Sticky Defensive Patent License
Our understanding of the key elements of the sticky DPL proposal based on Urban and Schultz’s article is as follows:
It is a distributed, standardized patent license.
A DPL participant acting as a Licensor:
- licenses its entire patent portfolio; and
- agrees to grant a non-exclusive, royalty-free, perpetual, world-wide license to all DPL Users (we bolded “perpetual” as this is a particular point of contrast between the Sticky DPL and the Non-Sticky DPL).
The license is irrevocable unless:
- Licensee sues a DPL User offensively, in which event the other DPL Users may suspend their license to the DPL User asserting its patents offensively (“Defensive Suspension”), or
- Licensee stops licensing its own portfolio under the DPL.
Breach allows optional Defensive Suspension revocations by DPL Licensees, but does not require it.
A DPL participant (Licensor) can individually license non-DPL users (including for royalty payments) or sue non-DPL users for patent infringement.
A DPL participant (Licensor) can withdraw from the DPL and stop offering a license to newcomers to the DPL by providing a certain advance notice, e.g., 6 months (a “Discontinuation Announcement”). However:
- Previously issued licenses (issued by the withdrawing DPL participant) remain in effect; and
- Each reciprocal license (issued to the withdrawing DPL participant) may be terminated by the non-withdrawing Licensor at the non-withdrawing Licensor’s discretion.
See Schultz, Jason and Urban, Jennifer M., Protecting Open Innovation: A New Approach to Patent Threats, Transaction Costs, and Tactical Disarmament (April 16, 2012). Harvard Journal of Law and Technology, Vol. 26, 2012. A working draft (including a model license) is available at SSRN.