Canon IP Initiatives

Leading the IP world in measures against PAEs

From around 2009 to 2013 the number of patent lawsuits in the U.S. skyrocketed, reaching a record high in 2013 with more than 6,000 cases. The main driver of this dramatic increase was the growth of suits by so-called "PAEs" (Patent Assertion Entities), which are organizations that do not conduct any actual business and profit by threatening and bringing patent lawsuits. Many operating companies suffered from the actions by these PAE.

More than 70% of the patents that PAEs use are ones they acquired from operating companies. To curb the PAE threat, Canon established the License on Transfer Network (LOT Network) in 2014, in partnership with five other companies including Google. Under the LOT program, if a patent owned by a LOT Network member company falls into the hands of a PAE, the right to use that patent is automatically granted to all other members free of charge, protecting those companies from a lawsuit. On the other hand, as long as a member company holds its patents, no restrictions are imposed on how they may use them, in terms of enforcement, licensing, assignment or anything else. This arrangement reduces the risk of PAE lawsuits without compromising the inherent significance and value of patents and allows member companies to concentrate on developing products and services, thereby promoting innovation.

The LOT Network concept has been extremely well-received across a wide spectrum of industries, and its membership as of November, 2021 exceeds 1,700 companies. Canon will continue to work with these companies to advance a fair sound patent system.

Leading the IP World In Measures Against PAEs