Back to top

Analyst Blog

Google Inc. (GOOGL - Analyst Report), in collaboration with five other technology giants, Newegg, Canon (CAJ - Snapshot Report), Dropbox, SAP, and Asana, has created an alliance known as the License on Transfer ("LOT") Network, in a bid to ward off patent trolls.

Google and Canon were two of the top receivers of U.S. patents last year. Patent litigation hit an all-time high last year, with more than 6,000 patent infringements filed. Therefore, the latest move will help Google protect itself against patent trolls and leverage the network effect, thereby using its energy towards innovation.

The LOT alliance is an initiative to oppose the patent deals of other firms that have engaged in "patent privateering” and to eliminate patents available to patent assertion entities ("PAE"). The members of the alliance will uphold full ownership and licensing rights of their patents and allows other members to access royalty-free licenses to transferred patents.

At times, technology companies transfer their patents to a patent assertion entity, which is not bound by the same laws and is therefore able to extract bigger licensing fees from competitors. These entities, or patent trolls as they are called, engage in significant litigation that wastes time and money of the competitors. This process is referred to as privateering.

PAE are businesses that purchase old patents and try to monetize them by alleging others of violation. They demand a one-off licensing fee to end a lawsuit, which many companies unwillingly pay since it's cheaper than defending the infringement claim.

Therefore, the latest effort is expected to mitigate patent lawsuits and extortion attempts for Google and other companies. Google is also a part of an alliance called the Coalition for Patent Fairness that seeks to minimize litigation between technology companies and thereby devote more energy to innovation. Cisco (CSCO - Analyst Report) Samsung, Dell and Adobe (ADBE - Analyst Report) are other major players that have joined this coalition.

Google currently holds a Zacks Rank #3 (Hold).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%