ByteDance Joins LOT Network to Bolster Patent Defenses

LOT Network, a non-profit organization dedicated to assisting businesses of all sizes and across various sectors in defending against patent trolls, has announced the inclusion of ByteDance, the parent company of TikTok, within its membership.

Strategic Move for ByteDance

While ByteDance has been actively acquiring patents and is currently involved in a patent dispute with Triller, its decision to join LOT Network stems from a broader defensive strategy.

The organization boasts a substantial membership, including prominent companies such as IBM, the Coca-Cola Company, Cisco, Lyft, Microsoft, Oracle, Target, Tencent, Tesla, Volkswagen, Ford, Waymo, Xiaomi, and Zelle, totaling over 1,300 members.

Record Growth and Immunized Patents

LOT Network experienced a record year in 2020, welcoming 574 new companies and expanding its collection of immunized patents to exceed 3 million. This represents 14% of all patents granted in the United States.

How LOT Network Provides Protection

LOT Network operates by allowing members to retain full control over their contributed patents.

• Members can continue to buy and sell patents freely.
• However, if a member sells a patent to a patent assertion entity (PAE), commonly known as a patent troll, a free license to that patent is automatically granted to all other members.

This mechanism effectively functions as a “flu shot” against patent trolls, particularly beneficial for startups.

Herd Immunity Against Patent Litigation

According to LOT CEO Ken Seddon, the organization fosters a concept of “herd immunization.” As more companies join, the pool of non-members diminishes, increasing the risk for those remaining outside the network.

“The shrinking community of non-members raises their risk of being targeted for lawsuits, prompting them to reconsider their position and join LOT Network,” Seddon explained.

Patents as Defensive Tools

ByteDance’s membership is seen as a strategic advantage, as patents serve as crucial defense mechanisms for corporations. Building a robust patent portfolio can take years, but it’s essential for protecting innovation.

Fast-growing companies, like ByteDance, become attractive targets for patent trolls due to their success and revenue.

Growing Target for Patent Trolls

Seddon emphasizes that success inevitably attracts attention and potential legal challenges. Companies experiencing rapid growth may find their revenue increasing faster than their ability to organically expand their patent portfolio.

Examples like Instacart’s acquisition of 250 patents from IBM and Airbnb’s patent infringement lawsuit with IBM highlight the importance of proactive patent protection.

Proactive IP Strategy

ByteDance’s decision to join LOT Network demonstrates a forward-thinking approach to intellectual property management. The company is proactively strengthening its defenses against potential patent litigation.

Seddon notes that ByteDance must now consider the threat of PAEs not only in the U.S. but also in China and Europe. Membership in LOT Network safeguards its investments against over 3 million patents potentially falling into the hands of a PAE.

Industry Collaboration for a Safer IP Landscape

Lynn Wu, Director and Chief IP Counsel at ByteDance, affirms the company’s commitment to innovation and the protection of its technical and creative community. She encourages other companies to join LOT Network to foster a safer industry environment.

“Collaborative efforts are essential to protect the industry from exploitation and promote continued innovation,” Wu stated.

Potential Resurgence of Patent Trolls

There is a growing anticipation of a potential resurgence in activity from patent assertion entities, which had been relatively quiet in the mid-to-late 2010s. This expectation is linked to concerns about a possible economic downturn.

During economic hardship, patent holders may be compelled to sell off valuable patents to maintain financial stability, potentially leading to their acquisition by patent trolls.

LOT Network's Role in Mitigating Risk

The core benefit of LOT Network membership is that if a member sells a patent to a troll, that troll is barred from suing other LOT members over it.

IBM’s recent membership in LOT Network exemplifies this principle. By contributing its entire patent portfolio to the network, IBM allows others to obtain a free license should its patents be sold to a PAE.

Seddon explains that IBM is essentially stating, “If I sell to a patent troll, and you haven’t joined LOT, is that my fault or yours? Joining LOT would have secured you a free license.”