Jack Ellis

Japanese carmaker Mazda signed up to the License On Transfer Network (LOTNET) this week, demonstrating how the litigation risk reduction initiative is spreading its appeal to a diverse range of IP owners – and proving again that Japanese companies across the board are exploring new IP value creation opportunities.

Under the LOTNET scheme, each member of the network agrees that when it transfers ownership of a patent to a third party, the other members automatically receive a licence to that patent. This includes situations where a member organisation and its patents are acquired outright by an NPE. Therefore, this arrangement is intended to prevent members’ patents from ever being asserted against other members once they have been transferred to another entity – and is specifically targeted at NPEs whose business models are based around monetising patents that they have acquired on the open market.

Below you can see the current list of LOTNET members, ordered by their date of joining. Those in italics are the founding members:

Member Joining date Industry Country
Canon 31st January 2014 Imaging, optical products Japan
DropBox 31st January 2014 Data storage United States
Google 31st January 2014 Web search, software, etc United States
SAP 31st January 2014 Software Germany
Asana 3rd June 2014 Software United States
Newegg 17th June 2014 E-commerce United States
Pure Storage 9th July 2014 Data storage United States
SAS Institute 8th August 2014 Software United States
Red Hat 2nd September 2014 Software United States
GitHub 28th October 2014 Data storage/internet services United States
SolarCity Corporation 11th November 2014 Solar power systems United States
Khan Academy 2nd December 2014 Education United States
Pandora Media 16th December 2014 Online content streaming United States
Rocket Matter 16th December 2014 Software/internet services United States
JPMorgan Chase 30th December 2014 Banking/finance United States
Ford 17th February 2015 Automotive United States
Mazda 24th March 2015 Automotive Japan


Earlier this week, we reported on Panasonic’s multi-pronged effort to create value from its intellectual property in spite of some strong disapproval from fellow Japanese IP owners, opposed at its willingness to partner with NPEs in order to achieve those goals. Canon has been one of the leading critics of Japanese companies adopting this ‘privateering’ model; and it is no surprise that Canon’s IP team, headed up by industry rainmaker Kenichi Nagasawa, has been instrumental in setting up LOTNET.

What this shows us is that it is not just those Japanese companies that – like Panasonic and Rohm – are working with NPEs on monetisation that are changing their approach to IP strategy. After all, IP value creation doesn’t just mean monetisation. LOTNET could not work without patents – the very concept of the patent’s right to exclude is fundamental to its viability. Canon, Mazda and others show us that IP assets can be leveraged to create corporate value, even though they appear to have ruled out selling their patents to NPEs.

Another trend evident here is the automotive industry’s growing interest in IP value creation, which appears to have never been greater. Tesla Motors and Toyota have both opened up sections of their patent portfolios for royalty-free use in recent months; while transportation-centric open innovation platform AutoHarvest appears to be going from strength to strength, having just last week announced a new partnership with Chinese counterpart WTOIP. Nor is Mazda is the first manufacturer from the automotive sector to participate in LOTNET; as you can see from the above table, Ford pipped it to the post when it joined last month. For its part, Ford – which reportedly faced at least 12 patent infringement suits filed against it by NPEs over the past two years – also recently became the first automaker member of RPX’s defensive pool, following up a few weeks later by signing a broad licence deal with Intellectual Ventures.