These FAQS attempt to summarize key details of the LOT Agreement. To the extent there is inconsistency between these FAQs and the LOT Agreement, the LOT Agreement takes precedence.

Q1 -- If I join LOT Network, which patents are licensed to LOT Network participants, and when?

Under the LOT Agreement, every company that participates grants a portfolio-wide license to the other participants, but the license becomes effective ONLY when the participant transfers one or more patents to an entity other than another LOT Network participant, and ONLY for the patent(s) actually transferred. The transfer of the patent is a “triggering event” which causes the license to become effective. The license is not triggered for transfers that are part of legitimate business spin-outs or a change of control to a Non-Assertion Entity.

As an example, if a LOT Network participant holds 500 patents, and transfers one patent to a PAE, the license previously granted at the time of membership triggers (i.e. becomes effective) only with respect to that single patent. The license to the other 499 patents remains untriggered (i.e. not in effect), and that status would only change if other patents were similarly transferred.

Q2 -- How does LOT Network reduce the risks its members face from PAEs?

PAEs increasingly rely on patents purchased from operating companies to sue other operating companies.  By some estimates, over 70% of patents asserted by PAEs come from operating companies.  In the event a PAE purchases patents from a LOT participant, that PAE will have fewer operating companies to sue since the license to the other active LOT participants will have triggered upon the transfer.   The LOT Network thereby disrupts the PAE vicious cycle that costs consumers and shareholders tens of billions of dollars annually.   The reduction in risk increases as more and more operating companies join LOT Network.

Q3 -- How much does it cost to join LOT Network?

Each LOT Network participant contributes a nominal annual membership fee based on the participant's annual revenue to help support administrative operations (see table below).  The first year’s membership fee for new LOT Network participants is prorated based on the date of membership.

Participant’s Annual Revenue

LOT Network Annual Membership Fee

<$10M

$1,500

$10M to $25M

$2,500

$25M to $50M

$5,000

$50M to $100M

$10,000

$100M to $1B

$15,000

>$1B

$20,000

 

Q4 -- What happens if I withdraw from LOT Network?

Participation in the LOT Network continues until the participant notifies the LOT Network Administrator that the participant intends to withdraw.   Withdrawal becomes effective after a minimum of a six-month notice period.  If during its participation period the withdrawing LOT Network participant held at least 10 U.S. patents, or triggered a license to at least one of its own patents, the withdrawing LOT Network participant keeps any licenses and releases to patents that triggered while it was a participant.  The withdrawing LOT Network participant will not receive the benefit of any triggered licenses which occur after withdrawal.  Patents owned by the withdrawing LOT Network participant at the time of withdrawal remain subject to the obligations in the LOT Agreement and will still trigger even if they are transferred after withdrawal, but the license is only effective for active LOT Network participants at the time of withdrawal.  

Q5 -- What is the duration of the licenses that become effective?

The license granted by the LOT Agreement is perpetual (i.e. for the life of the triggered patent). 

Q6 -- I agree that selling patents to PAEs is a problem, but I want to be able to sell patents to an operating company who is buying patents for defensive purposes. Should I still join the LOT Network?

Yes.  The LOT Agreement is designed to reduce the number of patent infringement claims received from PAEs while maintaining other beneficial uses of patents.  The transfer of patents between LOT participants does not trigger the effectiveness of the LOT license.  Therefore, a LOT participant who wants to sell patents to another LOT participant can do so without triggering any licenses to the transferred patents.

Further, the LOT Agreement provides a defensive termination provision to protect the interests of a legitimate defensive purchaser who is not a LOT participant.  In the event that a LOT participant initiates a patent infringement suit against the defensive purchaser, the defensive purchaser can suspend the triggered license enjoyed by the asserting LOT participant..  

Q7 -- If other companies in my industry have not yet joined the LOT Network, why would I want to join?

The licenses that LOT participants receive may be useful even if the other LOT participants are in different industries.  Often when a company selects patents to sell, they select “non-core” patent assets.  As such, a patent that one LOT participant might consider a good candidate for sale because it is in a non-core business, may be in a core business for another LOT participant.  Additionally, some patents relate to technologies which are commonly used by companies regardless of industry.  For example, PAEs have targeted companies for claims of patent infringement based on features commonly found on a corporate website.  The license provided under the LOT Agreement would protect LOT participants against these types of claims.