You get a license. You don't get a defense. And you don't get your grants back.
Quick answer: Shared AI License Foundation (SAIL) gives every member a royalty-free cross-license and a release covering past use of foundation model patents. Nothing stops members from licensing to non-members. SAIL is not a defense fund. The protection you receive can end. The grant you make is permanent and follows the patent to every future owner. That asymmetry is the crux of the agreement, and it is where counsel and prospective members should start.
Part One covered who founded SAIL and how it is structured. Click here to read.
SAIL Foundation’s Purpose
SAIL was founded, at least in part, in response to AI-related patent filings’ exponential growth, together with the corresponding increase in associated litigation and assertion activity. Its stated mission is to give members room to build without clearing rights one negotiation at a time and without diverting capital needed for technology development to fighting license disputes and related litigation. In practice, the mechanics of the SAIL Membership Agreement (the “Agreement”) that make that mission real are not only the cross-license itself, but also what happens after the license grant is made.1
What Membership Gives You
Section 1.1 of the Agreement provides the core “deal.” Basically, each Member grants to each other Member a worldwide, royalty-free, non-exclusive, irrevocable license to make and use the grantor’s “Covered AI Technologies.” It also releases past infringement if the conduct would now be licensed.2 And, while the release also extends to a Licensee’s Channel Entities and Customers, the License does not.3 Not surprisingly, the retroactive release can matter as much as the forward-looking license to a prospective member.
Members agree that the royalty-free rate within SAIL does not reflect a negotiated royalty and not to argue that it is relevant to a reasonable royalty or to injunctive relief in outside disputes. How this framing binds or otherwise impacts a non-member is a separate question that, for now, remains untested.4
Member licenses can also survive a licensor’s bankruptcy. Each licensee may elect to retain its rights under Section 365(n) of the Bankruptcy Code if a trustee rejects a member’s Agreement.5
Lastly, members are not exposed to discretionary expulsion Section 5.8 lists the exclusive grounds for terminating membership or suspending a license as: change of control, defensive suspension, withdrawal, nonpayment, and breach of the warranties in Section 3.2. Any purported termination or suspension on any other ground is void ab initio under the Agreement.6
THE DEFENSIVE EDGE OF SAIL
Three features of SAIL membership are notable; more specifically, the defensive suspension, the license structure, and the fact that the license irrevocably runs with the patent.
1. Defensive Suspension
Under Section 2.3 of the Agreement, Members are protected by the defensive suspension provision. There are four triggering acts that can cause a Member’s license to be suspended. The first triggering act occurs when a Foundation Licensee sues a Foundation Licensor for patent infringement based on that Licensor’s distribution or use of Covered AI Technologies. The second triggering act occurs when a Foundation Licensee challenges the validity, patentability, or enforceability of a Licensed Patent assigned to a Foundation Licensor (except where that proceeding was brought in response to an infringement claim of the kind described above). The third triggering act that can cause a Member’s license to be suspended occurs when a Licensee materially assists a third party in a suit for patent infringement or in a validity, patentability, or enforceability challenge. For these three triggers, suspension is not immediate. It takes effect thirty days after written notice is given by the Licensor and is avoided if the triggering action is withdrawn, dismissed, or otherwise resolved within that period.7
The fourth triggering act that causes a Foundation Member’s license to be suspended occurs when (i) a Licensee is added to or becomes subject to any United States government restricted party list and (ii) maintaining the license would violate U.S. export control laws. In this case, suspension is effective immediately and remains in effect so long as both conditions are satisfied. Given the pace of export-control activity affecting AI in 2026, members with significant international operations should treat this as a live risk, not a formality.8
SAIL’s primary premise is that patents in the Foundation Model space are worth more shared than asserted, and it’s presumed that everyone who joins believes in the same mission. Section 2.3 of the Agreement regarding defensive suspension is the deterrent that makes that assumption safe to rely on.
Notably, Section 2.3 does not prohibit a Foundation Member from suing another Foundation Member; that is not considered a breach. During a Member’s suspension, it is uncertain as to what the suspended Member’s exposure is, or whether the Member’s License will be automatically reinstated when the trigger resolves. What is certain is that in the event of suspension, the suspended Member loses their License to the other Members’ Licensed Patents but continues to have to license their Licensed Patents to the other Foundation Members.
2. The License Structure: Inbound vs Outbound
An inbound license is the license a Member receives from the other Members. They are “inbound” licenses when considered from the point of view of the license-receiving Member. By default, the Inbound License (member-received) terminates on the exit of that Licensee. Two exceptions apply. A Member that has paid SAIL dues for at least three years, but then withdraws voluntarily, retains license coverage, but only to: (a) issued patents, (b) patents that issue on pending patent applications, and (c) patents that issue on future-filed patent applications having an earliest priority date before the Member’s effective withdrawal date. The second exception applies if a member votes against an amendment of the agreement can preserve its inbound rights under the old terms rather than the new ones9. It should be appreciated that an exiting member that has not paid Foundation dues for at least three years has no protection from Licensed Patents after that member withdraws.
No exception is available to a Member terminated for nonpayment. Neither is there an exception for a member deemed withdrawn because that member is acquired by a non-member. Such compulsory withdrawal can be triggered by a transaction the Member does not control. If a Member undergoes a change of control and the acquirer is not a financial investor, and neither the acquirer nor an affiliate becomes a SAIL Member within six months of closing, the Member and its affiliates are deemed to have withdrawn. That withdrawal takes effect six months after the change of control is made. Venture and private-equity buyers are carved out of this trigger, so it does not apply; strategic acquirers (assertion entities) are not excepted.10
The License that a Member grants to the other SAIL Members is termed an “outbound” license from the Licensor to the SAIL Licensees, and the License is irrevocable. It does not matter when or how the Member leaves. The rights granted by the Member’s Outbound License are permanent. Still further, certain obligations of the Licensor continue past withdrawal. For instance, Licensor patents that issue after the Member withdraws, but that claim priority to a licensed patent of the Member, also become Licensed Patents of the Licensor. The granted Outbound License survives later transfers as the license runs with the patents themselves and binds subsequent transferees. Unlike the Inbound License, there is no three-year exception. In fact, the Agreement describes the grant as present, fully vested, and irrevocable. Exit does not disturb the perpetuality of the License.11
The asymmetry between the Inbound and Outbound Licenses is not an oversight; it is a mechanism that protects the Members. If Members could withdraw and take their Licensed Patents with them without encumbrance, any Member could rejoin the assertion market with its patents intact simply by walking out. Instead, the irrevocable nature of the grant means the corpus of Licensed Patents just continues to grow, and the ever-increasing defensive value accrues to everyone who stays.
If a Member is acquired by a strategic buyer, the Member loses the entirety of its protection from Licensed Patents. Further, in most cases, the benefit of the three-year exception is also lost, which by its terms applies only to voluntary withdrawal, but such a Member’s exit is mandatory.
For a company weighing membership, it’s important to consider that its protection from Licensed Patents can be withdrawn or otherwise lost, but the licenses granted by that Member are permanent, as discussed next.
3. The License Runs with the Patent
Withdrawal from SAIL is further discouraged by the provision that a Member’s Outbound License of a patent “runs” with that patent and remains an encumbrance against later transferees. Any transfer or grant of rights, whether by the original licensor or by any subsequent assignee, transferee, or otherwise successor, is subject to the licenses and continuing obligations already in place. Any subsequent transferee that receives the patent must accept that the transfer is taken subject to these existing obligations.12
SAIL’s concern about assertion entities is well founded. Divestitures, distress sales and bankruptcies are common channels through which the patents of operating companies come into the assertion marketplace. Section 1.3 of the Agreement does not close those channels. A member’s Covered AI Technology patents can still be sold. They simply arrive at the buyer already encumbered with its SAIL obligations.
On this point, SAIL is closer in design to Open Invention Network than to LOT Network . Under LOT, the license attaches when a patent is transferred to a defined class of buyer. Under SAIL, the license is set at grant and travels with the patent through every later transfer. Any acquirer, strategic or financial, operating company or assertion entity, takes the patent still licensed to SAIL membership, now and forever.13
Counsel for one of these entities should pay special attention to which patents may be encumbered. Likewise, those with patents that would be added to the patent-family should considered what future plans they have in terms of selling patent assets or being acquired. SAIL’s effect is supply-side. It shrinks the future stock of clean, assertable foundation model patents flowing out of Member portfolios.
WHAT SAIL DOES NOT DO
The License does not extend to software products and services built on Foundation Models, including end-user applications, those applications’ interfaces, and domain-specific implementations for Foundation Models. Hardware infrastructure and components, including improved physical designs, manufacturing processes, or architectures, are also excluded. This means a Foundation Member can still assert its patents in these areas against another Member. And while Members gain freedom to operate within the covered field, they do not acquire any right to use another Member’s patents against outsiders. Still further, the SAIL Agreement does not prevent any Member from licensing its patents to companies outside of SAIL, on any terms it negotiates.
Neither the public materials nor the Membership Agreement indicates that any Member is obligated to fund another Member’s defense or to intervene in the other’s case or to assert its own patents on the other’s behalf. A smaller member sued by a non-practicing entity for a claim that reads on Covered Technology receives no coordinated defense strategy from other members under the Agreement. What any Member gets is what every Member gets: (i) a license on, and release from, every other member’s Licensed Patents that read on the Covered AI Technologies and (ii) the knowledge that its own Licensed Patents cannot be asserted against members of the group.
The limits are worth stating plainly. SAIL does nothing about patents already held by assertion entities or the patent stock already in circulation. It does not acquire, invalidate, or defend. It offers no protection to a Member against a non-member’s suit.
FUJITSU AND SAIL’S INTERNATIONAL REACH
One development since Part One of this series was issued is that SAIL has added Fujitsu as a Member, which obviously joins from outside the United States.14
Fujitsu’s joining is important not only for the significant number of patents it contributes, but also as an indicator of SAIL’s expanding geographic reach. Section 1.3 and Section 2.5(b) of the SAIL Agreement do not distinguish between U.S. and foreign patent portfolios. A Japanese member’s outbound license enlarges the encumbered patent corpus on the same terms as those of any U.S. Member. Every added non-U.S. Member expands SAIL’s geographic footprint, and the obligations made to SAIL Members on its contributed patents reduce the attractiveness of patents available to assertion entities. With each additional member, the SAIL patent estate grows, and the body of available unencumbered foundation model patents shrinks.
The Bottom Line
Is SAIL for you? Likely YES if you are active in the foundation model space and a primary goal is to reduce the threat level of a large body of applicable patents. For this protection, you are willing to pay SAIL’s membership fee, and you agree to irrevocably license your foundation model patents to the SAIL membership.
WHERE THIS FITS IN OUR THREE-PART SERIES
This article is Part Two of three on the Shared AI License Foundation.
Part One of our three-part series looked at the founders and leadership of the Shared AI License Foundation (“SAIL”) and how the Foundation’s organization. Among other things, it discussed several different player types, including board members, observers, and standard members.15,16
Part Two of our series explored the benefits and obligations of membership in SAIL. We look at aspects of the SAIL Membership Agreement (“Agreement”) that protect each member and determine how members can and cannot use their patents against one another. Three aspects in particular highlight SAIL’s defensive nature. The first is a defensive suspension provision, the complexities of which we discuss in greater detail below. The second aspect is how the licenses to and from each member are structured. The third aspect is that license grants to the Foundation are irrevocable, and therefore said to “run” with the licensed patents.
Upcoming Part Three of the series takes up the topics of (i) Covered AI Technologies and (ii) Subject Patents in accordance with the Agreement. Part Three will also show how counsel can weigh a portfolio under these definitions to determine whether membership fits with a given business.
Footnotes
1 SAIL Foundation, “AI Pioneers Unite to Launch the Shared AI License Foundation to Advance Foundation Model Innovation” (press release, Apr. 8, 2026), https://www.sailfoundation.com/.
2 SAIL Membership Agreement § 1.1(a) (worldwide, royalty-free, non-exclusive cross-license and release of past infringement claims).
3 SAIL Membership Agreement § 1.1(a) (grant is non-sublicensable and non-transferable; release, but not license, extends to channel entities and customers).
4 SAIL Membership Agreement § 5.2 (members will not argue that the royalty-free rate is relevant to a reasonable royalty or injunctive relief in disputes outside the agreement).
5 SAIL Membership Agreement § 5.5 (agreement designated an executory contract; licensees may elect to retain rights under 11 U.S.C. § 365(n) if a trustee rejects it).
6 SAIL Membership Agreement § 5.8 (enumerated grounds are the exclusive grounds for termination or suspension; any purported termination or suspension on any other ground is void ab initio).
7 SAIL Membership Agreement § 2.3 (defensive suspension; validity challenge brought in response to an infringement claim does not trigger suspension; thirty-day notice with cure).
8 SAIL Membership Agreement § 2.3(d) (immediate suspension, no cure, upon addition to a U.S. government restricted party list where continued licensing would violate U.S. export control laws).
9 SAIL Membership Agreement § 2.5(a); Ex. A §§ A-3, A-4 (three-year dues exception and Limitation Announcement dissent mechanism).
10 SAIL Membership Agreement § 2.2 (deemed withdrawal following change of control where neither the acquirer nor an affiliate becomes a Foundation Member within six months; financial-investor carve-out; thirty-day notice to Foundation Administrator).
11 SAIL Membership Agreement § 2.5(b) (outbound license is present, fully vested, and irrevocable; survives exit; reaches later-issued patents and continuations).
12 SAIL Membership Agreement § 1.3 (licenses run with the licensed patents; any transfer is subject to the licenses and continuing obligations, and the transferee must so agree).
13 LOT Network, “How We Protect Members From Patent Trolls,” https://lotnet.com/how-we-protect-members/ (license attaches only upon transfer to a defined class of assertion-related buyer); Open Invention Network, “How OIN Works,” https://openinventionnetwork.com/ (cross-license among members, license set at grant).
14 SAIL Foundation, Members, https://www.sailfoundation.com/ (Fujitsu listed as the first member outside the United States to join following the launch cohort; last visited Aug. 11, 2026).
15 Shared AI License Foundation, https://www.sailfoundation.com/ (last visited Aug. 11, 2026).
16 Novak Druce Carroll LLP, “Beyond Defensive IP: Inside the Patent Deal Quietly Shaping AI Models. Part One. Boards, Tiers, and Who Controls the Pool,” https://www.novakdruce.com/ (July 2026).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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