5 ms·

> They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a hug

by paulgb 17y ago

> They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a huge distraction, they do the pragmatic thing - they settle. Patent trolling reminds me of a game of chicken. I wonder whether chicken strategies have been tried to combat it. For example, if the start-up could position themselves so that it is profitable for them to defend themselves if they are sued by a patent troll, and the trolls were aware of this (and rational), the trolls may be scared to litigate. This could be in the form of "insurance" that pays out when the company successfully defends itself against a patent claim. Ideally, the fact that the company is insured would thwart off trolls, so the premiums could be lower than what companies currently pay out in settlements.

dangoldin 17y ago
That's an interesting idea for a company! An company that insures against patent lawsuits. It would have be staffed by lawyers who know whether there are any possible patent violations but it might work. As you said, the fact that you are even insured by this company may already signal to the troll to back off.
- alain94040 17y ago
  Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is no business insuring against patent troll. Don't get me wrong, I wish there was.
  - lliiffee 17y ago
    The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?
    - decode 17y ago
      It doesn't work with Patent Trolls (AKA Non Practicing Entities). What is the team of scary lawyers going to do? Since the trolls don't actually have a business or product, you can't sue them for patents they infringe. And their whole business is litigating patents, so tying them up in court is not exactly a deterrent. The trolls themselves are often lawyers, or just a company that employs lawyers on retainer.
      - paulgb 17y ago
        Part of my assumption is that if the patent should truly not have been granted, the start-up has a decent chance of winning if they have the resources to fight it. (I do know of some counter-examples, like RIM and D2L) The trolls don't want to enter a losing battle because of the cost (even if they're in the business of litigation, time spent suing one company is time that could be spent suing another). Also, losing would damage the validity of the patent for future cases. (In my understanding, that is. IANAL)
        nitrogen 17y ago
        In my reading, trolls rarely have just one patent. They tend to buy silly, trivial patents in bulk from wherever they can. Since a single lost lawsuit could cause the troll to lose only those patents they assert in the suit, the damage to them is minimal. I think this makes trolling even more insidious -- even if you (as a startup) win, you lose.
      - electromagnetic 17y ago
        > their whole business is litigating patents, so tying them up in court is not exactly a deterrent. Lawyers can make a considerable amount of money, any disruption to the Patent Trolls' game will severely reduce their numbers. These Patent trolls, as you said, are often lawyers and by tying them up in court you are costing them profitability. Every non-settlement forces them to go to court and actually fight. This is how the courts work: Out-of-court settlements are frequent and are preferred as it saves a Judge's time for real cases, however mass submission and withdrawal of suits are seen as a waste of the courts time and effort. A fair amount of cases end up in front of a judge before settlement, if these end up being withdrawn (and the judge will know it's withdrawn not settled) you're going to be in bad credence with a judge. Pissing off a judge is a big no-no. Patent Trolls will be pissing off multiple judges, which is like putting a shotgun in your career's mouth and pulling the trigger. An insurance agency that fights patent trolls would be ideal. Offer $X amount of legal fee coverage for $Y a month, get a few talented lawyers and a fair amount of paralegals. Once word gets out, the majority of the work can be performed by paralegals (essentially everything up until you're standing in front of a jury-or-equivalent can be performed by paralegals) as no troll will want their time tied up. Eventually, only Trolls with a fair-case will fight, you then have 3 options to give your clients: offer them your lawyers' services/suggest settling/wish them good luck elsewhere. It would be a sort of no-case-no-extra-fee's deal. Lawyer's typically bill by the 6-minute interval, and frequently charge 100's of dollars an hour. In fact 1-2 billed hours is typically a lawyers daily pay, and they may still have 6-8 hours on top of what they're billing clients. If you start consuming these lawyers time, their profitability drops, especially considering they require settlements for their pay. They're invested in the 'easy win', which isn't conducive to fighting a drawn out case. If companies actually start going through with the court battles, the payment is potentially delayed anywhere from 3-months to 3-years.
  - daniel-cussen 17y ago
    In order for a bogus patent troll to sue, that troll would have to have the patent. It wouldn't be so bogus.
  - schammy 17y ago
    That doesn't make any sense. You think an insurance company makes money when you wreck your car? No. Yet there are thousands of them in business. They make money by making the premiums of the insurance cost more than what they have to pay to fix people's cars. This patent insurance would work the same way.

by paulgb 17y ago

dangoldin 17y ago

That's an interesting idea for a company! An company that insures against patent lawsuits. It would have be staffed by lawyers who know whether there are any possible patent violations but it might work. As you said, the fact that you are even insured by this company may already signal to the troll to back off.

alain94040 17y ago
Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is no business insuring against patent troll. Don't get me wrong, I wish there was.
- lliiffee 17y ago
  The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?
  - decode 17y ago
    It doesn't work with Patent Trolls (AKA Non Practicing Entities). What is the team of scary lawyers going to do? Since the trolls don't actually have a business or product, you can't sue them for patents they infringe. And their whole business is litigating patents, so tying them up in court is not exactly a deterrent. The trolls themselves are often lawyers, or just a company that employs lawyers on retainer.
    - paulgb 17y ago
      Part of my assumption is that if the patent should truly not have been granted, the start-up has a decent chance of winning if they have the resources to fight it. (I do know of some counter-examples, like RIM and D2L) The trolls don't want to enter a losing battle because of the cost (even if they're in the business of litigation, time spent suing one company is time that could be spent suing another). Also, losing would damage the validity of the patent for future cases. (In my understanding, that is. IANAL)
      - nitrogen 17y ago
        In my reading, trolls rarely have just one patent. They tend to buy silly, trivial patents in bulk from wherever they can. Since a single lost lawsuit could cause the troll to lose only those patents they assert in the suit, the damage to them is minimal. I think this makes trolling even more insidious -- even if you (as a startup) win, you lose.
    - electromagnetic 17y ago
      > their whole business is litigating patents, so tying them up in court is not exactly a deterrent. Lawyers can make a considerable amount of money, any disruption to the Patent Trolls' game will severely reduce their numbers. These Patent trolls, as you said, are often lawyers and by tying them up in court you are costing them profitability. Every non-settlement forces them to go to court and actually fight. This is how the courts work: Out-of-court settlements are frequent and are preferred as it saves a Judge's time for real cases, however mass submission and withdrawal of suits are seen as a waste of the courts time and effort. A fair amount of cases end up in front of a judge before settlement, if these end up being withdrawn (and the judge will know it's withdrawn not settled) you're going to be in bad credence with a judge. Pissing off a judge is a big no-no. Patent Trolls will be pissing off multiple judges, which is like putting a shotgun in your career's mouth and pulling the trigger. An insurance agency that fights patent trolls would be ideal. Offer $X amount of legal fee coverage for $Y a month, get a few talented lawyers and a fair amount of paralegals. Once word gets out, the majority of the work can be performed by paralegals (essentially everything up until you're standing in front of a jury-or-equivalent can be performed by paralegals) as no troll will want their time tied up. Eventually, only Trolls with a fair-case will fight, you then have 3 options to give your clients: offer them your lawyers' services/suggest settling/wish them good luck elsewhere. It would be a sort of no-case-no-extra-fee's deal. Lawyer's typically bill by the 6-minute interval, and frequently charge 100's of dollars an hour. In fact 1-2 billed hours is typically a lawyers daily pay, and they may still have 6-8 hours on top of what they're billing clients. If you start consuming these lawyers time, their profitability drops, especially considering they require settlements for their pay. They're invested in the 'easy win', which isn't conducive to fighting a drawn out case. If companies actually start going through with the court battles, the payment is potentially delayed anywhere from 3-months to 3-years.
- daniel-cussen 17y ago
  In order for a bogus patent troll to sue, that troll would have to have the patent. It wouldn't be so bogus.
- schammy 17y ago
  That doesn't make any sense. You think an insurance company makes money when you wreck your car? No. Yet there are thousands of them in business. They make money by making the premiums of the insurance cost more than what they have to pay to fix people's cars. This patent insurance would work the same way.