I got this email this morning.
Mark,
I’ve been following blogmaverick.com for a loooong time. I’ve recently come up against a patent related issue and figured I give it a shot in running it by you since you write about patent law often. I’ll be brief…
I spent the last year developing an extremely valuable piece of technology. I have caught the eye of a Fortune 500 company that would benefit most from the technology and they want to make a strategic investment in my small company. The problem is they are big, stodgy and paranoid… and they are hung up on my software possibly infringing on patents. As you know that it is almost impossible to create new software nowadays that is not at risk of possibly being interpreted to infringe on prior art. And I’m sure their overpaid legal team will find *something* that they will vaguely relate to justify their salaries.
I’ve done plenty of software deals in the past and have never quite run up against an inventor that has been so paranoid.
You are an investor… Is there anything I can say to them that will ease their concerns? Any way to structure the deal to ease their concerns?
Any advice is appreciated.
My Advice ?
There is nothing you can do. If some patent troll or someone else wants to attack you with a lawsuit, there is no way you can proactively protect yourself. It is an unfortunate cost of doing business these days.
The subject of patents really crossed my eye, as it’s been a topic of discussion here as well.
Comment by newaustralianews -
great website http://to-musicandmovies.com
Comment by mihaiiahim1211 -
The problem is that a search can only get you so far. Even the best searchers in the world will miss several potential troll pitfalls. Remember, “trolls” have no skin in the game. 9 times out of 10 they are not your competitors, you’ve never heard of them, and they are getting free legal work from a contingent fee lawyer. Typically, they’ve purchased a patent at an auction, or it’s something they (or somebody related to them) invented years ago but never marketed. When first presented with such a suit, the defendant’s first impression is almost always, “that’s BS, we don’t do anything even close to that!” and that is where the search fails. Trolls (or non-producing entities as they like to be called) can take a patent on apples and construe the claims to read (with help from creative lawyering and help from the judge) upon your oranges in such a fashion that no search would ever uncover it.
You’re also missing another point, in that excess searching can hurt you. You can find the aforementioned apples patent, decide it has nothing to do with your oranges, but when you do get sued, you are charged with having actual knowledge of the apples patent, so now you’re on the hook for willful infringement because you (as a responsible company) decided that the apples patent wasn’t close enough to spend money on an opinion.
Sadly, Mark’s advice rings true. If you’re making money and have a successful product, there’s almost nothing you can do to avoid getting sued.
Comment by patentlawyerlee -
Unfortunately Mark is right… There is not much you can do when an 800lb gorilla comes after you with an equally large legal fund to extract money for an alleged infringement. But you can prepare in advance with a solid patent research program. I would highly recommend that you take a look at a new Patent Searching and Analytic solution that has just been launched by a Colorado Springs, CO based company called CobaltIP. Their website is: http://www.cobaltip.com. We had one of the principals of the company and a CSE Group member and friend, (Matt Troyer) do a “Sneak Peak” at our November Colorado Springs Entrepreneurs Group Meetup. More info here: http://www.colospgsbiz.org/cse-blog/item/58-november-2011-colorado-springs-entrepreneurs-group-meetup. The company is offering a variety of professional IP searching solutions at different price ranges and has developed what I believe is going to be a market shifting solution overall. Mike Schmidt, Ensemble Ventures, LLC – Colorado Springs, CO
Comment by ensembleventure -
Oops meant to add this on your newest post …
Comment by The Tart -
Well Mark, we’ve come a long way since the days of going to the 8.0 in the Quadrangle after a Mavs game, standing outside around that fountain talking about a great win or missed throw … Or, for me, meeting a blind date at the Beau Nash before a game or running into THAT guy I saw at the game over at Highland Park Yacht Club on Travis later.
The way we communicate has changed & now allows us to create “moments” in new ways. I for one don’t see smartphones as all that bad. Let me share a story …
Several years ago my mother became ill & needed to move into an assisted living facility hundreds of miles away from me. As soon as she settled in we got her a flip phone & then soon after gave her an iPhone. Naturally that iPhone mortified her … but as soon as she realized that every time she heard a “ping” there was a text message with a photo she became intrigued.
Smartphone communications allowed me to share my life with her … “moments”. Moments from all kinds of venues: sports, museums, friend’s homes & pet pics. Sadly she died this fall. But what I have are some classic moments with her which makes where I was so much more memorable. We felt connected in an unusual way.
I can’t speak to what has been proposed to you. But don’t discount the moment someone at a Mavs game take’s a pic of the winning throw & Tweets/txts it to: their dad in a hospital, husband whose working late at the office, friend in rehab recovering from a surgery or the parents of the kid sitting next to you who is at their FIRST Mavs game & is completely in awe!
Smartphones along with social media, at their best, have given me some of the most wonderful moments with my mother who is now gone. Every time my iPhone “pings” … well you know what I mean. <3
So next time your at Taco Diner, taking that last sip of coffee before you get your morning going, think about all those proposals … Is there one that might be worth something? A “moment” for somebody somewhere … “ping”
Comment by The Tart -
While what Mark says is pretty much true, there are some factors to consider. Primarily, patent trolls work almost exclusively with contingent-fee lawyers. Meaning, the lawyers only get paid by a percentage of the winnings. So, if you’re an upstart, with little revenue, there’s not much chance you’ll get sued (now). Trolls primarily target huge companies’ products with lots and lots of revenue because they need that revenue for a sizable damages award. So, if you’re starting out, i wouldn’t be too worried. If you’re in acquisition talks, the buyer may use this to try and talk down the sales price, but if they’re savvy with software they know it’s just part of the cost of doing business.
Clearance opinions and searches are only good for avoiding willful infringement and treble damages. You can have the best non-infringement opinion in the world, and still get hit with infringement, particularly in eastern Texas. Even worse, your search/opinion may miss a patent, that some crafty troll has manipulated to read upon your product.
Comment by patentlawyerlee -
I was talking to an economist last year. He was talking about the real cost of products and services. I think most people would be surprised about the R&D and legal cost of many tech products. It is ridiculous.
Comment by dowelltaggart -
So sad. By June, I will have a solid 2 years of my life invested in a software product which I expect to be hugely successful, except that if it is, I will have no funds left to hire lawyers to fight whackos and patent trolls in the courts. I guess that will make me a failure.
Kinda sucks. Nevermind that I’ve stuck to super obvious improvements on existing technologies which are not patented or patent-able.
Comment by petecarapetyan -
Patents are the very reasons of many fights and wars, we should get rid of the whole idee of patentising things.
http://www.afvallenzonder.com
Comment by afvallenzonder -
As an inventor in the stages of researching existing patents to ensure my idea does not encroach on anyone else’s, the information both in this post, and in the comments are extremely valuable. So glad I checked in tonight! Thanks Mark and commenters.
Comment by norrismantooth -
The subject of patents really crossed my eye, as it’s been a topic of discussion here as well. We have an internationally patented process available to us for making low-cost carbon fiber cars(yes I did say carbon fiber and low-cost in the same sentence!) I’ve wanted to ask Mark about this in fact: We can acquire the company with international patents for about 1/23 to 1/62 of its value(can explain). That company is currently healthy and has been professionally assessed to have a value of $23mil on the low end. Hope to know your thoughts Mark: isaac@barhammotors.com
Comment by isaacbarham -
Pingback: Patent Law Kills Again « blog maverick | www.kotisearch.com
Get a freedom to operate opinion, it’s like a patent search on steroids. I will in the near future have to spend the money on one.I believe the way it works is you hire independent law firm(s)to do the searh for prior art anywhere if it comes back clean they are putting their reputation on the line and they are liable. If the opinioin comes back clean it not only protects you if someone infringes on your art, it protects you and potential investors money from being spent on litigation if someone sues for infringement. It is as i understand, a very powerful tool and well worth the money… BUT DON’T TRUST ME,Research it, i an not a legal expert by any means. I have been referred to this tool by a Venture Capitalist friend of my brother, I have an ankle brace that allows full range of motion but you can’t sprain your ankle, he estimates my freedom to operate opinion will cost 25-30k, very expensive but when people will do nearly anything to get(steal) your work or sue you, it has to be worth it. Hope this helps.
DLD
P.S. The VC explained it like this. A patent doesn’t give you the right to use your art it prevents others from using it, A Freedom to operate opinion gives you the right to use your art.
Comment by d3diesel -
I would say the best reference to this is in the movie “The Social Network”, Mark Z gets bombarded with IP claims, but brushes them off as Eduardo cries about them in the corner of the room. I think in this day and age, unfortunately you have to act like that. If everyone followed IP rules, we would hardly have any new software. I mean Google pays billions to microsoft because Andriod’s ip conflicts with a patent microsoft has. Or even if Mark Z had adhered to those IP claims, FB would not have gone on and would not be getting the billion dollar valuations it is today.
Also Mark, i was wondering if you could give me some advice on my website. http://www.storeator.com . Im just really stuck on what to do with it. I would really appreciate it if i could run some stuff by you. @ sunnysangasong@gmail.com . Thanks Mark
Comment by sundawg559 -