Friday, February 03, 2006

How to Litigate Like a Patent Troll

Apparently, your success in extorting royalties over your shaky patents depends largely on the jurisdiction in which you file lawsuits:
In one federal court in East Texas, plaintiffs have such an easy time winning patent-infringement lawsuits against big-tech companies that defendants often choose to settle rather than fight.
Here's an interesting fact from the article: the average cost of defending oneself against a patent lawsuit, according to the American Intellectual Property Law Association, is 2.8 million dollars. No wonder companies, both large and small, often roll over when threatened by a troll, even if that troll's patents are obviously invalid.



Anonymous Little Guy said...

Absolutely True!

I'm a small-time inventor. I tinker in my home office, doing innovative software when I'm not doing contract work for clients.

I worked for 3 years on a product that was going to revolutionize directory services for small businesses. It was just about finished, and I'd put out a beta version on the website.

Then came the cease-and-desist from a patent troll. They wouldn't tell me which patents or claims they thought I infringed, but I was able to trace back what they held with some help from the Internet and a lawyer. None of their claims validly covered what I was doing, and the claims which might have some overlap would easily be invalidated by a ton of prior art, most of it available as source code from other sources that predated their patent applications. My attorneys agreed that they didn't have a case.

But I didn't have $2+ million to fight. And I couldn't afford to defend myself against a lawsuit. I also couldn't afford the $800,000 they wanted in licensing. So, I shuttered the project.

No one can say whether my 3-year investment would have been successful in the marketplace. We'll never know.

7:50 AM  
Anonymous Anonymous said...

From another little guy:

I spent 5 years of my life researching, developing and patenting an algorithm which is extremely useful for audio processing applications.
I put a prototype code in my patent application and on a web-site too and made it clear that I will not charge any money for non-commercial use of my algorithm, but I feel that I am entitled to some very small (e.g. 25 cents for each copy sold, not 800,000$)
fee for commercially sold products making use of my algorithm.
Guess what, did anybody come forward to license my stuff ?
Of course, no.
Some of those guys are little guys writing commercial soft in their basements and selling it , and none of them even thought that they owe me something for the algorithm they implemented from my publiushed specs and which they need badly (all other similar algorithms are inferiour to mine)
I don't plan to extarct money from small guys, but I am sure that at some point I will go after those dirtbags in TI amd MS to see the money they stole from me.

8:08 AM  
Anonymous Little Guy said...

So how do you plan on funding your royalty-extraction campaign against MS, TI, et. al? Do you think you'll have to team up with a patent holding company?

Would you be supportive of reform that made enforcing your patent(s) less costly?

I'm also wondering (and I know this is irrelevent now, since you did file the application and disclose the invention, but just for curiosity's sake), do you think you could have protected your invention with trade secret?

9:31 AM  
Anonymous Anonymous said...

From another little guy:

I don't have 2-3 mil to go after big corp, so my only choice is to sell say 50 % to some holding company.

The most disgusting thing is that when my patent application was piublished I sent 100 lettets to all the big corps offering them to licemse or buy it outright very very cheap (not even 7 figures for buying it) . Nobody ever replied...
So when I hear their complaints about evil patent trolls buying patents from defunct companies I am ouraged to say the least. How else can an independent inventor to see any money for his creation if not by selling or licensing his patent ?
As time goes by, my frustration builds up...
To hell with the patent system.
I could keep it a trade secret for decades, writing and selling some soft in low volume to stay off the radar of those big corps, but then o0ne day
my stuff would be reverse-enginnered by somebody in big coprs
anbd I would see somebody elses name on a patent describing my algo.
To hell with the patents and promoting progress, I just want to be paid a little money for my work and not have it stolen by big crooks.

Any patent reform coming from Washington DC these days can only mean making patents unenforcible by small guys like me.

10:03 AM  
Anonymous Little Guy said...

I could keep it a trade secret for decades, writing and selling some soft in low volume to stay off the radar of those big corps, but then o0ne day
my stuff would be reverse-enginnered by somebody in big coprs

But at least you'd have X years of revenue, right? And if your process really was superior, you could save the big corp money that they'd have to spend reverse-engineering by licensing it to them under NDA (preserving your trade secret rights). There's no way to say that you'd be successful with this, but it sounds like you haven't been all that successful (at extracting payments) with the current system either. Do you think this approach could work in cases like yours?

anbd I would see somebody elses name on a patent describing my algo.

Couldn't you use "poor man's patent" (disclose invention in a sealed and signed letter to yourself, delivered with postmark by the PO) to establish your inventorship? And if you really wanted, to invalidate any patent that someone else later files over your claims?

to hell with the patents and promoting progress, I just want to be paid a little money for my work and not have it stolen by big crooks.

Amen to that. And amen to not allowing the big crooks to shut down small inventors who want to commercialize their inventions! That's what eats me up -- those bastards shut me down, and it was completely without merit. It is only because of our crooked patent system that they are allowed to do that kind of crap.

So we really want the same thing: to be able to make some money off our work. I could do that if the patent system weren't in my way. But it is. And both big corps and patent trolls conspire against me, both using the patent system as a bludgeon.

11:32 AM  
Anonymous Anonymous said...

From another little guy:

Ah, NO,
NDA doesn't work with big crooks -they wouldn't sign it in the first place and if they know there is something really useful they would reverse-engineert it in a matter of weeks -they have resources.
The only way to make a little money is by keeping low volume and staying off their radar...
And by the way, when (and if) I eventually find some financial backing to enforce my patent they will be yelling "patent troll" at me, like they do it now to that poor dead inventor behind NTP.
"Patent troll" phrase is applied indiscriminately nowadays to any small plaintiff in order to detract public attention from some real problems with low patent quality and stifling competition from small entities by using patent thickets (cross-licensing and banding together) by big guys...

12:20 PM  
Anonymous Little Guy said...

Not to offend, anonymous, but... maybe your patent just isn't as valuable as you think it is... I mean, even the patent holding companies agree that 90+% of granted patents are of no commercial interest. I'd give you the benefit of the doubt, though, and say that it *does* fall into that <10%. I fear though, that even then the public will never have much sympathy for an inventor who doesn't actually produce anything but a patent application, especially if the patent only covers an algorithm or business method.

Why don't you make an audio processing library and sell SDKs for it? If it really is better, you should be able to demonstrate how much better it is with a simple website. And then, when you claim that MS or TI or whoever stole your patented idea, you'd get a lot more sympathy, because people could see how it might cut unfairly into your software library sales.

It'd also give you a better basis for claims of damages for infringement in a court case. And you'd largely avoid the patent troll label.

Along the way, I'd suspect that your wildly successful SDK library will change your approach -- you probably won't need to take the troll road because the library is really useful and it produces enough revenue to keep you growing. After all, "all other similar algorithms are inferior" to yours. If others do infringe, you can leverage your marketplace acceptence in negotiations for settlements without ever even needing to do more than vaguely threaten litigation.

Or, maybe I'm up in the night. That's the way I'd proceed, though, if I were you (but I admit that I don't have all the insight into the details of your creation that you do).

1:13 PM  

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