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OIN's involvement

The Open Invention Network became involved when AST approached them. "Knowing of the Open Invention Networks interests, we actually contacted them as the potential ultimate buyer" says McCurdy. AST and OIN's CEOs have talked of collaborating as patent pools in the past. McCurdy doesn't think this would have been a surprise to Microsoft. The reason they probably knew is, he says "some of the members of the trust are also members of the OIN" making it "very likely that they (Microsoft) believed the patents could end up in OIN's hands ultimately".

Daniel McCurdy, Allied Security Trust CEO

Bergelt isn't so sure that this is the case, saying that he'd have expected Microsoft to also offer the patent to OIN as one of the active buyers in the patent market. It is worth noting though that OIN doesn't have pre-existing buying relationship with Microsoft; according to Edward Meitzner, CFO at OIN, to his knowledge "Microsoft has never offered a patent for sale to OIN".

At LinuxCon 2009, Bergelt went further in a keynote, saying that patents were normally offered as single numbers, not bundled and described with terms like "open source". But in the case of this sale, this was one of five lots of bundled patents, and we officially only know AST's description of the lot in question. It's an interesting description though, as looking at the list of patents in question, they could easily be used against proprietary software makers, and possibly more profitably than against open source vendors.

Like all patent deals, commercial confidentiality makes the process opaque and opaqueness is anathema to open source. When Microsoft makes patent deals with companies like TomTom or AST, the actual terms of the deal are kept under lock and key. The lack of information allows for speculation and hypothesising of what the scope of the deal is and the ascribing of motives. This has a chilling effect which may be more effective than any patent related law suit.

With the AST/OIN purchase, Microsoft's motives are not known. McCurdy says he believes Microsoft's objective was "to sell patents that were not of any use to them" and notes there were "many kinds of patents Microsoft were selling" and they were just "attempting to sell assets which were constantly devaluing".

The underlying problem though, and something both CEOs agree on, is non-practicing entities (NPEs), or as they are more commonly called, patent trolls. These are companies who do not produce anything and who see the value of a patent in terms of who they can sue, in which courts, and who is most likely to settle a case and pay them money to go away. Though the OIN and AST both appear from the outside to be buying patents like NPEs, they are both trying to change the system from the inside by stopping patents from simply falling into the hands of the real trolls. AST does it by reducing the value of the patents through licensing to companies who would be likely troll targets before selling them on, in effect defusing their power to explode.

The OIN has created a defensive patent pool to be used if a practising company targets Linux, but in the case of trolls, because they do not make anything, it is extremely unlikely that they will have infringed any of the OIN's defensive pool. It is also industry practice, according to McCrudy, when selling a patent for the seller to give themselves a license. This would mean that OINs newly acquired patents would not be useful in defending a case brought by Microsoft (or one or more AST member companies).

What it has achieved though, is it has taken twenty two potentially troublesome patents out of circulation. Ironically, in the process, it also allowed Microsoft to convert patents into cash, cash which came indirectly from the supporters of free and open source software.

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