LOT nets Lenovo in further sign of Chinese companies' increasing engagement in global patent market

Lenovo last week became the latest company to join the License On Transfer Network (LOTNet), a coalition of IP owners that pledge to grant fellow members a licence to any patents they assign to patent assertion entities (PAEs). The Beijing-headquartered company also became the first Chinese member of the group, signifying how rights holders from the country are becoming increasingly active players in the global patent market. Lenovo now appears on LOTNet’s member list, with a joining date of 16th March.

LOTNet was launched by founding members Canon, Dropbox, Google and SAP in January 2014, with the aim of countering so-called ‘troll’ behaviour by gradually restricting the supply of patents to PAEs. LOTNet defines a PAE as any “entity and its affiliates” which derive “more than half of their total revenue… from patent assertion in a 12-month period, or if it has a plan approved by senior management to do so”.

Speaking on a panel at IPBC Asia in Tokyo last November, Lenovo’s vice president of intellectual property, Ira Blumberg, revealed that the company was in talks to sign up to LOTNet. It is worth noting that Lenovo has in recent years been a voracious buyer of patents from third parties – including PAEs. In March 2014, the Chinese company paid $100 million to acquire 21 patent families relevant to telecoms infrastructure and additional licences from publicly traded NPE Unwired Planet. The deal included a number of assets that had been transferred to the NPE by Ericsson as part of their monetisation partnership.

A month later, Lenovo acquired over 3,800 mobile device-related patent families from NEC. It has also obtained a number of patents from IBM over the years, at least some of which can presumably be accounted for by its 2014 acquisition of the US company’s server business. In the same year, Lenovo was assigned around 2,000 patents as part of its $2.9 billion purchase of Motorola Mobility from fellow LOTNet member Google.

It may be the case that LOTNet membership was one of the terms of the Motorola deal stipulated by Google. We know that the US company has deployed somewhat similar tactics to boost the group’s numbers; for example, start-ups that received patents from Google under its Patent Starter Program also got a free two-year membership to LOTNet.

Whatever the details, it is safe to say that Lenovo’s joining marks a significant milestone for the defensive alliance. It will be interesting to see if other Chinese companies follow suit anytime soon. Interest in the revenue generation potential of licensing is on the rise in China, particularly among the country’s larger rights holders. Getting them to sign up to LOTNet may yet prove to be a tough sell.

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