The Innovator’s Patent Agreement

Patents were designed to protect the innovator. The idea was if you built something special that you would have the ability to protect that right.

And in many ways the essence of the patent system was originally intended to help the little company vs the big company.

But those days are long gone. The current patent system, (when it comes to software patents in particular) doesn’t work for startups. And that is bad for this planet – as most innovation comes from startup companies. 

Today we have two problems with software patents.

First, we have non-operating entities suing companies for patent infringement. Their business model is a settlement to fund the next wave of litigation attacks. The cost of settlement is more attractive to many than fighting out a lengthy court battle. 

The bigger threat is from large companies that literally file thousands of patent or PCT applications per year. That is a game that is not workable for startups. They simply cannot afford to build such a legal warchest.

A startup uses capital for innovation – not litigation. What’s even worse is that engineers at those large companies have no idea or say about what their employer might do with these patents. 

Today, Twitter announced an important effort to reform the tech industry’s practice of patents. They created the first draft of the Innovator’s Patent Agreement (IPA). 

via Twitter

The IPA is a new way to do patent assignment that keeps control in the hands of engineers and designers. It is a commitment from Twitter to our employees that patents can only be used for defensive purposes. We will not use the patents from employees’ inventions in offensive litigation without their permission. What’s more, this control flows with the patents, so if we sold them to others, they could only use them as the inventor intended.

This is a significant departure from the current state of affairs in the industry. Typically, engineers and designers sign an agreement with their company that irrevocably gives that company any patents filed related to the employee’s work. The company then has control over the patents and can use them however they want, which may include selling them to others who can also use them however they want. With the IPA, employees can be assured that their patents will be used only as a shield rather than as a weapon.

I encourage you to read the entire post and the draft on Github. 

I am pleased to announce that my partners and I at Spark Capital are very supportive of the IPA principles.

Starting today, we will recommend to our portfolio companies that they collaborate in the discussion Twitter has started & support the basic principles of the IPA at their own company.

To be clear, we can only recommend this to entrepreneurs. Just like our position on getting rid of employee non-compete agreements, we cannot force this position on anyone. But we sincerely hope that this effort gains additional supporters and positively reforms our industry in a meaningful way. 

Well done Twitter.  

(disclosure: Spark Capital is an investor in Twitter)