Samsung, LG and Foxconn among early takers of Google’s new – and hush-hush – PAX licence

Google yesterday unveiled the Android Networked Cross-License – or PAX, for short – a new defensive licensing programme ostensibly aimed at reducing patent risk for businesses shipping products with its Android operating system. While PAX already has some big names on board, detail about the offering – and how it differs from similar schemes previously launched by Google – remains thin on the ground.

Free-to-join PAX (the name intended to echo the Latin word meaning ‘peace’) is described as a “royalty-free community patent cross-licence that covers Android and Google Applications preinstalled on devices that meet Android’s compatibility requirements”. In terms of how it actually works, it would appear that PAX signatories – labelled as ‘members’ – grant patent licences to one another on a royalty-free basis and “receive broad, long-term freedom of action with respect to Android and Google Applications from all other members”.

Eight companies other than Google itself are already members. Korean giants Samsung Electronics and LG Electronics, along with Taiwan’s Foxconn and HTC, are the largest patent holders to have signed up (alongside Google, of course). LeEco-controlled Chinese handset maker Coolpad, Spanish device maker BQ and Romanian smartphone company Allview are also on board, as is HMD Global – the private equity-backed outfit staffed by former Nokia executives that is resurrecting the Finnish company’s mobile device brand under licence.

Other that that, there is precious little in the way of publicly available detail regarding the PAX licence. An online enquiry form on the PAX website comes with a few fairly stern terms and conditions, including the following:

• This Form is to help us get in touch with you regarding the PAX License. It isn’t meant for any other purpose. If we determine that your submission relates to any other matter, we will disregard it. If you want to reach Google regarding some other patent matter, please see [www.google.com/patents/licensing].
• If we send you a copy of the PAX License, you shall only use it for your own internal evaluation regarding whether to join. You must use a reasonable degree of care to protect the PAX License and to prevent any unauthorized use or disclosure of the PAX License. You may share the PAX License with your employees, board of directors, or lawyers who need to see it, but only if they have agreed to keep it confidential. You may also disclose the PAX License when compelled to do so by law, providing Google notice if possible.

It would seem that Google wants to keep as much about PAX as possible under wraps, for the moment at least. Of course, it is pretty much standard practice in the industry for the terms of patent licences to be confidential; and in that sense, the secrecy surrounding PAX is nothing out of the ordinary. Nevertheless, Google’s line here contrasts with the open nature of the terms of its earlier patent defence schemes, the Open Patent Non-Assertion Pledge (OPN) and the License-On-Transfer Network (LOTNet).

As such, it is difficult to ruminate on the possible pros and cons that PAX may have for different sorts of businesses. This hasn’t stopped a number of tech industry commentators putting a positive spin on PAX, describing it as a “groundbreaking patent peace deal” offering a way to “avoid patent wars and make peace among Android OEMs” and “stop Android patent trolls” (and, not entirely accurately, as a way for Android partners to “easily share software patents”).

That said, we can speculate that PAX may go further than its forerunners, OPN and LOT. One possibility is that it actually commits members to assist materially in each others’ defence, perhaps by transferring useful patents to fellow licensees that are under attack. This would put PAX in a similar bracket to Microsoft’s recently announced Azure IP Advantage programme. However, one important difference is that Microsoft offers the latter to its paying customers as a one way commitment; with PAX’s free, community-membership model, there isn’t a similar incentive for the larger patent holders to hand assets to smaller members that can offer little in return.

The one thing that we can probably assume at this point is that PAX will share the same fundamental flaw – from a patent risk perspective – as LOT, OPN and similar ‘community’-based programmes: They can only protect a member from other members. Patents that remain outside of the defence pact still present risk for those inside it.

What this means is that, even with formidable portfolios like those of Google, Foxconn, LG and Samsung under licence, the community has to continue to grow and attract big-time patent owners in order for it to become more effective. PAX’s smaller founding members have much less to offer in terms of global patent coverage than Google and the large Asian corporates. As for HMD, the patent licences it presumably has to Nokia’s and Microsoft’s portfolios as a result of its formation last year are arguably going to offer it a lot more in terms of risk mitigation than the PAX licence. It is hard to see how those who choose to directly monetise their patents (Microsoft, of course, has an extensive Android-relevant portfolio that has helped it to generate significant revenue) will join a community that would substantially restrict their licensing opportunities. Nonetheless, Google’s continued efforts to find market-based solutions to the perceived patent ‘trolling’ issue are to be commended – whether they ultimately prove successful or not.