Google, Intertrust Launch Defensive Patent Program for Startups

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By Malathi Nayak

Alphabet Inc.'s Google and Intertrust Technologies Corporation have partnered in a program that lets startups access some of their patents to defend against litigation in exchange for equity in the up-and-coming companies.

Google and Intertrust, a Silicon Valley-based software company, kicked off the defensive patent program, dubbed “PatentShield,” on April 25. Both companies have pooled patents that cover areas such as security, networking and the internet of things, Intertrust CEO Talal Shamoon told Bloomberg BNA.

“Most startups don’t have issued patents to counter sue with,” when faced with litigation, Shamoon said. “There are a lot of large incumbent product companies that use litigation as way to kill new entrants in the market just by draining their resources.”

Startups must apply to participate in PatentShield. If selected, they would have to grant a small equity stake to the program, Intertrust said in a statement. Intertrust’s venture capital arm will run the PatentShield program, while Google is participating through its patent contribution, Intertrust said.

PatentShield currently has hundreds of patents committed to the program and Intertrust is in talks with other technology companies to grow the collection, Shamoon said.

Intertrust is partly owned by Sony Corp and Royal Philips Electronics NV.

Litigation Risk to Factor into Equity

PatentShield will also give startups advice on how to devise their intellectual property strategies, Intertrust said in its statement.

The program would be most beneficial to early-stage startups looking for guidance on how to tackle intellectual property challenges they are likely to encounter in the future or more mature companies that are seeing litigation threats from incumbents, Shamoon said.

“The equity amount will also be a function of the litigation risk for any given company,” Shamoon said. “The selection criteria is much more about finding quality entrepreneurs, the way a venture capitalist would be looking.”

The amount of equity a startup would have to part with is a small amount similar to what companies would typically give for advisory services from a law firm, Shamoon said.

Google has previously rolled out intellectual property initiatives aimed at reducing patent litigation such as “PAX,” a cross-licensing program related to its Android operating software that it announced April 3.

Members of the PAX network, which includes Samsung Electronics and LG Electronics, grant each other patent licenses covering certain Android and Google applications without charging royalties. PAX has no selection process and anyone can join, Google said in a blog post.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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