Six weeks ago, iPEL, Inc. announced a revolutionary concept into the patent licensing ecosystem. What if those who own large patent portfolios decided to actually help start-ups by opening up their patent portfolios to those start-ups rather than have those companies operate without a net and worrying about what has become an omnipresent threat of patent litigation? After all, a patent owner with a well formulated licensing program is not one who is interested in going after cash starved start-up companies anyway.
This philosophical shift led to the creation of a new licensing model that offers free patent licenses to startups and small businesses. Perhaps due to the old adage that if it sounds too good to be true it probably is too good to be true, there were skeptics. What the skeptics failed to understand, however, is that while sounding altruistic on its face, the hope was these start-ups taking licenses would succeed – and succeed at a very high level. They would grow their technologies safely, using iPEL patented innovations. If those start-ups could run the gauntlet facing all early stage enterprises, they would eventually become paying licensees, presumably happy to pay based on their success and the assistance received. It was a new model, and one iPEL thought the industry might eventually adopt in more widespread fashion.
iPEL CEO Brian Yates heard the skeptics, and fundamentally wanted the program to be a win-win for everyone, so changes have been made to expand the scope the free licensing program and to provide long-term incentives to companies that grow after taking a free license.
“Some of the concerns raised by commentators made us realize that our free licensing program needed to provide additional details and assurances.” Yates explained to IPWatchdog. “During the process of addressing those concerns, we decided to enhance our free licenses by providing additional incentives that should make it clear to everyone that iPEL is a friend of small businesses and startups, not an enemy lying in wait.”
The full terms of the expanded free licensing program are set forth on iPEL’s website. Generally speaking, the new terms increase the allowable annual revenue to qualify for a free license from $5 million to $10 million USD (or foreign equivalent) and provide the ability to renew for an additional one-year period as long as the company’s revenue during the initial free license period did not exceed $20 million. According to Yates, iPEL believes this will allow for safer growth and better risk management for the free licensees.
As a further incentive to small businesses and startups to take its free license, iPEL is also guaranteeing a 50% discount on its currently published paid licensing rates after the initial free license period ends. “Because we plan to raise our licensing rates at the end of this year, and on a regular basis as our portfolio grows and we achieve favorable litigation outcomes in China, small companies can secure significantly discounted rates by signing up for a free license today.” Yates said.
Beyond its free licensing program, iPEL has been the subject of considerable discussion within the patent community based on its paid licensing program and its bold predictions about its litigation prospects in China. iPEL – by and through Yates – recently suggested that major patent litigation in China was imminent, and that it planned to obtain China’s first $100 million damages award.
The imminent Chinese litigation has been “postponed,” Yates explained, “because we are having meaningful licensing discussions, which is our preferred way of doing business. But, if it becomes clear that our haggle-free, no-fault license approach is being rejected, then we are ready to promptly litigate.”
In terms of a $100 million damages award in a country known for awarding meager damage awards, Yates clarified: “We are optimistic, but not delusional. We do not expect iPEL to obtain a single judgment above $100 million in China, in the near term – maybe someday. Instead, we plan to achieve cumulative judgments against a single company in excess of $100 million, based on infringement of multiple patents, across multiple product lines.”
So now we wait and see. Will more start-ups see the wisdom associated with taking a free license to a 1,000+ patent family portfolio? Will iPEL take China by storm and start collecting wins, and real damages against infringers? Time will tell all things, but those familiar with Yates know well he is not afraid to bring a lawsuit when necessary. So, if this kinder, gentler approach doesn’t pay dividends there will likely be a lot of companies wishing they had taken his olive branch overtures a bit more seriously.
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