Q&A

What is Allied Security Trust?

AST is a Delaware statutory trust that was originally formed by several high technology companies to obtain cost-effective patent licenses. The Trust provides opportunities to enhance companies’ freedom to sell products by sharing the cost of patent licenses. At the same time, the Trust creates new opportunities for patent holders of all sizes to generate a return on their rights.

AST is not an investment vehicle. Its purpose is freedom of operation and cost reduction. It generates no profits and does not engage in patent assertions against other companies. AST maintains a “catch-and-release” commitment that returns to the market in a timely manner patents acquired on behalf of Trust members after licenses are secured. The Trust also addresses the increasing need for innovative companies to defend against costly patent law suits.

Why was the trust formed?

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.” 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.

How many members are in the trust and who are they?

Currently, there are eleven members in AST. AST anticipates reaching a goal of between 30-40 members.

How have companies been harmed by unfair patent assertions?

Successful high tech companies are frequently approached by patent holding companies that have purchased patents purely for the purpose of asserting them and conducting patent litigation against operating companies. It 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. Even a small claim is highly disruptive and requires significant time and legal costs to defend.

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. These lawsuits are not only a huge distraction for management, but they also draw R&D and other resources away from other projects and may hinder a company’s ability to provide new products in a timely manner.

How does AST differ from a patent a NPE or non-practicing (patent owning) entity?

While the U.S. patent system has successfully fostered innovation for more than 200 years, abuses sometimes cause it to fall out of balance. The vast majority of patent owners use IP rights to provide the freedom to sell their products. NPEs are IP holding companies whose primary business is to acquire patents, often weak ones, to assert against operating businesses. AST will not assert any of the acquired patents. While member companies who choose to can receive licenses to particular inventions, the Trust does not retain any patents beyond a specified time period or invest in IP rights to generate patent royalties or extract settlements.

What is AST trying to accomplish?

The ability to sell products and develop new ones without fear of disruption. Today, patents can be acquired by third parties who sell no products and thus are not exposed to patents asserted against them. AST also serves to mitigate the potentially high costs associated with patent litigation.

How is the trust funded?

Trust members each contribute a modest amount to cover AST operating expenses and patent purchases. The Trust maintains a mutually agreed upon level of funds from each member so that patent purchases can be made in a timely manner.

Will AST assert these patents against infringers?

No. The purpose of AST is to provide the freedom to sell products and cost reduction. Member companies who wish to participate in a particular patent purchase are granted a worldwide non-exclusive patent license.

How do companies become AST members?

AST is not an exclusive club. Any company in the high tech field with annual revenues of a defined minimum level is eligible and encouraged to join. The objective is to create synergies among the members so that multiple AST member companies will be interested in participating in patent purchasing opportunities.