An Updated Proposal for a License on Transfer (LOT) Agreement

31 Pages Posted: 9 Jul 2014

Date Written: July 7, 2014


This paper proposes a standardized, networked, royalty-free License-On-Transfer (LOT) patent license agreement. Under the LOT Agreement, each LOT User grants a license to the other LOT Users existing at the time of transfer of a patent by the LOT User, where the license automatically becomes effective when the patent in question is transferred to a non-LOT User. Exceptions exist for (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.

The LOT Agreement is open to any Entity. Appendix I provides a model LOT license agreement.

Keywords: patents, PAEs, trolls, patent license

Suggested Citation

Hayes, David and Schulman, Charles Eric, An Updated Proposal for a License on Transfer (LOT) Agreement (July 7, 2014). Available at SSRN: or

David Hayes

Fenwick & West LLP ( email )

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

HOME PAGE: http://

Charles Eric Schulman (Contact Author)

Fish & Richardson ( email )

Redwood City, CA

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