Non-Sticky Defensive Patent License
The DPL is a standardized (i.e., non-negotiated), networked, portfolio-wide, royalty-free, patent cross license without the right to sublicense. Patents in the DPL ecosystem are available royalty-free to companies, institutions or individuals that agree to similarly license their patents.
The license under the “sticky” DPL as formulated by Professors Urban and Schultz at Berkeley is irrevocable, i.e., once a participant joins the original DPL the patents that the participant holds at the time become irrevocably licensed even if the participant withdraws (patents acquired post withdrawal would not be encumbered). In contrast, the “non-sticky” version of the DPL, which automatically terminates the licenses (both inbound and outbound) at the end of a withdrawal notice period, is an attempt to make the DPL have little-to-no risk while maintaining almost all its benefits.
You can see a model non-sticky DPL license and some possible modifications for a straw-man version of the agreement and a response to a proposal for Defensive Patent License (DPL) for a more full discussion of the DPL agreement.
Key Aspects of the Non-Sticky DPL
Withdrawal automatically terminates licenses both inbound and outbound at the end of a withdrawal notice period: The non-sticky DPL automatically terminates both inbound and outbound licenses for a withdrawing participant at the time the participant stops being a participant. Thus, if a participant joins and regrets doing so, that participant can withdraw, terminating the DPL licenses both inbound and outbound at the end of the withdrawal notice period. In this way, a participant can withdraw and return substantially to its pre-participation licensing state. Of course, past damages will be gone both inbound and outbound as between the withdrawn participant and the other DPL Users for the period of mutual participation.
Transfer Provision: Under the transfer provision of the non-sticky DPL, in the event a Licensor transfers a patent (outside the context of a business line transfer) then, prior to the transfer, the Licensor automatically grants a license to the transferred patent to each non-sticky DPL Licensee existing at the time of the transfer.
Other High-Level Terms of the Non-Sticky DPL
Carve outs to the license for Foundry and Cloning products/services.
No Other Rights: The License does not include any copyright, trademark, trade secret, or other intellectual property rights, other than the rights to Licensed Patents expressly granted.
The following are some advantages of the DPL (both the original version of the DPL as proposed by Urban and Schultz and the modified version as proposed here). Some of these advantages increase with an increase in DPL adoption, especially within a particular industry.
Competition on the merits with reduced patent risk. The DPL would enable companies to compete on the merits of their products or services largely free from risks of patent assertions by other DPL members. The success of the DPL approach depends, of course, upon who joins the DPL. If a significant group of companies in a particular industry join the DPL, the DPL members in that industry could dramatically reduce their risk of patent infringement.
Network effect: The more entities that join the DPL, the more attractive it is for new members, the greater effect it has on the patent landscape, and the more incentive there is to continue to participate and for others to join.
Protects DPL members from non-practicing entities (NPEs) by providing licenses to members for other member’s patents transferred to NPEs: The DPL reduces the value to non-practicing entities of purchasing patents subject to the DPL because the DPL patents transferred to NPEs are encumbered by a license to the then-existing DPL members. If enough of the members, including the substantial portfolio company (SPC) members, in an industry are participants in the DPL, the number of patents that can be purchased by a non-practicing entity and used against those DPL members would be reduced.
Reduced transaction costs. The DPL affords an easy mechanism to achieve patent cross-licenses with other entities such as SPCs. Although an entity can achieve similar cross-licenses through a series of bilateral agreements, the DPL achieves such patent cross-licenses with much lower transaction costs.
Moral high ground/greater participation in patenting efforts/improved recruiting. The DPL could provide an opportunity for a company to express a particular view about competition and patent litigation. If an established company (or a set of companies) were to be the first to join the DPL, it would make a powerful statement to the marketplace. Many engineers/inventors may be more willing or eager to assist in seeking patents on behalf of a company that participate in the DPL. It may also help in hiring sought-after recruits, e.g., software engineers, who believe the current patent system needs improvement.