Cisco, HP, Verizon, Others Join Forces to Trample Patent Trollers

In an effort to stave off the ever-increasing and nefarious practice of patent trolling, several tech heavy hitters have formed Allied Security Trust (AST), an organization that aims to help companies defend themselves from expensive lawsuits.

Members of the Poughkeepsie, N.Y.-based organization include Cisco Systems, Hewlett-Packard, Verizon Communications, Google, Ericsson, and six other unnamed tech firms.

"The Trust was formed in reaction to a marked increase in patent assertions and litigation involving high tech companies by patent holding companies, also known as NPEs (non-practicing entities) also known as "patent trolls," the Trust said in a statement. "These organizations produce no products or services of their own, and acquire patents, sometimes hundreds of them, with the sole intention of asserting them against operating companies and conducting patent litigation to extract settlements or licensing fees."

AST, initially formed in 2007, is a Delaware statutory trust that buys patents that member companies express a common interest in and obtains worldwide non-exclusive perpetual licenses. The Trust then sells those patents back into the marketplace. The concept is what Trust CFO Jonathan Brandl calls "a catch and release" program.

Previous published reports said that prospective AST members would have to pay approximately $250,000 to sign up and subsequently deposit $5 million into escrow. Brandl would not disclose the cost of membership, but said the aforementioned figures were incorrect.

Patent trolling costs operating companies an average of $3.2 million through the end of discovery and $5.2 million through trial to defend these cases when there is more than $25 million at stake, according to calculations made by the Trust.

"Even a small claim is highly disruptive and requires significant time and legal costs to defend," the Trust said in a statement. "Often, it is less expensive to settle for a smaller amount than is being sought, even when an operating company knows that it would eventually win."