I am now entering into my third small business venture, and what is likely to be my most ambitious... and sometimes I wonder if I am what is referred to as a "Job Creator". Most days I sure don't feel like one, in fact I would be dancing a jig right now if I could pay one employee (let alone quit my day job and do this small business thing full time). I guess I might be better described as an American who still has faith in the Dream.
Recently I had a long talk with a patent lawyer, and for all of the stereotyping of lawyers being greedy douche bags out to steal your money with the law... this one told me, "I can represent you in getting a patent for your process. But by the time everything is said and done it is going to cost more than $40,000, and the patent office is just as likely as not to reject the patent. And even after that the level of protection you will have from patent trolls and people stealing your technology at your level would be negligible."
He broke it all down for me like this.
Patent Trolls will send threats of litigation once you start making money. They used to threaten cease and desist but that hammer was recently taken away from them in a court case that said that a patent owner that is not actually creating something from that patent cannot press for a cease and desist order. (eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388) The amount of money that they ask for is strategically lower than the cost of bringing a lawyer on board to fight the claim. So it is economically rational just to give them the money and make them go away. What shows just how broken this process is... the patent troll contacting you may not actually have a claim to the patent that they are actually threatening to sue you over, but the cost of finding out if they are bluffing or not is more expensive than just paying them to go away. They may just be bluffing, and so at a later date the actual patent holder may come along looking for the same money, and you will have to pay on it again (because the first troll is now long gone). There are going to be situations that will arise in the future when I will have to choose between defending myself from patent trolls, and hiring a new person.
Patents take a long time to file and be approved. The system is so backed up that if you are lucky your patent application will only take three years. And in the time it takes for you to get that patent application your idea is on file waiting to be stolen, and your legal options for preventing other people from knocking off your invention are limited. And if the person stealing the invention is out side of the United States... then you pretty much have no options to protect your invention.
Patents are the weapons that big corporations use against each other, and it is no longer a game that can be played by startups and independent inventors. Large corporations construct patent arsenals that they use in a kind of Mutually Assured Destruction détente (which has turned into a shooting war recently over the mobile device market).
In short our patent system, which was meant to encourage creativity, innovation, and progress is now having the exact opposite effect. It is now a discouraging mess that keeps people like me awake at night worrying about how I am going to get my idea to market and build a future for my family. Even with the patent reform act, the nature of the beast has still not changed, inventors are still at the mercy of a system that is corrupted by bad actors abusing it.
What I have learned is that in the ongoing patent wars the startup needs to practice something akin to asymmetrical warfare. They need to take advantage of their size to escape the notice of predators (Patent Trolls) and to make themselves appear too small for the big boys to bother with.
At the same time it is advantageous to make yourself look too costly to attack. Right now the same lawyer is working on creating a set of opinion papers for us. What the papers do is state that in his opinion our product does not infringe on patent XYZ because of "Blah blah blah". They are just that though, opinions, they have little standing in court but 99% of the patent trolls out there will run and hide when they receive one of these shortly after they sent out their threatening letter. The fact that the opinion letters directly address the patent they are threatening with makes it look like we are prepared for them, and therefore it looks like we are ready for a fight and the patent trolls don't want fights they want easy marks.
So how are we protecting our innovation? Its a secret... or at least how it works is a secret, which brings with it a whole mess of other problems that I will get into next week as I make my way through the maze of intellectual property law.
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