Clubbing the Trolls on Capitol Hill

Writing this from the Hart Building, about to meet with our two Senators (well… their staffers…) to discuss patent trolls. At Livio, we were very fortunate to avoid a lawsuit (of any kind). Obviously starting any business is exciting, and in the tech industry there’s never a dull moment with changing technology and major product announcements daily.

One dark secret about our tech industry is the risk of IP and patents. It’s a checkbox question to be prepped for when raising VC money, and IP (protectable or non) is always a to-do item. Most of my friends and family think that a patent is a magical right to sue everyone to grow the money tree. In my circles we call this “Patent as a Product.” Unfortunately that money tree exists, but in a very unnatural way…

Protecting your products by filing provisional patents is a good business practice. We are fortunate that in America we have protection to avoid people ripping off our technology. What’s unfortunate is many good companies (and really unfortunate; major universities) outsource the enforcement and protection of these patents.

Someone figured out that there is a business to solicit large companies and universities, manage their patent portfolio, and give them a % of all licensing revenue generated from licensees. That idea turned into a multi-billion dollar business. The trolling happens when these greedy companies (which we call Patent Trolls) start becoming bad actors. The trolls work to maximize gross margin, target small businesses, which don’t have the resources to fight back.

To make the process darker, there is no requirement to even tell the “alleged” infringer what patent they are “infringing” or even disclosing the name of the patent owner (troll payee). It’s like getting pulled over on a traffic stop, getting a $25,000 ticket without explanation, and having to pay $500,000 to fight it in court.

Any tech startup is that you can get sued for patent infringement, without any specific reference, without any specific plaintiff. This is extortion. This multi-billion dollar industry needs to be shut down. The solution I support (through CEA) is a loser pay provision with an escrow/bond set up at the beginning of the litigation.

Obviously the plaintiff and patent number needs to be listed as well so small (and all) businesses hit with any patent infringement issue can quickly assess the merit of the litigation.

Have you or someone you know been hit by a troll? Comment or hit me up on twitter!