This is quite an amazing development. As noted by the Huffington Post (see excerpt below), “Twitter said on Tuesday that it would structure its patents so they could not be used for offensive litigation purposes without permission from the people who developed them.” Twitter wants to “ensure its patents are not used to ‘impede the innovation of others.'”Heroic!! I have, by the way, suggested something similar before: see my post A Patent “Don’t Be Evil” Policy (also Taiwan’s Defensive “Patent Bank”; The Patent Defense League and Defensive Patent Pooling). Maybe Twitter follows the C4SIF blog?

If only other companies would do this–such as Google, in keeping with its Don’t Be Evil pledge, which it seems likely to break soon, with its acquisition of Motorola patents and ongoing offensive patent lawsuits (see A Patent “Don’t Be Evil” Policy; If Google Is Serious About Reforming Patent Mess, It Should Make A Bold Statement And Stop Using Motorola Patents To Demand Cash; also Not Being Evil? Google patents Google Doodles).

From my quick review: the draft agreement is brilliantly written. Perhaps this approach could be combined by companies in a given industry with some kind of defensive patent pooling or defense league, as I suggest in the post linked above. Update: Isaac Bergmann calls to my attention a discussion between Jason Calacanis and David Sacks in a recent This Week in Startups (at 34:00, or, for more background, 25:50, to about 38:00), discussing something similar to the defensive patent league idea I mentioned above.

Of course, if more companies were to adopt this approach, you would have a situation where companies are spending millions of dollars just to have defensive patent shields that are never used. It would be clear that companies are expending valuable resources just so they don’t sue each other. And then people might start to wonder: why don’t we just stop granting patents in the first place so that we reach the same situation–no one suing anyone–without spending millions of dollars on patent attorney salaries?

As I wrote in a comment to Mike Masnick’s post, Twitter’s Revolutionary Agreement Lets Original Inventors Stop Patent Trolls: I think this is a brilliant approach. It is not perfect, but here is what I think is going on. If they just issue a policy statement that they will never use them defensively, they can change their minds later (just like legislatures cannot do this-they have parliamentary or legislative sovereignty and can repeal earlier laws–as I discuss here). They can’t tie their own hands. So they have to give a right to someone else in some way. The inventor is the safest best. Short of forming some trust or other organization (which might be a better solution, but it’s more complicated and not as easily replicable by other companies; this one just requires you modify your standard inventor assignment agreement).

So to tie its own hands to prevent itself from suing someone aggressively–they are doing it by contractually giving a veto right to inventors, and assuming they would not want to do this. (Note also the agreement says the inventor will not be coerced or threatened into permitting it.) That also means that it runs with the patent if someone else ever acquires the patent from twitter.

Also, I think it protects the management/board of Twitter from complaints by shareholders–otherwise they might be sued for not acting in the shareholders’ best interest if they refuse to sue someone they could extort a billion dollars from, for some “principle” that some managers prefer. This way they can say “well we have no contractual right to–we gave it up previously to the employee-inventors, for purpose of attracting better talent or getting more invention disclosures, a decision protected by the business judgment rule.”

Update: In a comment on Mike Masnick’s post, Twitter’s Revolutionary Agreement Lets Original Inventors Stop Patent Trolls, I had written:

Further, the more companies that adopt this approach, the more their own patents become “poisoned” for future trolls, who often just buy their patents from other companies, e.g. those that go bankrupt. The patents from Twitter-type companies would never be able to be used by trolls.

A perfect example of this is explained in VC Fred Wilson’s post The Twitter “Patent Hack”:

Many years ago now, my prior venture capital firm, Flatiron Partners, invested in a company called Thinking Media. It was an early Internet company. They developed some browser based javascript tracking technology. The company ulimately failed but was sold in a fire sale including the patents. Those patents eventually made their way to an incumbent, the big marketing research company Nielsen. Fast forward ten years or so and Nielsen sued two of my portfolio companies, comScore and TACODA, and a bunch of other companies too, on the basis of the Thinking Media patents. So IP that was partially funded by our firm was used to sue other portfolio companies. It is so galling to have this kind of thing happen and it is one of the many reasons why I have come to believe that software and business method patents are an enemy of innovation in the tech sector.

If Thinking Media had the patent hack in their documents, the story I just told would not have happened. And thanks to Twitter’s leadership, I hope that all future USV portfolio companies will have the patent hack in their documents and stories like that one will be a thing of the past.

However, Wilson’s comment that it “would not have happened”, and my own comment that “The patents from Twitter-type companies would never be able to be used by trolls” are both a bit overconfident. Perhaps Nielsen, in this example, could have found the original inventors and offered them enough cash to get them to grant permission for Nielsen to use the patents offensively. This is another reason that it might be better to establish some kind of agency, a Patent Defense Trust or League, and make the contract with this agency. The agency’s core mission would be to refuse to ever grant permission, so it could not be bribed.

From the Huffington Post:

Twitter Announces Innovator’s Patent Agreement To Limit Patent Use Lawsuits

First Posted: 04/17/2012 5:09 pm Updated: 04/17/2012 7:30 pm

By Alexei Oreskovic

SAN FRANCISCO (Reuters) – Twitter said on Tuesday that it would structure its patents so they could not be used for offensive litigation purposes without permission from the people who developed them.

Twitter said the move would give inventors more control over their creations and ensure its patents are not used to “impede the innovation of others,” the company said in a post on its official blog.

“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,” Twitter said on the blog.

…

Twitter said that the limits on the use of its patents, which it dubbed the Innovator’s Patent Agreement, will apply to patents even after they are sold.

Eric Goldman, an associate professor at Santa Clara University School of Law, said Twitter’s announcement will burnish the company’s standing among software engineers, some of whom have grumbled at seeing their patents used to sue other companies.

“Unquestionably, it’s an effort to define Twitter’s brand in the marketplace and to signal that its perhaps more engineering-friendly than companies that wouldn’t make such a promise,” said Goldman.

Read more>>

From Twitter’s blog:

Introducing the Innovator’s Patent Agreement

Tuesday, April 17, 2012

Cross-posted on the Twitter Engineering blog.One of the great things about Twitter is working with so many talented folks who dream up and build incredible products day in and day out. Like many companies, we apply for patents on a bunch of these inventions. However, we also think a lot about how those patents may be used in the future; we sometimes worry that they may be used to impede the innovation of others. For that reason, we are publishing a draft of the Innovator’s Patent Agreement, which we informally call the “IPA”.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.We will implement the IPA later this year, and it will apply to all patents issued to our engineers, both past and present. We are still in early stages, and have just started to reach out to other companies to discuss the IPA and whether it might make sense for them too. In the meantime, we’ve posted the IPA on GitHub with the hope that you will take a look, share your feedback and discuss with your companies. And, of course, you can #jointheflockand have the IPA apply to you.Today is the second day of our quarterly Hack Week, which means employees – engineers, designers, and folks all across the company – are working on projects and tools outside their regular day-to-day work. The goal of this week is to give rise to the most audacious and creative ideas. These ideas will have the greatest impact in a world that fosters innovation, rather than dampening it, and we hope the IPA will play an important part in making that vision a reality.- Adam Messinger, VP of Engineering (@adam_messinger)