Square, the mobile payments company, has joined with other tech companies in a cross-licensing platform to reduce patent lawsuits over cryptocurrency and promote the growth of digital currencies.
The company says it is joining the Open Invention Network where members pledge royalty-free access to patents for open source technology.
Square says it is trying to avoid the sort of runaway litigation that once beset the smartphone industry. A year ago, Square formed the Cryptocurrency Open Patent Alliance, in which members make a similar pledge not to sue each other over patents and provides a shared patent library for access to the underlying technology.
“We’re in just such a rapid time of growth, so many amazing things are happening without patents,” said Max Sills, counsel at Square and general manager of the cryptocurrency alliance. “We want to avoid long, drawn-out legal battles.”
Square
The goal of joining the Open Invention Network is to create a nonaggression pact for what Sills calls the “plumbing” that underpins the new digital currencies, tools that “you can’t do business without.”
The agreement covers technologies such as the
“When it has to deal with core
The Open Invention Network, which also has more than 1,000 patents of its own that members get royalty-free, was created to protect the Linux operating system from patent litigation. Founded in 2005 by companies including International Business Machines, Red Hat and Sony, it has more than 3,500 members around the world, including Microsoft, Google and Oracle.
In the past decade, the network has grown to include areas such as the
Square isn’t alone in trying to limit the types of patent suits that have
Other groups have been formed to address the challenge, though each focuses on a discrete issue when it comes to patent disputes. The
The
Companies such as Bank of America and Goldman Sachs Group have been
“I don’t think anyone’s concerned about Bank of America becoming a litigator; people recognize Bank of America is using patents in a defensive manner,” Bergelt said. “But it’s a bit of a Wild West with the newly minted companies.”
Patents are important to create incentives for research, but “the ugly side of patents” involves “people lying in wait with their patent portfolios,” hoping to cash in as the industry grows, said Tom Franklin, a patent lawyer with Kilpatrick Townsend who specializes in blockchain and fintech patents.
“There will be people with patents that will be threatening to the industry,” Franklin said. “People want to make it a patent-free world, but patents are good at clearing out the underbrush. All people who spend dollars to make it faster, cheaper, more secure, and less susceptible to hacking — those people all want to get paid.”
Sills and Bergelt said they are hoping Square’s actions in joining the Open Invention Network will lead other big players in the field, including Bank of America and Citigroup, to also join. “I don’t know that any consumers are really concerned about the open source kernel,” Sills said. “It’s less about saying you can’t monetize your patents and more about saying: What’s the core infrastructure that we’re all going to have to use? How do we share the costs so it’s scalable?”