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Cisco Systems and Google are entering into a long-term patent deal designed to give each company licenses to the other’s patents, but also to protect them against patents trolls and future litigation.
The agreement, announced Feb. 4, covers what officials with both companies said is a broad range of products and technologies, though they did not detail what those technologies are.
It also comes a week after Google entered into a similar 10-year patent deal with longtime partner Samsung, which has leveraged Google’s Android mobile operating system to become a top maker of smartphones and tablets. The deal covers current and future innovations.
The tech industry has seen its share of patent-infringement lawsuits over the past several years, with many of them involving Google, Apple and Samsung. Add to that patent trolls and—increasingly—patent privateering, and the environment is ripe for even more legal disputes.
Such agreements as the one reached by Google and Cisco are designed to prevent much of that, according to Dan Lang, Cisco’s vice president of intellectual property.
“In today’s overly-litigious environment, cross-licensing is an effective way for technology companies to work together and help prevent unnecessary patent lawsuits,” Lang said in a statement. “This agreement is an important step in promoting innovation and assuring freedom of operation.”
Both companies said a key aim was to push back at the growing use of patent privateering in the industry. Patent assertion entities—also called patent trolls—make their money by buying patents from companies and then asserting those patents against other companies that have products already on the market. According to federal authorities, these patent trolls—which don’t innovate or create products—comprise a large percentage of the patent-infringement lawsuits filed.
Patent privateering is when businesses that have created products want to generate more money from their patents. These companies will transfer their patents to patent assertion firms, which then will file lawsuits themselves and share any proceeds with the business that created the patent.
According to Allen Lo, Google’s deputy general counsel for patents, the Cisco deal will help remove some of the threat of patent lawsuits in the future, and encourage other companies to consider entering into similar agreements.
“Our agreement with Cisco will reduce the potential for litigation, letting us focus instead on building great new products,” Lo said in a statement. “We’re pleased to enter into this cross-license, and we welcome discussions with any company interested in a similar arrangement.”
Both Cisco and Google are members of the Coalition for Patent Fairness, a group that is pushing for patent reform and that also includes such companies as Dell, Oracle, SAP, Adobe and BlackBerry.
There continues to be some movement against patent trolls. The Federal Trade Commission (FTC) last year said it was launching a study of patent trolls, while the International Trade Commission said companies complaining of patent infringement will have to prove they have a significant presence in the United States before action is taken.
In a column on Forbes.com in October 2013, Mark Chandler, general counsel at Cisco, noted a court case brought by Cisco, NetGear and Motorola Solutions against Innovatio IP Ventures, which had been demanding licensing fees from the tech vendors’ customers deploying certain WiFi solutions. A judge rejected the demands and instead put the licensing fee at less than 10 cents per chip, making it financially worthless for Innovatio to continue sending out demand letters.
“Fortunately, there is momentum building against the tawdry leverage games that many NPEs [non-practicing entities] employ,” Chandler wrote. “We’re glad to hear the FTC and the Congress are taking hard looks at the issue.”