Richard Lloyd

Google is at it again - trying to solve the ills of the patent world with another initiative, this time aimed at giving a helping hand to the start-up community. Or at least, that’s how the company is pitching it. The search giant announced the launch of the Patent Starter Program yesterday. This will see it give some of its patents away for free.

As part of the scheme Google will transfer two patent families to the first 50 eligible start-ups that sign up. The company will then give those businesses free access to an Innography account (paid for by Google) where they can view and possibly purchase additional patents from Google’s non-organic portfolio. The start-ups will also get free two-year membership of the License on Transfer Network (LOTNET), the program, backed by Google, which allows its members to benefit from a web of cross-licences should another member consider selling a patent to anyone outside of the network.

At this stage Google is only contemplating sales of patents which it has acquired – including the thousands of assets it picked-up through its 2011 Motorola Mobility acquisition – and not those that have been developed in-house. “We decided to take a baby step and just sell non-organic assets,” senior patent licensing manager Kurt Brasch explained. That decision also made the programme an easier sell internally, he added.

Google will only consider working with companies that are involved in sectors that it also operates in and defines a start-up as one with revenue of between $500,000 and $20 million. For each successful applicant, Google will identify three to five patent assets that it thinks are applicable to the start-up’s business, and each participant will be able to pick two of those.  In order to retain ownership of the patents the start-up must remain a member of the LOT Network for two years.

In revealing details of the new programme, Brasch stressed that it was designed to “provide start-ups with patents when they need them”. He then added: “We have a whole organisation at Google dedicated to start-ups and the feeling was that we could do something on the patent side.” Teaming up with companies in this way, of course, will also enable Google to build deeper and broader relationships with them – something that coud prove very useful further down the line.

Provisions in the agreement that each applicant must sign make it clear that Google wants the patents it transfers to be used for defensive purposes. If the any of the start-ups use them for non-defensive purposes they will have to pay Google a hefty penalty. In fact, the whole agreement means that there are some significant strings attached to this patent giveaway with Google, its affiliates and its partners protected from any future assertion they may face from these patents. That, of course, will significantly reduce their value – something that start-us, which often own very few assets, may do well to consider before they sign on the dotted line. 

The sales aspect of the Patent Starter Program fits with a wider divestiture project that Google has started to implement. At the moment it is in its infancy and amounts to one portfolio of 35 patents assets related to radio advertising technology which the tech giant has put up for sale. The message from Brasch was that we can expect to see further disposals although he said that the patent group was under no pressure internally to sell and generate revenue for the company.

As Brasch revealed details of the new programme, he also provided an update on the Patent Purchase Promotion, the patent-buying initiative which Google launched in April. That gave patent owners the opportunity to log their interest in selling patents to Google with the company promising to give them an answer within 30 days. A big part of the thinking behind the Promotion was to offer owners a much more efficient selling process and to give Google plenty of information on the secondary market.  

“We’re very thrilled with the number of people that were a part of it and the breadth of sellers involved,” Brasch said. He admitted that Google expected interest mainly from operating companies, but that in the end one quarter of the submissions were from individual sellers. Half of the offers were for $100,000 or less and while they received “quite a number of patents” that had no relevance to Google, Brasch revealed that they bought 28% of the ones that they felt were relevant.  

According to Brasch the initiative has given Google a greater understanding of the secondary patent market which he said was very inefficient. “We heard a lot from sellers that when they send an asset somewhere for consideration it can take six to 12 months for a potential buyer to even look at it,” he commented. Brasch wouldn’t be drawn on what was going to be next from Google’s patent group, but on current form it shouldn’t take too long to transpire.