Patent trolls

July 26th, 2013 at 12:00 pm by David Farrar

Stuff reports:

A growing number of technology startups are being threatened with lawsuits over broad they allegedly, and inadvertently, infringed.

The founders of three small startups went to Washington DC  this week to lobby members of the United States Congress to change the patent system.

“This is the single worst thing to happen to me since I started the company,” says one of the CEOs, the founder of a five-person e-commerce startup that was targeted by a firm he calls a patent troll. He is so concerned about retaliation from that firm that he asked that his name not be used for this story.

He says that being targeted by a patent lawsuit is worse than times he’s lost clients or run out of money. It’s even worse than having to do without a salary for the last year. He admits he’s fortunate that his wife has a steady job that allows them to support their children. But the possibility that a patent lawsuit he regards as frivolous could destroy his company keeps him up at night.

The firm has raised about a million dollars from investors. The CEO says that after paying his employees’ salaries, his top expense is legal bills. And the vast majority of those legal costs relate to a single patent lawsuit.

The entrepreneur says he didn’t copy the plaintiff’s technology; indeed he’d never heard of the firm until it started making legal threats. He describes the patents he is accused of infringing as extraordinarily broad. The complaint claims the firm infringed one of the plaintiff’s patents by using a wireless device, a database and a website to synchronize data and perform common e-commerce functions-things that hundreds of web startups do. “Anyone is at risk for that,” he says. “And it never gets more specific.”

We had this occur in NZ many years ago. DET, a Canadian firm, wrote to scores of NZ companies demanding they pay them licensing fees as they had a broad NZ patent for e-commerce systems that are multi-transactional and multi-language and multi-currency. Yes, it was that broad.

We got it disqualified on a technicality – they had mixed some dates up. But if not for that, then it could have been an even bigger threat to NZ companies online.

Thank goodness the NZ Government and Parliament has agreed to exclude software from being patentable. Software should be protected by copyright over code, but patents are far too broad a tool for protection with software as inevitably all software builds on what is already out there.

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13 Responses to “Patent trolls”

  1. Lance (2,635 comments) says:

    As I have said many times before;
    I see and endless array of ‘new patents’ coming out of the USA on devices that already exist or for which there is substantial prior art. Along with many other criteria all of which are supposed to exclude the possibility of it being patentable.
    I can only conclude it is either for patent trolls to blackmail people into the easy way out (paying up) or as a marketing tool since any challenge would not be defensible but very expensive to pursue all the same.

    As the owner of some patents I have come to the conclusion it has become a crock of shit and should be massively overhauled.

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  2. hj (6,918 comments) says:

    Podcasters ike Dan Carlin who podcasts from his garage are being sued.
    http://www.dancarlin.com/disp.php/hh
    http://www.businessspectator.com.au/article/2013/7/1/technology/just-misunderstood-podcasting-inventor-denies-patent-troll-tag

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  3. Viking2 (11,413 comments) says:

    That’s what happens when we train too many lazy grasping fucking lawyers. Worse than beneficiaries.

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  4. Alan Wilkinson (1,871 comments) says:

    The USPTO long ago indulged the trolls to set up this disaster with idiotic software patents. Though I’m usually on the side of cock-up versus conspiracy this was so egregiously an insult to common sense and experience that I have to believe financial and/or political corruption was behind it and perhaps remains so.

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  5. RightNow (6,986 comments) says:

    Help stop the patent trolls:
    http://www.joelonsoftware.com/items/2013/07/22.html
    http://patents.stackexchange.com/

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  6. Philonz (88 comments) says:

    An interesting “This American Life” on patent trolls: http://www.thisamericanlife.org/radio-archives/episode/496/when-patents-attack-part-two

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  7. wreck1080 (3,884 comments) says:

    The problem is that patents are being awarded to obvious solutions to simple problems.

    Way over the top!!! And, this is another reason never to join the USA in a free trade agreement.

    Just writing a computer program do to anything will unknowingly breach patents .

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  8. Monique Angel (288 comments) says:

    Or maybe it ‘s a story of some numpty breaching patent.

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  9. Monique Angel (288 comments) says:

    A big part of raising capital is convincing your investors that you have fresh IP. Going into it with your eyes wide open is a must for all parties. Convince yourselves, convince your investors and convince the Trolls. If you don’t have fresh IP (and a good patent lawyer is an essential and will also burn lots of cash ) then you must look at the likelihood of being trolled.
    It doesn’t sound too horrendous to me. These businesses just need to man up, make sales and delay the trolls. Eventually if the business is sound then they’ll see off the Trolls.
    The solution is not to erode property rights by taking away the ability of patenting new technology.
    It is wrong to say software is built on all software that came before it. You could equally well say that no technology is patentable for the same reason.

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  10. wrightingright (143 comments) says:

    ALL “intellectual property” is bad and is a threat to a free market and property rights, not just software patents:

    http://mises.org/document/3582

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  11. Monique Angel (288 comments) says:

    That ‘s rubbish weightingright. Follow the money.

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  12. Alan Wilkinson (1,871 comments) says:

    @Monique, what a load of crap. Have you ever built a business based on a software product? There is no possibility you can know if you are infringing some software patent on any of the 60+ countries you are exporting to. Neither can you afford to register patents in all of those jurisdictions.

    Yes, VC’s or buyout companies want to secure IP but patents will rarely be important. A lot of other factors are.

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  13. Alan Wilkinson (1,871 comments) says:

    Name one useful innovative product that would not have been produced without software patents. They are a bureaucratic disaster with massive costs and zero benefits.

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