Protecting innovation from patent trolls

Orbital Exploration Technologies (OrbitX) , a space technology startup based in Quezon City, recently joined the LOT Network , an international community of tech companies that shelters members from patent assertion entities (PAEs).

“It was important to our entire team of researchers, scientists, developers, and everyone at OrbitX to join a protective organization like the LOT Network,” said Dexter P. Baño Jr., founder and president of OrbitX, in a press statement. “As a new space tech player — and a pioneering one from the Philippines — we want to set an example for all future deep tech and space tech players that protecting innovation is paramount to the success of any tech startup.”

A PAE, sometimes called a patent troll , is considered by the network to be a patent holder, in combination with its affiliates, that generates more than 50% of its gross revenue from patent assertion.

Members of the LOT Network agree that if — and only if — a patent owned by a member company falls into the hands of a patent troll, then that company grants the other members a license to that patent, which means the patent can no longer be used by trolls to sue the members of the community.

In a 2016 interview with Intellectual Property Watch, Ken S. Seddon, chief executive officer of the LOT Network, noted that smaller companies have a higher likelihood of being sued by PAEs. “Over 50% of companies sued by patent trolls make less than $10 million in revenue,” he said, “because the PAEs know that smaller companies will often settle, not having the financial and IP (intellectual property)-specific resources in-house to defend themselves.”

FREE FOR STARTUPS
According to the LOT Network, its members still retain the traditional use of their patents: “For example, members are still free to sell or transfer their patents, participate in patent pools, license patents for revenue, or assert them. LOT Network is purely defensive immunization against costly PAE litigation.”

OrtbitX, which was endorsed to the LOT Network by the International Trade Council, is filing patents for its new engine designs, together with its injectors and plumbing. “These parts have new measurements and specifications intended to work just for our Haribon rocket ,” said Mr. Baño. “Even the fuselage, fuel, and oxidizer tanks will be subject to intellectual property.”

“Our team is now more at ease working on bringing sustainable space exploration to the market with our protections afforded by the LOT agreement,” he added.

It is important to recognize the contributions that innovative companies make — as well as the importance of patent systems in protecting these innovators — said Mr. Seddon. Membership at the network is free for startups with less than $25 million in annual revenue.

“We’re thrilled that OrbitX saw the value in joining our community,” he added. “Their membership affords them, their stakeholders, and their clients proof that their innovations, R&D (research and development), and future patents are part of [the protection] offered by our community.”

Lenovo, The Walt Disney Company, Netflix, Inc., Pinterest Inc., and Bayerische Motoren Werke AG (BMW), are among the 1,400 members of the LOT Network. The one other Philippine-based member company is business solutions provider Mustard Seed Systems Corporation, which joined in October 2018. — Patricia B. Mirasol