big corporations show up with their giant patent portfolios, threatening legal doom if royalties aren't paid. Attaching royalties to product or service delivery is a serious issue for companies, reducing margins long-term -- especially in business models where the monetization is separated from the product. But OIN neutralizes that strategy for those building with open source, as the big corporations in the network both license their patent portfolios in and commit not to litigate against the open source software in the Linux System Definition. The bigger it gets, the better it protects.

OIN is not the only protection mechanism in town. Bergelt is also an adviser to a new consortium, the License on Transfer Network, a fresh approach to mutual patent protection that was recently announced. The License On Transfer (LOT) Network uses a suspended license agreement to automatically grant patent licenses to every other signatory in the event a member transfers a patent to someone outside the network. There are carve-outs for necessary transfers, such as M&A; otherwise, if there is any risk of a patent ending up in the hands of a troll, it's automatically defanged for those in the club.

There are currently seven members: Asana, Canon, Dropbox, Google, Newegg, Pure Storage, and SAP AG. The leadership team is composed of legal staff from Canon, Google, Dropbox, and SAP. In addition, the Advisory Board includes both deep thinkers on neutralizing patent threats (such as Julie Samuels and Jason Schulz, authors of the clever but underused Defensive Patent License) and lawyers experienced in helping patent filers and aggressors get their way.

Still, it's OIN that matters for the majority; LOTN only helps the big companies right now. While it's important that the Supreme Court is hitting software patents hard, it's not easy defending against the big trolls and no one is changing the rules to moderate their taxation of innovation. I suggest that OIN is expanding rapidly because it creates an innovation space around Linux that can't be taxed by those with giant portfolios. Until Congress fixes the software patent problem properly, OIN is nearly the only show in town for open source innovators.