10 ms·

Life for a startup on the receiving end of a patent law suit

106 points by changdizzle 13y ago

wheaties 13y ago
Regardless of the kinds of reform we would like to see, the fact that America still considers software nothing like "math" or prose will continue to allow these types of litigators to press for a long, long time. Zombie debt collectors are a seedy yet still thriving business model praying on the weak and gullible. That is the route these trolls will take as well.
ChuckMcM 13y ago
Still waiting for the "Prenda Law" moment in patent court.
- changdizzle 13y ago
  So far I would say Newegg takes the cake - http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corporate-troll-alcatel-in-third-patent-appeal-win-this-year/ http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corp...
  - Zikes 13y ago
    I've always admired Newegg's efforts on that. I should patronize their business more often.
    - samspenc 13y ago
      Exactly! Proud Newegg patronizer here, especially because of their standing up to the trolls.
  - ChuckMcM 13y ago
    Given that Lee Cheng is looking for additional cases perhaps he could step in for these guys? (Lee I know you're reading :-) is there any legal mechanism to do this?)
- hfsktr 13y ago
  http://en.wikipedia.org/wiki/Prenda_Law http://en.wikipedia.org/wiki/Prenda_Law I must be living under a rock as I only barely recognized the name. That all read bad enough but then the part where they are likely putting stuff on pirate bay to then prosecute people...the more of this I read the more outlandish it seems.
tsenkov 13y ago
Algorithms shouldn't be patented; UI components/metaphors shouldn't be patented; Anything potentially leading to monopolism shouldn't be patented; Monopolists should get their patents revoked. This is my opinion.
- clavalle 13y ago
  The point of a patent is a state sanctioned monopoly.
zalzane 13y ago
Lately my group of friends have been discussing the most underhanded ways to get PAE's to bugger off. Nothing serious, but it's interesting to think about how one of these PAE lawyers would react if you told him his daughter's name and the school she goes to. It kinda surprises me that none of these extortion cases have escalated to that sort of thing. When someone puts 5-10 years of sweat, blood and tears into a company, it would surprise me if there wasn't a single example in the country where one of those entrepreneurs reacted violently to this kind of extortion racket.
- rfctr 13y ago
  > how one of these PAE lawyers would react if you told him his daughter's name and the school she goes to They would make sure you're behind bars in no time.
  - pkinsky 13y ago
    What if 'you' are an anonymous remailer service account and a bitcoin address? It would be amusing if patent trolling got bad enough to force startups to operate on the black market. After all, what's the ROI on legitimacy if the state can't protect you from banditry?
    - rfctr 13y ago
      What if his daughter really got killed or raped?
      - pkinsky 13y ago
        <sociopath>Other patent assertion entities would be inspired to think carefully about targeting entities subscribing to our protection service.</sociopath>
        rfctr 13y ago
        I dunno how it is in US, but in other places all kinds of shady businesses are protected by organized crime. Try to harass their businesses and jokes may end pretty quick.
jakejake 13y ago
In addition to patent reform, why legals bills are so astronomical? The whole thing stinks.
- rfctr 13y ago
  A lawyer that may help costs $300+/hr. Lawyers, even when simply reply to your email, charge you for 15 minutes.
- rayiner 13y ago
  Legal bill = billing rate * hours billed. The number of hours billed is very dependent on the structure of the law. One of the goals of courts is to streamline the law so that cases that don't have merit can be dismissed quickly and easily. If you follow litigations in the popular press, you'll see that a lot of lawsuits get dismissed on "technicalities" (i.e. procedural rules). E.g. the EFF's NSA litigation is in danger of getting dismissed for a lack of standing (i.e. dismissal because the plaintiff can't show actual injury). Courts create these procedural barriers because getting to the merits (i.e. looking at the facts) of litigation is time-consuming and expensive. Courts also create other barriers. For example, in a shareholder suit, there is something called the business judgment rule: i.e. in the absence of a conflict of interest or something like that, a court will defer to management's superior business judgment. Rules like that allow shareholder suits to be evaluated and dismissed based on facts that are easy to prove without having to reach facts that are expensive to investigate and prove. In patent litigation, there is precious little of that. Patent litigations very quickly become a very fact-intensive process of interpreting a complex and voluminous patent, getting expert witness testimony about exactly how the defendants product works, etc. Once a lawyer is sitting down with an engineer looking over code, the clock really gets going. The Supreme Court has been very reluctant to create categorical rules in terms of patentability, and that's largely because the Patent Act is written in a way that makes such categorical rules inconsistent with the intent of the law. But the fact is that categorical rules (e.g. no software patents, deference to business judgment) make litigation cheaper, and that's an important consideration too.
  - csense 13y ago
    > One of the goals of courts is to streamline the law And one of the goals of (relatively) rich plaintiffs who sue (relatively) poor defendants is to drag out the case as much as possible to impose costs and inconveniences on the defendant.
wavesounds 13y ago
Does anyone sell patent-troll insurance?
- Guvante 13y ago
  Too easy to game. With the minimum legal cost of a successful defense being $200,000, what kind of monthly rate would cover that?
  - larrys 13y ago
    You will see this happen I'm sure. Insurance companies don't sweat big lawsuits and have all the resources to put up a fight and spread the risk. It's only a matter of them viewing it as an opportunity. It will happen. And they will be able to effectively (at scale) jerk around the trolls till the cows come home. The trolls will either settle for a nominal amount (think of it as a protection racket) or pick a different house to break into without an alarm.
  - dscb 13y ago
    With car insurance claims easily being >100k due to injuries/death/multiple vehicle collisions, what kind of monthly rate could possible cover that? Other examples with high claim amounts, flood insurance, health care, etc. It doesn't matter how high the minimum cost is, and you cant judge any kind of insurance based solely on that. The chance of it happening is just as important. Let's say 1% of all companies get sued for patent disputes every year (I don't know the stats on this, just an example), with an average defense costing $500 000. The insurance company also wants to make money, so let's have them charge 150% over cost. $500k x 1.5 = $750k (amount of revenue per 100 customers) $750k x 0.01= $7500 (cost per customer per year) $7500 / 12 = $625 (cost per customer per month) Now even that number isn't that high, and I assume 1% of companies getting hit with patent lawsuit per year is bigger than the real figures.
    - Guvante 13y ago
      Average cost of a claim and average claims per year are incredibly important. Average cost of a car claim (ignoring glass) is probably in the $5,000 range. The average person gets in <0.5 accidents a year, so coverage is <$2,500 for the average person. Average cost of a patent claim is, say $200,000 (that is a minimum, but we will treat it as an average). Average company gets 0.05 patent claims per year (1 in 20). Coverage would be $1,000 a month. Not too bad. Now lets add what happens after the first time you pay out an insurance claim within 6 months. Someone in your company gets $200,000 for a client list, your patent claims per year just became 10 per client. Good luck.
phillro 13y ago
We need aggressive patent reform to stop this. A good start would be contacting your representatives and signing this letter. http://devsbuild.it/patent-reform-letter http://devsbuild.it/patent-reform-letter
rasur 13y ago
Excuse my ignorance, but have any companies succeeded by just replying "Go Get Fucked" to patent trolls?
- Zikes 13y ago
  Unfortunately the law, or at least the judicial system, is on their side. Ignore them and they will only win by default.
- clavalle 13y ago
  If they file suit you have to show up or you lose the case. If you don't get lawyers involved you are hosed.
  - csense 13y ago
    AFAIK if you're a corporation, you must be represented by a lawyer in the US. If you're not a corporation, AFAIK you can go pro se (be your own defense attorney), but in that route you're not just risking the business -- if you lose and the damages are more than the business can pay, they'll be able to seize your house, your car, and your kids' college fund. And your credit rating will be ruined if you have to declare bankruptcy personally, so you might not be able to get credit cards for a decade or two afterwards.
jborden13 13y ago
They say "you haven't made it in business until somebody sues you." This is the type of shit that keeps me up at night...
noonespecial 13y ago
“You’ll stay in business and license from us, or you’ll go out of business,” he told him over the phone. “Either way is fine with me.” There are villains in this world. They used to hide beside the road and beat then rob travellers. Later they rode around in rusty pickups with ak's killing and robbing villagers. Their weapons change but their tactics don't. The measure of civilization is how we choose to deal with them. I'm afraid they'll always be with us. It all comes down to where our sense of justice meets our apathy.
- ereckers 13y ago
  "There are villains in this world. They used to hide beside the road and beat then rob travellers." Nah. They've always been lawyers.
- nlh 13y ago
  Indeed. Also - that quote struck a nerve because it is -exactly- what mobsters say to shop owners when they're demanding (extorting) protection money. This is nothing more than legal (for now) extortion.
slowdown 13y ago
I have an LLC (US), but this is one of the blunders I've made and I plan on dissolving it soon. There are many reasons to my answer, here are some: The problem with a US based LLC is that you open up free access to thousands of patent trolls waiting to eat your hard earned money. This isn't a problem if you can afford a decent Lawyer for $5000-15000, but for businesses like mine, which are bootstrapped, it's totally unaffordable. Well funded startups usually have a separate legal department to resolve these issues, but when you're running a startup totally from your own pocket, it becomes extremely hard and annoying. I was wondering for a solution until a very good friend of mine suggested me something nice. If you set up a company somewhere in India (or some other popular, Start-up friendly developing country), these patent trolls have little access to you in terms of licensing, etc. Usually a patent troll will send you a legal letter threatening you about violation of some kind of absurd technology patent, etc. But, when you start up elsewhere, these become nulled[1]. Meaning, they can't touch you. Worse-case scenario, even if someone DID sue you, the lawyers are really cheap in such developing countries. We're talking about price ranges of $50-1000. And for $500 bucks you can get some really nice lawyers to get the job done. There's also a LOT of start-up friendly exemptions for companies in such developing countries simply because they don't have enough of them and they want more people to start up. So, even though these countries are often referred to as 'third worlds', they are really good places to start up. If you know of anyone wanting to start up from those countries, you should probably team up with them as their co-founder and that should be good enough. Of course, all this assuming that you aren't interested in seeking funding and you want a bootstrapped start up. But then, if you are seeking funding, you'll probably have enough cash to afford a $5000 lawyer anyway. One potential issue you may find running a startup from a developing country is the access to decent payment gateways. But then, if you don't mind sharing an extra 1% with the gateway provider, you can probably use someone like skrill.
- rfctr 13y ago
  Samsung was in South Korea. Apple blocked Samsung's sales in US based on patent issues. It doesn't matter where you're located. What matters where you want to do business.
  - 13y ago
slowdown 13y ago
http://foaas.com/off/patent%20trolls/Startups http://foaas.com/off/patent%20trolls/Startups
chenster 13y ago
Would it be safe to move the company outside of US where patent troll cannot reach in legal jurisdiction?
- rfctr 13y ago
  You can move the company. But as long as you make sales in US, you can be blocked from doing business.
  - cpursley 13y ago
    Sure, but nobody's going to take the time to do so.
    - rfctr 13y ago
      Right. The troll was just bluffing when he was saying: "You’ll stay in business and license from us, or you’ll go out of business". He's just joking, right? Surely he has neither tools nor intentions to put someone out of business?
  - chenster 13y ago
    How would they exactly block you from doing business? Unless you have a physical presence, if all your transcations take place online, how would it be different from doing in the US and outside?
    - rfctr 13y ago
      Court order will prohibit the sales. The decision will be delivered to whatever representatives the company has on US soil, as well as to customs, payment processors and whatnot.
    - bcoates 13y ago
      Customs will seize your domain name without warning or following any particular legal process. https://www.eff.org/deeplinks/2012/08/members-congress-demand-answers-homeland-securitys-unjust-domain-name-seizures https://www.eff.org/deeplinks/2012/08/members-congress-deman...
ninjapirate 13y ago
The real problem and challenge of the issue (especially in terms of litigation) is taking the power away from PAEs but also not taking the power out of our patent system. The fact that our system allows folks to invent but not manufacture led to substantial growth in our country and also to the entrepreneurial culture we all enjoy. PAEs are abusing this and absolutely need to be stopped.
deleted 13y ago
[deleted]
- tbrownaw 13y ago
  I don't think it works that way, since it's possible for something to be covered by more than one patent.
ioncereadknuth 13y ago
suggestion: every company that receives one of these things should incorporate in nigeria or something, till US lawmakers wake the fuck up.
- keithpeter 13y ago
  Isle of Mann? UK patent law, 'relaxed' personal taxation, zero corporation tax, good motor bike racing, English widely spoken, good transport links with mainland, temperate climate, funky passport. I imagine remote ownership is possible. On a more serious note, patent protection was designed to promote innovation by providing a monopoly in exchange for full disclosure so others could understand and further improve. In the US this purpose is (apparently) not being achieved so as others have said, time for some politics.
ioncereadknuth 13y ago
look kids, the system is rigged. you dont organize, you dont form voting groups based on your issues, you dont get involved in politics, and when the rules bend the odds vehemently against you, you go to a social media website and bitch about it. when are you losers going to wake the hell up? and oh yeah, Aaron Shwartz, never forget. edit: you know theres a business opportunity right there. you know crowd funding? how about crowd voting? that'll teach em.
- ioncereadknuth 13y ago
  super edit: i'll seed fund it. i'm old, bitter, and have money.
  - ioncereadknuth 13y ago
    sorry, paul graham gets first the option to seed fund it. thats the gentlemanly thing to do, since this is his bulletin board. i'll explain to you how the world works in exchange for equity in that case.
  - ioncereadknuth 13y ago
    for real. 2k USD/month for 5 months for anyone who puts this together. think of it as pre-ycombinator funding. promissory note.
    - thinkcomp 13y ago
      http://www.plainsite.org/issues http://www.plainsite.org/issues
      - deleted 13y ago
        [deleted]
thinkcomp 13y ago
As much as patent trolls are an enormous problem, they are not the only villains in this story. The others are of course the lawyers and the courts. Let's say that you received a summons in the mail informing you that your startup was being sued. First of all, why are you receiving it in the mail? Why can't the Secretary of State ask for your e-mail address (as some do) and actually use it for service of process? (Answer: because the courts aren't even sure they want to allow a technology as sophisticated as Certified Mail to be permitted for service of process, let alone fax. E-mail? You must be joking.) Once you get the summons, assuming you can even understand what it means, what do you do? Look up the case on-line? Probably not. That would require you to have a PACER account, which costs money beyond $15.00 per quarter in fake-page access at $0.10 per fake-page. It would also require you to know how to navigate the system, which isn't particularly easy. Assuming that you could, and could understand the legal documents, you might be able to learn a lot right there. Instead, what most people would do is pay a lawyer to handle all of this for them, at anywhere from $300 to $600 per hour. But what does lawyering really involve? Copying and pasting from Microsoft Word templates, turning Word files into PDFs, attesting to obvious things ("I have caused this envelope to be placed in the mail as of this date") and occasionally reading a similar case to cite. But mostly it's not that difficult. There are definitely aspects that require skill and logical thinking. That's maybe 5% of the work. So why are we paying $300 to $600 per hour for highly indebted people to do things that computers could? Because the courts won't let computers into the picture. They won't even let companies represent themselves through their founders, even though Citizens United guarantees corporate freedom of speech (everywhere except inside the courtroom, apparently). If they did allow technology to enter the picture, handling a patent infringement assertion might actually be fairly trivial--something you could do in a few minutes on a web form--and at worst, as annoying as calling customer service. The USPTO isn't blameless either. For more on that you can look at some slides from a presentation I gave at the USPTO Software Patent Round Table in February, 2013. Slides http://www.aarongreenspan.com/technology/20130212.softwarepatents.pdf http://www.aarongreenspan.com/technology/20130212.softwarepa... Video http://helix-1.uspto.gov/asxgen/20130212_SoftwarePartnershipStanford_Part2.wmv http://helix-1.uspto.gov/asxgen/20130212_SoftwarePartnership...
- rayiner 13y ago
  > That would require you to have a PACER account, which costs money beyond $15.00 per quarter in fake-page access at $0.10 per fake-page Patent law is federal law, and nearly all the relevant federal opinions are available for free online. I do think it is problematic, in principle, that very small corporations cannot represent themselves pro-se. That said, pro-se litigants are an enormous burden on courts because they have no idea what they're doing. A federal judge will have hundreds of cases on her plate at any given time. They need litigants to get in, make their case, and get out. > But what does lawyering really involve? Copying and pasting from Microsoft Word templates, turning Word files into PDFs, attesting to obvious things ("I have caused this envelope to be placed in the mail as of this date") and occasionally reading a similar case to cite. My mom thinks that programming just involves "typing things into the computer." What you're describing is paralegals' work if not secretarial work. Most of lawyer's work involves researching case law, writing memos and briefs, doing factual investigation, interviewing witnesses, taking depositions, etc. Clients are sophisticated. They're not paying $500/hour lawyers to turn Word documents into PDF's, not when you can get droves of bar-admitted lawyers to work for $20/hour on Craigslist. > Because the courts won't let computers into the picture. Invent a computer program that can apply the law to the specific facts of a case and generate a helpful brief and we'll talk. In reality, many college and law-school educated people of well above average intelligence can't write a helpful brief. The legal industry has been adopting computer technology as it becomes available. A good example is document review. Computers excel at searching through large amounts of information looking for potentially-relevant documents, so law firms increasingly use computers to flag such documents (though many/most clients still prefer to have this outsourced to low-cost contract attorneys). Most work that used to be done by secretaries is automated. Document management systems produce blacklines, track changes is used to enter revisions, etc. Again, clients are sophisticated. They're not paying $500/hour for a lawyer to manually enter hand-markups.
6d0debc071 13y ago
I wonder whether areas with strong patent law will just become... uncompetitive... by comparison to areas where such laws are not enforced.
technoir 13y ago
I once considered taking a serious crack at a subset of this problem. Didn't get any takers though. http://libpatent.com/ http://libpatent.com/
- csense 13y ago
  What's your marketing like? Have you tried approaching relevant blogs like Popehat for a mention? Or trying to get in contact with places where startups congregate, like YC? Or asking if EFF or others who oppose patents for ideological reasons would be willing to give you publicity, advice, or referrals? Heck, a Show HN post might get you some publicity and feedback. Also, the website is a little unclear about what exactly customers are buying. "Search for prior art" -- it sounds like you're charging people $10k to copy-paste the sentences from their product's specs one-by-one into Google. What exactly are your customers paying for? It's not clear on your website. Remember, you probably have a decent understanding of patent law if you have a JD, but your customers don't. Your target audience is (I'm guessing) similar to much of HN -- intelligent hackers who have a good business sense but little formal training in law or business. Hackers'll want to know the "how" and "why" of what they're buying, but your explanations don't explain legal jargon like "examining applications," "prior art search," or "ex parte". Also, I would suggest offering services on contingency-fee basis -- you only get paid if you actually bust one or more patents at least dimly related to your customer's business, or produce some other sort of tangible result for the customer. To make this financially viable for you, you may need to substantially increase your fee for contingency clients, and have cash reserves in case you lose multiple re-examinations in a row. Also it'd be nice to show patents you've busted. If you don't have any yet, you might consider looking for easy patents to target, and self-funding a re-examination of them, or (if you don't have the money or it's against the rules for a lawyer to bring such a case on their own initiative) approaching the EFF or somebody to ask if they'll fund you.
  - technoir 13y ago
    Thanks for the thoughtful response. I originally created this page as an exercise in "marketing driven development" aka just testing the waters to see if there is a market for this sort of thing. I did consider your last point of busting a bogus patent and self-funding the ex parte filing fee. I was considering going for a particular linked list implementation which was patented in the 2000s. My approach was more or less to grep / lucene a wide range of open source projects with extensive timestamps of publication dates (e.g. linux kernel). It turns out that is a lot of work, and since I got no response to the site, I figured this kind of legal service is not really appealing -- for reasons I don't understand. At least, not enough demand to spend a bunch of time on it, since I have other projects I enjoy working on more. Thanks again for the thoughtful response.
Spearchucker 13y ago
What's stopping anyone threatened like this from closing shop, and re-opening in another country under different ownership or some backhanded deal where the victim retains a chance of an income?
- deleted 13y ago
  [deleted]
csense 13y ago
Maybe we should set up a tradition of patent-busting bounties. Some third-party trust or nonprofit or somesuch, so you no longer have control of the money and the patent troll can't force you to give the money to them to pay a judgment against you. 2% - 10% of your contribution can be used for their general expenses, the other 90% - 98% can only be given to a party who gets a specific patent invalidated, which you specify when you donate. So when the troll tells you that Patent #1234567 is being infringed by your company and you need to pay $100k a year or they'll sue you, you can roll over if it's your own best decision from a risk/reward perspective -- but you can also make a one-time donation of $100k, or whatever you can afford, to the '567 bounty pool. The troll extorts ten companies, suddenly there's a million-dollar reward for somebody to take them out, and it changes the risk-reward equation for the companies and lawyers involved (especially if companies are investor-backed and aren't the sole source of income for the majority of their owners.) I suggested this a while ago [1] and it got a lot of upvotes. [1] https://news.ycombinator.com/item?id=5126551 https://news.ycombinator.com/item?id=5126551
isalmmann 13y ago
24E37894
Mikeb85 13y ago
Come to Canada. Here mathematical algorithms cannot be patented, nor can anything 'obvious'. While it is possible to patent software here, realistically you can't really do it, and the legal system is kind to defendants if someone is brave enough to sue you. The patent system in the US looks ridiculous to anyone outside the US...
pjdorrell 13y ago
I think the concept of "patent troll" is doing us more harm than good. The implication of this expression is that the badness is in the "trollish" aspect, and not in the "patent" aspect of it. Patent trolls are what happens when the patent system is taken to its logical conclusion. So if patent trolls are evil, then the patent system itself is evil. The fact that some or even many patent holders _aren't_ evil is beside the point. Imagine, for example, that there was a law which gave husbands permission to rape their wives. Presumably only _some_ husbands would take advantage of this law. So one might conclude that the law isn't bad, it's just that society has to find some way to deal with those bad husbands, the so-called "marital sex trolls", who take advantage of such a law. And the bad husbands would say something like: "Morally, I think husbands deserve some reward for the benefits that they bring to a marriage."

106 points by changdizzle 13y ago

Regardless of the kinds of reform we would like to see, the fact that America still considers software nothing like "math" or prose will continue to allow these types of litigators to press for a long, long time. Zombie debt collectors are a seedy yet still thriving business model praying on the weak and gullible. That is the route these trolls will take as well.

ChuckMcM 13y ago

Still waiting for the "Prenda Law" moment in patent court.

changdizzle 13y ago
So far I would say Newegg takes the cake - http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corporate-troll-alcatel-in-third-patent-appeal-win-this-year/ http://arstechnica.com/tech-policy/2013/05/newegg-nukes-corp...
- Zikes 13y ago
  I've always admired Newegg's efforts on that. I should patronize their business more often.
  - samspenc 13y ago
    Exactly! Proud Newegg patronizer here, especially because of their standing up to the trolls.
- ChuckMcM 13y ago
  Given that Lee Cheng is looking for additional cases perhaps he could step in for these guys? (Lee I know you're reading :-) is there any legal mechanism to do this?)
hfsktr 13y ago
http://en.wikipedia.org/wiki/Prenda_Law http://en.wikipedia.org/wiki/Prenda_Law I must be living under a rock as I only barely recognized the name. That all read bad enough but then the part where they are likely putting stuff on pirate bay to then prosecute people...the more of this I read the more outlandish it seems.

tsenkov 13y ago

Algorithms shouldn't be patented; UI components/metaphors shouldn't be patented; Anything potentially leading to monopolism shouldn't be patented; Monopolists should get their patents revoked. This is my opinion.

clavalle 13y ago
The point of a patent is a state sanctioned monopoly.

zalzane 13y ago

Lately my group of friends have been discussing the most underhanded ways to get PAE's to bugger off. Nothing serious, but it's interesting to think about how one of these PAE lawyers would react if you told him his daughter's name and the school she goes to. It kinda surprises me that none of these extortion cases have escalated to that sort of thing. When someone puts 5-10 years of sweat, blood and tears into a company, it would surprise me if there wasn't a single example in the country where one of those entrepreneurs reacted violently to this kind of extortion racket.

rfctr 13y ago
> how one of these PAE lawyers would react if you told him his daughter's name and the school she goes to They would make sure you're behind bars in no time.
- pkinsky 13y ago
  What if 'you' are an anonymous remailer service account and a bitcoin address? It would be amusing if patent trolling got bad enough to force startups to operate on the black market. After all, what's the ROI on legitimacy if the state can't protect you from banditry?
  - rfctr 13y ago
    What if his daughter really got killed or raped?
    - pkinsky 13y ago
      <sociopath>Other patent assertion entities would be inspired to think carefully about targeting entities subscribing to our protection service.</sociopath>
      - rfctr 13y ago
        I dunno how it is in US, but in other places all kinds of shady businesses are protected by organized crime. Try to harass their businesses and jokes may end pretty quick.

jakejake 13y ago

In addition to patent reform, why legals bills are so astronomical? The whole thing stinks.

rfctr 13y ago
A lawyer that may help costs $300+/hr. Lawyers, even when simply reply to your email, charge you for 15 minutes.
rayiner 13y ago
Legal bill = billing rate * hours billed. The number of hours billed is very dependent on the structure of the law. One of the goals of courts is to streamline the law so that cases that don't have merit can be dismissed quickly and easily. If you follow litigations in the popular press, you'll see that a lot of lawsuits get dismissed on "technicalities" (i.e. procedural rules). E.g. the EFF's NSA litigation is in danger of getting dismissed for a lack of standing (i.e. dismissal because the plaintiff can't show actual injury). Courts create these procedural barriers because getting to the merits (i.e. looking at the facts) of litigation is time-consuming and expensive. Courts also create other barriers. For example, in a shareholder suit, there is something called the business judgment rule: i.e. in the absence of a conflict of interest or something like that, a court will defer to management's superior business judgment. Rules like that allow shareholder suits to be evaluated and dismissed based on facts that are easy to prove without having to reach facts that are expensive to investigate and prove. In patent litigation, there is precious little of that. Patent litigations very quickly become a very fact-intensive process of interpreting a complex and voluminous patent, getting expert witness testimony about exactly how the defendants product works, etc. Once a lawyer is sitting down with an engineer looking over code, the clock really gets going. The Supreme Court has been very reluctant to create categorical rules in terms of patentability, and that's largely because the Patent Act is written in a way that makes such categorical rules inconsistent with the intent of the law. But the fact is that categorical rules (e.g. no software patents, deference to business judgment) make litigation cheaper, and that's an important consideration too.
- csense 13y ago
  > One of the goals of courts is to streamline the law And one of the goals of (relatively) rich plaintiffs who sue (relatively) poor defendants is to drag out the case as much as possible to impose costs and inconveniences on the defendant.

wavesounds 13y ago

Does anyone sell patent-troll insurance?

Guvante 13y ago
Too easy to game. With the minimum legal cost of a successful defense being $200,000, what kind of monthly rate would cover that?
- larrys 13y ago
  You will see this happen I'm sure. Insurance companies don't sweat big lawsuits and have all the resources to put up a fight and spread the risk. It's only a matter of them viewing it as an opportunity. It will happen. And they will be able to effectively (at scale) jerk around the trolls till the cows come home. The trolls will either settle for a nominal amount (think of it as a protection racket) or pick a different house to break into without an alarm.
- dscb 13y ago
  With car insurance claims easily being >100k due to injuries/death/multiple vehicle collisions, what kind of monthly rate could possible cover that? Other examples with high claim amounts, flood insurance, health care, etc. It doesn't matter how high the minimum cost is, and you cant judge any kind of insurance based solely on that. The chance of it happening is just as important. Let's say 1% of all companies get sued for patent disputes every year (I don't know the stats on this, just an example), with an average defense costing $500 000. The insurance company also wants to make money, so let's have them charge 150% over cost. $500k x 1.5 = $750k (amount of revenue per 100 customers) $750k x 0.01= $7500 (cost per customer per year) $7500 / 12 = $625 (cost per customer per month) Now even that number isn't that high, and I assume 1% of companies getting hit with patent lawsuit per year is bigger than the real figures.
  - Guvante 13y ago
    Average cost of a claim and average claims per year are incredibly important. Average cost of a car claim (ignoring glass) is probably in the $5,000 range. The average person gets in <0.5 accidents a year, so coverage is <$2,500 for the average person. Average cost of a patent claim is, say $200,000 (that is a minimum, but we will treat it as an average). Average company gets 0.05 patent claims per year (1 in 20). Coverage would be $1,000 a month. Not too bad. Now lets add what happens after the first time you pay out an insurance claim within 6 months. Someone in your company gets $200,000 for a client list, your patent claims per year just became 10 per client. Good luck.

phillro 13y ago

We need aggressive patent reform to stop this. A good start would be contacting your representatives and signing this letter. http://devsbuild.it/patent-reform-letter http://devsbuild.it/patent-reform-letter

rasur 13y ago

Excuse my ignorance, but have any companies succeeded by just replying "Go Get Fucked" to patent trolls?

Zikes 13y ago
Unfortunately the law, or at least the judicial system, is on their side. Ignore them and they will only win by default.
clavalle 13y ago
If they file suit you have to show up or you lose the case. If you don't get lawyers involved you are hosed.
- csense 13y ago
  AFAIK if you're a corporation, you must be represented by a lawyer in the US. If you're not a corporation, AFAIK you can go pro se (be your own defense attorney), but in that route you're not just risking the business -- if you lose and the damages are more than the business can pay, they'll be able to seize your house, your car, and your kids' college fund. And your credit rating will be ruined if you have to declare bankruptcy personally, so you might not be able to get credit cards for a decade or two afterwards.

jborden13 13y ago

They say "you haven't made it in business until somebody sues you." This is the type of shit that keeps me up at night...

noonespecial 13y ago

“You’ll stay in business and license from us, or you’ll go out of business,” he told him over the phone. “Either way is fine with me.” There are villains in this world. They used to hide beside the road and beat then rob travellers. Later they rode around in rusty pickups with ak's killing and robbing villagers. Their weapons change but their tactics don't. The measure of civilization is how we choose to deal with them. I'm afraid they'll always be with us. It all comes down to where our sense of justice meets our apathy.

ereckers 13y ago
"There are villains in this world. They used to hide beside the road and beat then rob travellers." Nah. They've always been lawyers.
nlh 13y ago
Indeed. Also - that quote struck a nerve because it is -exactly- what mobsters say to shop owners when they're demanding (extorting) protection money. This is nothing more than legal (for now) extortion.

slowdown 13y ago

I have an LLC (US), but this is one of the blunders I've made and I plan on dissolving it soon. There are many reasons to my answer, here are some: The problem with a US based LLC is that you open up free access to thousands of patent trolls waiting to eat your hard earned money. This isn't a problem if you can afford a decent Lawyer for $5000-15000, but for businesses like mine, which are bootstrapped, it's totally unaffordable. Well funded startups usually have a separate legal department to resolve these issues, but when you're running a startup totally from your own pocket, it becomes extremely hard and annoying. I was wondering for a solution until a very good friend of mine suggested me something nice. If you set up a company somewhere in India (or some other popular, Start-up friendly developing country), these patent trolls have little access to you in terms of licensing, etc. Usually a patent troll will send you a legal letter threatening you about violation of some kind of absurd technology patent, etc. But, when you start up elsewhere, these become nulled[1]. Meaning, they can't touch you. Worse-case scenario, even if someone DID sue you, the lawyers are really cheap in such developing countries. We're talking about price ranges of $50-1000. And for $500 bucks you can get some really nice lawyers to get the job done. There's also a LOT of start-up friendly exemptions for companies in such developing countries simply because they don't have enough of them and they want more people to start up. So, even though these countries are often referred to as 'third worlds', they are really good places to start up. If you know of anyone wanting to start up from those countries, you should probably team up with them as their co-founder and that should be good enough. Of course, all this assuming that you aren't interested in seeking funding and you want a bootstrapped start up. But then, if you are seeking funding, you'll probably have enough cash to afford a $5000 lawyer anyway. One potential issue you may find running a startup from a developing country is the access to decent payment gateways. But then, if you don't mind sharing an extra 1% with the gateway provider, you can probably use someone like skrill.

rfctr 13y ago
Samsung was in South Korea. Apple blocked Samsung's sales in US based on patent issues. It doesn't matter where you're located. What matters where you want to do business.
- 13y ago

slowdown 13y ago

http://foaas.com/off/patent%20trolls/Startups http://foaas.com/off/patent%20trolls/Startups

chenster 13y ago

Would it be safe to move the company outside of US where patent troll cannot reach in legal jurisdiction?

rfctr 13y ago
You can move the company. But as long as you make sales in US, you can be blocked from doing business.
- cpursley 13y ago
  Sure, but nobody's going to take the time to do so.
  - rfctr 13y ago
    Right. The troll was just bluffing when he was saying: "You’ll stay in business and license from us, or you’ll go out of business". He's just joking, right? Surely he has neither tools nor intentions to put someone out of business?
- chenster 13y ago
  How would they exactly block you from doing business? Unless you have a physical presence, if all your transcations take place online, how would it be different from doing in the US and outside?
  - rfctr 13y ago
    Court order will prohibit the sales. The decision will be delivered to whatever representatives the company has on US soil, as well as to customs, payment processors and whatnot.
  - bcoates 13y ago
    Customs will seize your domain name without warning or following any particular legal process. https://www.eff.org/deeplinks/2012/08/members-congress-demand-answers-homeland-securitys-unjust-domain-name-seizures https://www.eff.org/deeplinks/2012/08/members-congress-deman...

ninjapirate 13y ago

The real problem and challenge of the issue (especially in terms of litigation) is taking the power away from PAEs but also not taking the power out of our patent system. The fact that our system allows folks to invent but not manufacture led to substantial growth in our country and also to the entrepreneurial culture we all enjoy. PAEs are abusing this and absolutely need to be stopped.

deleted 13y ago

[deleted]

tbrownaw 13y ago
I don't think it works that way, since it's possible for something to be covered by more than one patent.

ioncereadknuth 13y ago

suggestion: every company that receives one of these things should incorporate in nigeria or something, till US lawmakers wake the fuck up.

keithpeter 13y ago
Isle of Mann? UK patent law, 'relaxed' personal taxation, zero corporation tax, good motor bike racing, English widely spoken, good transport links with mainland, temperate climate, funky passport. I imagine remote ownership is possible. On a more serious note, patent protection was designed to promote innovation by providing a monopoly in exchange for full disclosure so others could understand and further improve. In the US this purpose is (apparently) not being achieved so as others have said, time for some politics.

ioncereadknuth 13y ago

look kids, the system is rigged. you dont organize, you dont form voting groups based on your issues, you dont get involved in politics, and when the rules bend the odds vehemently against you, you go to a social media website and bitch about it. when are you losers going to wake the hell up? and oh yeah, Aaron Shwartz, never forget. edit: you know theres a business opportunity right there. you know crowd funding? how about crowd voting? that'll teach em.

ioncereadknuth 13y ago
super edit: i'll seed fund it. i'm old, bitter, and have money.
- ioncereadknuth 13y ago
  sorry, paul graham gets first the option to seed fund it. thats the gentlemanly thing to do, since this is his bulletin board. i'll explain to you how the world works in exchange for equity in that case.
- ioncereadknuth 13y ago
  for real. 2k USD/month for 5 months for anyone who puts this together. think of it as pre-ycombinator funding. promissory note.
  - thinkcomp 13y ago
    http://www.plainsite.org/issues http://www.plainsite.org/issues
    - deleted 13y ago
      [deleted]

thinkcomp 13y ago

As much as patent trolls are an enormous problem, they are not the only villains in this story. The others are of course the lawyers and the courts. Let's say that you received a summons in the mail informing you that your startup was being sued. First of all, why are you receiving it in the mail? Why can't the Secretary of State ask for your e-mail address (as some do) and actually use it for service of process? (Answer: because the courts aren't even sure they want to allow a technology as sophisticated as Certified Mail to be permitted for service of process, let alone fax. E-mail? You must be joking.) Once you get the summons, assuming you can even understand what it means, what do you do? Look up the case on-line? Probably not. That would require you to have a PACER account, which costs money beyond $15.00 per quarter in fake-page access at $0.10 per fake-page. It would also require you to know how to navigate the system, which isn't particularly easy. Assuming that you could, and could understand the legal documents, you might be able to learn a lot right there. Instead, what most people would do is pay a lawyer to handle all of this for them, at anywhere from $300 to $600 per hour. But what does lawyering really involve? Copying and pasting from Microsoft Word templates, turning Word files into PDFs, attesting to obvious things ("I have caused this envelope to be placed in the mail as of this date") and occasionally reading a similar case to cite. But mostly it's not that difficult. There are definitely aspects that require skill and logical thinking. That's maybe 5% of the work. So why are we paying $300 to $600 per hour for highly indebted people to do things that computers could? Because the courts won't let computers into the picture. They won't even let companies represent themselves through their founders, even though Citizens United guarantees corporate freedom of speech (everywhere except inside the courtroom, apparently). If they did allow technology to enter the picture, handling a patent infringement assertion might actually be fairly trivial--something you could do in a few minutes on a web form--and at worst, as annoying as calling customer service. The USPTO isn't blameless either. For more on that you can look at some slides from a presentation I gave at the USPTO Software Patent Round Table in February, 2013. Slides http://www.aarongreenspan.com/technology/20130212.softwarepatents.pdf http://www.aarongreenspan.com/technology/20130212.softwarepa... Video http://helix-1.uspto.gov/asxgen/20130212_SoftwarePartnershipStanford_Part2.wmv http://helix-1.uspto.gov/asxgen/20130212_SoftwarePartnership...

rayiner 13y ago
> That would require you to have a PACER account, which costs money beyond $15.00 per quarter in fake-page access at $0.10 per fake-page Patent law is federal law, and nearly all the relevant federal opinions are available for free online. I do think it is problematic, in principle, that very small corporations cannot represent themselves pro-se. That said, pro-se litigants are an enormous burden on courts because they have no idea what they're doing. A federal judge will have hundreds of cases on her plate at any given time. They need litigants to get in, make their case, and get out. > But what does lawyering really involve? Copying and pasting from Microsoft Word templates, turning Word files into PDFs, attesting to obvious things ("I have caused this envelope to be placed in the mail as of this date") and occasionally reading a similar case to cite. My mom thinks that programming just involves "typing things into the computer." What you're describing is paralegals' work if not secretarial work. Most of lawyer's work involves researching case law, writing memos and briefs, doing factual investigation, interviewing witnesses, taking depositions, etc. Clients are sophisticated. They're not paying $500/hour lawyers to turn Word documents into PDF's, not when you can get droves of bar-admitted lawyers to work for $20/hour on Craigslist. > Because the courts won't let computers into the picture. Invent a computer program that can apply the law to the specific facts of a case and generate a helpful brief and we'll talk. In reality, many college and law-school educated people of well above average intelligence can't write a helpful brief. The legal industry has been adopting computer technology as it becomes available. A good example is document review. Computers excel at searching through large amounts of information looking for potentially-relevant documents, so law firms increasingly use computers to flag such documents (though many/most clients still prefer to have this outsourced to low-cost contract attorneys). Most work that used to be done by secretaries is automated. Document management systems produce blacklines, track changes is used to enter revisions, etc. Again, clients are sophisticated. They're not paying $500/hour for a lawyer to manually enter hand-markups.

6d0debc071 13y ago

I wonder whether areas with strong patent law will just become... uncompetitive... by comparison to areas where such laws are not enforced.

technoir 13y ago

I once considered taking a serious crack at a subset of this problem. Didn't get any takers though. http://libpatent.com/ http://libpatent.com/

csense 13y ago
What's your marketing like? Have you tried approaching relevant blogs like Popehat for a mention? Or trying to get in contact with places where startups congregate, like YC? Or asking if EFF or others who oppose patents for ideological reasons would be willing to give you publicity, advice, or referrals? Heck, a Show HN post might get you some publicity and feedback. Also, the website is a little unclear about what exactly customers are buying. "Search for prior art" -- it sounds like you're charging people $10k to copy-paste the sentences from their product's specs one-by-one into Google. What exactly are your customers paying for? It's not clear on your website. Remember, you probably have a decent understanding of patent law if you have a JD, but your customers don't. Your target audience is (I'm guessing) similar to much of HN -- intelligent hackers who have a good business sense but little formal training in law or business. Hackers'll want to know the "how" and "why" of what they're buying, but your explanations don't explain legal jargon like "examining applications," "prior art search," or "ex parte". Also, I would suggest offering services on contingency-fee basis -- you only get paid if you actually bust one or more patents at least dimly related to your customer's business, or produce some other sort of tangible result for the customer. To make this financially viable for you, you may need to substantially increase your fee for contingency clients, and have cash reserves in case you lose multiple re-examinations in a row. Also it'd be nice to show patents you've busted. If you don't have any yet, you might consider looking for easy patents to target, and self-funding a re-examination of them, or (if you don't have the money or it's against the rules for a lawyer to bring such a case on their own initiative) approaching the EFF or somebody to ask if they'll fund you.
- technoir 13y ago
  Thanks for the thoughtful response. I originally created this page as an exercise in "marketing driven development" aka just testing the waters to see if there is a market for this sort of thing. I did consider your last point of busting a bogus patent and self-funding the ex parte filing fee. I was considering going for a particular linked list implementation which was patented in the 2000s. My approach was more or less to grep / lucene a wide range of open source projects with extensive timestamps of publication dates (e.g. linux kernel). It turns out that is a lot of work, and since I got no response to the site, I figured this kind of legal service is not really appealing -- for reasons I don't understand. At least, not enough demand to spend a bunch of time on it, since I have other projects I enjoy working on more. Thanks again for the thoughtful response.

Spearchucker 13y ago

What's stopping anyone threatened like this from closing shop, and re-opening in another country under different ownership or some backhanded deal where the victim retains a chance of an income?

deleted 13y ago
[deleted]

csense 13y ago

Maybe we should set up a tradition of patent-busting bounties. Some third-party trust or nonprofit or somesuch, so you no longer have control of the money and the patent troll can't force you to give the money to them to pay a judgment against you. 2% - 10% of your contribution can be used for their general expenses, the other 90% - 98% can only be given to a party who gets a specific patent invalidated, which you specify when you donate. So when the troll tells you that Patent #1234567 is being infringed by your company and you need to pay $100k a year or they'll sue you, you can roll over if it's your own best decision from a risk/reward perspective -- but you can also make a one-time donation of $100k, or whatever you can afford, to the '567 bounty pool. The troll extorts ten companies, suddenly there's a million-dollar reward for somebody to take them out, and it changes the risk-reward equation for the companies and lawyers involved (especially if companies are investor-backed and aren't the sole source of income for the majority of their owners.) I suggested this a while ago [1] and it got a lot of upvotes. [1] https://news.ycombinator.com/item?id=5126551 https://news.ycombinator.com/item?id=5126551

isalmmann 13y ago

24E37894

Mikeb85 13y ago

Come to Canada. Here mathematical algorithms cannot be patented, nor can anything 'obvious'. While it is possible to patent software here, realistically you can't really do it, and the legal system is kind to defendants if someone is brave enough to sue you. The patent system in the US looks ridiculous to anyone outside the US...

pjdorrell 13y ago

I think the concept of "patent troll" is doing us more harm than good. The implication of this expression is that the badness is in the "trollish" aspect, and not in the "patent" aspect of it. Patent trolls are what happens when the patent system is taken to its logical conclusion. So if patent trolls are evil, then the patent system itself is evil. The fact that some or even many patent holders _aren't_ evil is beside the point. Imagine, for example, that there was a law which gave husbands permission to rape their wives. Presumably only _some_ husbands would take advantage of this law. So one might conclude that the law isn't bad, it's just that society has to find some way to deal with those bad husbands, the so-called "marital sex trolls", who take advantage of such a law. And the bad husbands would say something like: "Morally, I think husbands deserve some reward for the benefits that they bring to a marriage."