Patent trolls are essentially economic rent-seekers, and that recent research has shown that they stifle innovation and hurt startups. If you’re an entrepreneur, you’ve most likely seen the many unsettling headlines — and while there is hope that the era of patent trolls is ebbing, you have every right to be nervous. After all, entrepreneurial endeavors are risky on their own. Fortunately, there is a strategy for protecting yourself against patient trolls.
Five-Step Protection Plan
1. Do your due diligence. You’ve got an idea for a product or service, and you want to go into business for yourself. Before you do anything else, do your research. As John Bradley Jackson, the director of the Center for Entrepreneurship at Cal State Fullerton, says in an article published by the Orange County Register, “Conduct a thorough search with the US Patent and Trademark office prior to the release of any new product or service.” Your mission is to confirm that you’re not infringing on any existing patents. In an article on Forbes, author Drew Hendricks agrees: “Before you put any product or service on the market, do a thorough search to determine whether or not that item has already been patented.”
In addition to conducting thorough searches, I recommend being familiar with the basics of IP law. Do you know the differences between patents, trademarks, copyrights, and trade secrets? Do you know if you need to file patents for your startup? Are you aware of legislative trends regarding intellectual property (IP)? As a startup or small business, you should be able to answer “yes” to all of those questions. (Shameless plug: Traklight’s blog and resources page are chock full of free information that’s straightforward and helpful.)
2. Protect yourself legally. As this article explains, you need to file the appropriate patents before someone else does. After all, according to Verge’s research, “each patent a startup has tends to add about $1 million to their valuation.” And while attorneys are not cheap, a lawyer is an important friend to have in your corner. One way you can cut costs, though, is to be well-prepared. Traklight’s ID your IP® will not only identify everything you need to do from an IP standpoint for your startup—such as filing the appropriate patents, trademarking logos and product names, and establishing the appropriate online domains and social profiles—but also produce a report specifically for your attorney. This is essentially a legal to-do list of sorts, which will shave down the time your attorney is on the clock, thus minimizing legal fees.
3. Ensure you’re insured. You know patent trolls are a real concern when insurance companies start offering intellectual property insurance, which protects businesses in the event of a lawsuit. Hendricks’s and Jackson’s advice? Get some—and fast. “It’s important to put this insurance in place before any legal action has been taken against your business,” Hendricks explains in Forbes.
4. Develop a digital defense. In a Huffington Post article, author Deborah Sweeney explains that patent trolls don’t just slap suits on any ol’ company: “They comb the internet looking at websites and plans, picking out anything and everything that they can twist into patent infringement.” Therefore, Sweeney advises that startups create digital shields that gate business documents. “Your shield can be an online registration system for anyone interested in looking at your business’s documents, or a system that forbids anyone outside of your office from accessing those documents.” While this may seem like you’re hiding, it can prove essential in the early stages of development, especially when finances are tight.
5. Create a network. Colleen Chien — a professor at the Santa Clara University School of Law and the author of a recent patent troll study—told TechCrunch that startups should form “collective, self-help-based solutions such as joint defense efforts and industry association groups.” And while that means that small businesses might have to share their worries over—and possible suits from—patent trolls, there’s strengthen—and more money—in numbers. As Chien explains, patent trolls go after businesses that aren’t in a “financial position to defend themselves.”
Slapped with a Suit?
Even with all your preparation, you may still come head-to-head with a patent troll. If you receive a demand letter or a suit notice, do not respond to the sender. Instead, do a thorough investigation, and get answers to these questions:
- Who sent the letter—an individual or business?
- What’s that entity’s background?
- Is the entity a patent troll?
- What are the IP laws as they apply to your business on a state and federal level?
- What response deadline did the entity impose on you?
- How does that entity believe you’ve infringed on their intellectual property?
That last question is key, because according to Sweeney in the Huffington Post, “It is typically easier to fight the claims of infringement, rather than the patent holder’s claim to the patent.” Furthermore, you can validate whether you’re genuinely infringing or if the accusations are questionable. The more investigative work you do, the more time you can save with your attorney—and you will need to hire one. Fortunately, some may provide free consultations to assess your case; battling patent trolls is a growing business line for IP lawyers, after all. Now, as I said above, attorneys don’t come cheap, but as Hendricks puts it in Forbes, “If one letter from an attorney can shut down a patent troll’s attempts, the fee may be well below the cost they’re requesting.” (For more information on defending against patent trolls from a legal standpoint, check out this guide from Blank Rome.)
As mentioned in the last article (link to Patent Troll Blog Part 1), there is a new way as a startup, inventor, or entrepreneur to fend off the patent trolls. Unified Patents helps protect startups and entrepreneurs by partnering with large companies and subject matter experts to identify and deter patent trolls. Best part it’s free for the little guy. If you have at least one issued or pending patent, you can register for Unified Patents and also receive a free code for ID your IP (regularly $199). Click here to get started now.
Keep Calm and Innovate On
While patent trolls are concerning, they shouldn’t deter you from pursuing your entrepreneurial endeavors. They shouldn’t make you cower in fear or give up. As Dustin Dubois from Ice Miller tells Verge, “As important as it is to get yourself aligned legally, nothing is more important to your business than making sure that it is profitable.” In other words, IP is a key aspect of your business and something you absolutely need to understand and protect, but it isn’t your business in itself. Focus on your business, and take the necessary steps protect yourself and your ideas. Patent trolls’ reign will end, but only if startups, small businesses, and entrepreneurs don’t give up, because it’s through your relentless pursuit of success—and lobbying our lawmakers—that we’ll defeat the trolls.