Google Announces the Patent Purchase Promotion to Foster Innovation

With the launch of our new website this year, we added a “Headlines” section to highlight news that is occurring within the IP Community.  Everyday we search for headlines from different media sources that discuss relevant topics that affect the IP Community as a whole.  If you are an avid reader of IPWatchdog, then you know that one very relevant topic we have recently written many articles on has been about Patent Trolls and Patent Troll Legislation.  Needless to say, many of the headlines we have highlighted recently have also been on this topic.  So while searching for headlines today, one thing in particular stood out, there were many posts from multiple media sources covering Google’s response to the Patent Troll issue they call the Patent Purchase Promotion.

The headlines call this Google’s way of “Outfoxing Trolls” and “Disarming Trolls by buying patents before they become weapons” because Google’s plan is to buy up patents from any inventor or entrepreneur who wants to sell their patents to Google while retaining the license to use their own inventions.  According to Google, the Patent Purchase Promotion is an experimental marketplace that was created to help improve the patent landscape by hopefully removing some of the friction that currently exists in the secondary patent market.  They created what they call a streamlined portal, which will open from May 8, through May 22, 2015, that will allow patent holders to submit information to Google on the patents they are looking to sell and at what price point they are willing to sell them.   Google plans to then review all of the submissions and contact those patent owners whose patents they wish to purchase by June 26, 2015 with transactions being complete and payments being made via ACH transfer by late August.

By simplifying the process and having a concentrated submission window, we can focus our efforts into quickly evaluating patent assets and getting responses back to potential sellers quickly. Hopefully this will translate into better experiences for sellers, and remove the complications of working with entities such as patent trolls.

There are many different opinions as to what this is about and speculations as to what Google’s real motives are to do this.  When asked what they intend to do with the patents they state that:

Google maintains a large patent portfolio. Any patents purchased by Google through this program will join our portfolio and can be used by Google in all the normal ways that patents can be used (e.g., we can license them to others, etc.)

But Google also states that the Patent Purchase Promotion is just their newest addition to the Google Patent Programs, which they designed in hopes that it might yield “better, more immediate results for patent owners verses partnering with non-practicing entities.”

Google promotes innovation both within our company and throughout the technology ecosystem. In the spirit of fostering such innovation, we have embraced new models for sharing intellectual property across a variety of technology areas. Our programs include our release of open source software (like Android and VP8), our participation in community licenses (including the Open Invention Network License), and some newer initiatives like the Open Patent Pledge, the VP8 License and License on Transfer.

We’re always looking at ways that can help improve the patent landscape and make the patent system work better for everyone. We ask everyone to remember that this program is an experiment, but we hope that it proves useful and delivers great results to participants.

But what exactly is the Patent Purchase Promotion and how will it work?  Apparently, anyone who is a patent owner or has the legal rights from the patent owner to sell a patent can submit their patents to Google during the May 8-22 submission period.  Those who wish to participate are only allowed one patent per submission and Google will only be able to pay entities that have a US Tax ID or who can fill out a W-8BEN-E form if they are a foreign company.   Given that this program is in its experimental phase, Google wants to keep it simple so they are willing to buy patents from foreign entities, but they are not going to buy any foreign assets or applications.

Throughout the documentation for this program, Goggle is clearly making sure that they cover all of their legal bases, by heeding several warnings to anyone who is thinking of submitting their patents to Google for consideration through this promotion.

But, please make no mistake: Selling patents is serious business. With this experiment, we are trying to simplify that process, but it is still a process that requires formal agreements that have real implications between you and Google. Just by submitting a patent for consideration, you are agreeing to certain things (such as agreeing to sell Google the patent at the amount you indicate in your submission if Google chooses to transact with you).

There’s some fine print that you absolutely want to make sure you fully understand before participating, and we encourage participants to speak with an attorney.

If you are one who is considering submitting your patent to Google for consideration, here are some things you need to know prior to doing so.  First, Google is not interested in any patents that are subject to terminal disclaimers, although they do go on to further state that because of the ramifications of double patenting through splitting ownership of terminally disclaimed patents, they will consider any patents submitted that fall into this category as an offer to sell not only the patent itself but also all other assets that are relevant to the terminal disclaimer.

Second, Google states that once a patent owner submits a patent through their forum, the patent owner is then obligated to complete the transaction at the amount the patent owner has indicated in their submission if Google contacts them via email by June 26, 2015.  Patent owners must also agree that during this time frame, they cannot sell their patents to or enter into any agreements with any other entity.

Additionally, once Google has contacted a patent owner, even if it is to say they are only potentially interested in purchasing the submitted patent, the patent owner must also agree not to sell the patent to or enter into any agreements until Google either finalizes their acceptance of the offer or notifies the patent owner of their intent not to complete the transaction.  So once a patent owner submits a patent, they can do nothing with it until Google makes their final decisions, which may be as late as July 22, 2015.

Further still, even if Google notifies a patent owner of their desire to purchase the submitted patent, and the patent owner submits all of the additional information Google requests, including a signed Patent Purchase Agreement, Google states that they “reserve the right to not transact with you for any reason (or for NO reason whatsoever) up to the point where we return you a fully executed copy of the Patent Purchase Agreement.”

Finally, once Google agree to and actually completes the purchase of a patent, the seller then retains a license to use the patent for the life of the patent.  The agreement states, in it’s finest legal jargon, that the license is “an irrevocable, non­exclusive, non­transferable, non­assignable (including by operation of law or otherwise), non­sublicensable, worldwide, fully paid­up right and license under the Patents, to develop, have developed, make, have made, use, have used, sell, offer to sell, import, export and otherwise transfer or dispose of any product, service, method or process.”  To which us non attorneys would say “Whatever that all means!”

Which is why I close with this.  Without knowing for sure what Google’s intent is or is not, if you are considering selling your patent to Google, make sure you hire an attorney you can trust to advise you through the entire process.  You and your attorney should read the contract line for line and word for word so you are fully aware of what you are getting yourself into.  Make sure you not only know what you are giving to Google but what you are getting in return.