Wells Fargo patent troll case has finance world all aquiver so Barclays, TD Bank sign up to Open Invention Network

Boss reckons half a dozen institutions will follow suit this year

Barclays Bank is to join the Open Invention Network (OIN), as is Canada-based Toronto-Dominion (TD) Bank Group, in order to resist what Barclays told us are "overt or veiled threats of litigation from patent trolls."

The OIN exists to reduce the threat of licence and patent infringement cases against open-source software. All members sign a cross-licensing agreement giving and receiving access to Linux System patents royalty free, and also get access to a portfolio of IP (Intellectual Property) assets owned by OIN. At the time of writing, there were 3,367 licensees.

Barclays has also said it will join the LOT Network, another group formed to protect against patent trolls. LOT Network members agree that if a patent held by them is transferred to a patent assertion entity (PAE), other members automatically receive immunity from infringement of that licence.

Although many financial companies are already signed up, OIN CEO Keith Bergelt told us that Barclays and TD-Bank are the beginning of a new wave of traditional banks joining. "I think it will trigger at least a half-dozen banks during 2021 following suit. We're in advanced discussions with several," he said.

In its statement, Barclays said it was "the first major European headquartered bank to join LOT Network and Open Invention Network Community."

Keith Bergelt, CEO Open Invention Network

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A Barclays spokesperson told us: "Barclays has been subject to overt or veiled threats of litigation from patent trolls. Many of these patent trolls wield vast numbers of poor quality patents that they have acquired, with the express purpose of monetising, from disposals by other large technology and financial services companies."

They added: "The validity or applicability of any individual patent within these portfolios ceases to matter in a typical interaction with a patent troll, because the patent owners can continue asserting ever more patents in litigation, thus making the cost of a fair legal resolution untenably high compared to their demands for settlement."

Josh Death, intellectual property and patentable innovations lead at TD-Bank, told The Register: "Over the past 15 years, TD has had to deal with numerous PAE claims, both formally via claims and informally as demand letters. While we're strong supporters of intellectual property rights, we believe the decoupling of intellectual property rights from the original innovators creates a distorted market that leverages the legal system in unanticipated, and arguably, anti-innovative, ways.

"OIN is one of a handful of organisations that has developed effective means to counter aspects of the PAE threat; in the case at hand, Linux-related patents."

Why are banks signing up now? According to Bergelt, banks have become aware of patent risks following a successful patent lawsuit by USAA, a financial services company mainly focused on the US military, against one of the world's largest banks, Wells Fargo, resulting in an award of over $300m.

"In this case it was taking a picture of a cheque and sending it to your bank and having it deposited, which is now very common in the USA and in other parts of the world. That application is something that they're going to be able to mint money on if they continue to prevail in litigation against bank after bank after bank," he said.

"They've recently sued the PNC, which is a super-regional in the US, and that's sending shockwaves through the entire banking community.

"On the fringes there's a patent assertion entity called Sound View which has some patents that allegedly relate to Hadoop, which is a cloud solution that all banks are utilizing."

He added: "It is making people aware of how important open source is to the future of banking, financial services, and developing what customers need to be able to access services."

PAEs and how to best them

OIN alone is not the solution to patent trolls, but is part of a mosaic, Bergelt told us, alongside LOT Network and another patent defence group, RPX. "We're not going to solve every problem that they have from PAEs or from operating companies, but there are certain types of patents that we're going to neutralise risk against, and these are the core patents that [banks] are building their systems around," he said.

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The OIN is now focused on resisting patent trolls following a pivot back in November 2019. "It's no secret that we were designed from the outset to be to deal with a monolithic operating company risk, which was largely to deal with Microsoft," Bergelt said. "With Microsoft signing two years ago, we started our pivot to be able to focus in a more balanced way on operating company and non-practicing entity risk."

While the OIN is primarily about open source, in the case of patent threats it is flexible. "If a patent troll were to approach Barclays, we want to know about it and we want to have the opportunity to support them," Bergelt told us.

"We don't get into, well, this isn't technically open source, we just try and support whatever we can because we know we have this unique access to the community, and the community is made up of people who have worked in and around open source, but they've also worked in proprietary, they may know patent literature that can then be useful in pushing back on an aggressor so we don't split hairs about where we're going to help." ®

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