Foursquare COO Says Small Businesses 'Take It On the Chin' When It Comes to Patent Trolling

from the trolls-and-tolls dept

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Call them patent assertion entities, non-practicing entities, or, in the words of John Oliver, raccoons, but whatever you do, don’t call them small inventors. Patent trolls do not create jobs or products, and their profits certainly are not small. In an effort to clear the air of all the misinformation going around by the patent troll lobby, we spent the day with Jeff Glueck, COO of tech startup Foursquare, as he and other Consumer Electronics Association (CEA) and Engine Advocacy startup members met with members of Congress and their staff to describe his many encounters with patent trolls. A frontrunner in the industry, Glueck has worked in leadership positions at various tech companies, such as mobile software startup Skyfire and now Foursquare. So it should come as no surprise that he needs two hands to count all of his encounters with frivolous patent lawsuits. As he describes it:

The typical troll process is to shake down small companies or startups with the expectation that business owners will settle rather than endure the cost of fighting frivolous claims in court. It's sad when you work hard to create real inventions and a group of lawyers with a vague patent — that never should have been granted in the first place — is able to derail your business with a groundless claim. ... Small businesses take it on the chin. Last year, patent trolls targeted small businesses and tech companies about 80 percent of the time. Now, that number is approaching 90 percent. You may as well call it an all-out assault on the innovation economy.

In fact, 2015 is on track to be a record-breaking year for the patent troll lobby. Comparatively speaking, patent trolls have filled over 11 percent more lawsuits this year than at this point of 2014. Even worse, they are attacking tech startups more than ever before. Patent trolls traditionally have targeted small businesses that are least equipped to defend themselves.

For those select small businesses courageous enough to fight back, the costs are steep financially and the reward is purely ideological. It can take over a million dollars and three years to defend your company going all the way to trial against a troll. Few small businesses or startups have that luxury. And that’s only counting legal fees and legal costs. For small business, a bigger cost can be the time and distraction, or the way that customers and partners may shy away from doing business with you while under a patent assault. As CEO at Skyfire, Jeff saw a baseless patent troll suit against his first major telco customer delay launch of Skyfire’s mobile network software by 15 months. With a deployment on hold, Skyfire couldn’t get paid, and had to keep the company alive at a cost of $15 million dollars until ultimately the troll was defeated in court. Now, in his role at Foursquare, he sees the company dealing with five trolls at any one time, and roughly a million dollars annually in costs dealing with trolls:

That’s nearly ten engineers we would hire tomorrow, but instead that money is going to lawyers. As a country, our leadership in software is a huge potential job growth engine. We can have companies focus on improving their products to grow users and revenues globally, or we can have an economy derailed by everyone suing everyone.

The current climate is daunting for tech entrepreneurs, and Glueck is focused on a solution. In this case, it’s legislative — the U.S. House of Representatives Innovation Act, which is slated for a floor vote this month:

We’re fans of H.R. 9. We need to put a stop to the corrupt process of venue shopping – it’s un-American. Overly burdensome upfront discovery is being used as a weapon and fishing expedition to force companies into settling regardless of the merits of the case.  Narrowing early discovery will take away a weapon for trolls. An automatic stay for innocent users will also help to protect innocent small businesses – from restaurants to tech startups – who just simply use a product. They don’t make it.

Ahead of the upcoming crucial vote for the tech community, contact your member of Congress and urge him or her to support innovative startups like Foursquare by reforming America’s patent litigation system. The patent troll lobby is big and its pockets are deep; don’t let these extortionists get away with another cent.


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  • icon
    JoeCool (profile), 22 Jul 2015 @ 10:49am

    Standard of Living

    Being a lawyer pays better than being an engineer, so by taking one for the team, small companies are helping more Americans earn a higher standard of living by allowing them to be higher earning parasites. So its for the good of the country! ;)

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 Jul 2015 @ 11:00am

      Re: Standard of Living

      Lawyers are just doing their part by working within the laws of our country.

      Although, laws are written and interpreted by former lawyers. So yeah, string 'em up by their toes!

      reply to this | link to this | view in chronology ]

  • icon
    Coyne Tibbets (profile), 22 Jul 2015 @ 11:01am

    This shall not pass -- big companies will see to it

    Large companies will lobby against any improvements to the patent system.

    For them, the trolls are a minor cost of doing business, and they perform a valuable service: destroying or stalling new competitors. Every dollar a troll sucks out of Newegg's pocket is a dollar not spent on competing with Microsoft--you think Microsoft considers that a bad thing? (Even worse, trolls avoid large companies because they might actually fight back.)

    Further, patent trolling is directly useful for those major companies. Apple trolled Samsung out of US markets; Samsung thinks that's bad. But what about Apple? They won't want to be giving up that tool anytime soon.

    Here's predicting that, just like before, it'll just sort of die in committee.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 Jul 2015 @ 11:08am

      Re: This shall not pass -- big companies will see to it

      This is called "regulatory capture". It's a big problem in all kinds of industries. Happens with environmental regulations in the mining and manufacturing sectors. Finance laws in banking, and so on. Even alcohol distributors. There's a good documentary on Netflix about it. Small breweries have trouble getting their product on the trucks due to backfired prohibition-era regulations.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 Jul 2015 @ 11:53am

        Re: Re: This shall not pass -- big companies will see to it

        It is also called barrier to entry. Old, established players who refuse to adapt or die can use this to keep out the competition. If this country wants to regain or keep its dominance, which the current POTUS does not wish for us to do, it needs to take the leash off (i.e. severely limit patents and copyright).

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 22 Jul 2015 @ 5:44pm

    Mark Syman's not going to like this at all, not one bit.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 22 Jul 2015 @ 5:45pm

    Good to see Cuba opening up, our organization won't have to be beholden to the Chinese or American patent trolls after all.

    reply to this | link to this | view in chronology ]

  • icon
    KJ (profile), 22 Jul 2015 @ 8:19pm

    Why don't companies pool resources to fight specific patents?

    At $1M/yr in extortion for Foursquare alone, wouldn't it make sense for companies to publish, perhaps anonymously, the patent threats made against them, then contribute to a pool to defend one of the pool's members, and have the patent invalidated? This would be a band-aid of course since the source of the problem is the patent office.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 23 Jul 2015 @ 2:01am

      Re: Why don't companies pool resources to fight specific patents?

      AFAIK it's lack of knowledge and/or pride mostly that deters small start-ups from pooling resources together.

      Plus whoever's going to manage those resources will need to be paid enough not to betray the association, and in time this would simply add another "*A" to the already existing pool (RIAA, MPAA, ESA, etc.)

      reply to this | link to this | view in chronology ]

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