A Proposal for a License on Transfer (LOT) Agreement

25 Pages Posted: 26 Feb 2013 Last revised: 16 Mar 2015

Date Written: July 27, 2013

Abstract

This paper proposes a standardized, networked, royalty-free License-On-Transfer (LOT) patent license agreement. Under the terms of the LOT license, every LOT User agrees that when it transfers a patent, the transferred patent automatically becomes licensed to the other LOT Users existing at the time of the transfer, except (i) transfers that are part of a legitimate spin out or of a Change of Control to a Non-Assertion Entity or (ii) transfers to another LOT User. This structure protects LOT Users from being subject to the extraction of patent rents by the entity (e.g., a patent assertion entity) to which the patent is transferred.

The licenses are subject to “defensive termination,” e.g., in the event that a LOT User brings an offensive patent suit against a non-assertion entity to which a patent subject to the LOT has been transferred then, at any time after the institution of the offensive patent suit, the non-assertion entity can terminate the license for the subject patent granted to the LOT licensee bringing the offensive action.

Keywords: patents, PAEs, trolls, patent license

Suggested Citation

Hayes, David and Schulman, Charles Eric, A Proposal for a License on Transfer (LOT) Agreement (July 27, 2013). Available at SSRN: https://ssrn.com/abstract=2224355 or http://dx.doi.org/10.2139/ssrn.2224355

David Hayes

Fenwick & West LLP ( email )

555 California Street
12th Floor
San Francisco, CA 94104
United States

HOME PAGE: http://https://www.fenwick.com/Professionals/Pages/davidhayes.aspx

Charles Eric Schulman (Contact Author)

Fish & Richardson ( email )

Redwood City, CA

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