More Patent Trolls Are Targeting Startups. Here's What You Can Do.

By: Nathaniel Borenstein

Startups aren't typically founded by lawyers, so patent law isn't usually a front line issue for them. But I've come to realize that patent protection is at best No. 11 on the top 10 list of things for startups to focus on -- something they generally understand is important, but not quite important enough. Part of that is because the headlines focus on big lawsuits lobbed at big companies, which creates a false sense of security. As an inventor and a computer scientist with 25-plus years of practical experience, I'd like to think I've navigated the murky, complicated world of patents and come out on the other side wiser and more informed. And, as such, there is something I want entrepreneurs, inventors and early-stage businesses to know. Yes, you are a potential target for patent trolls, and yes, there is something you can do about it. Today.

Related: If Your Startup Really Is Disruptive, Expect to be Sued By a Patent Troll.

Here's what everyone thinks they know.
It is generally understood patent trolls are typically "shell" companies that do no real business but simply pursue a business strategy of suing businesses over their patents. They typically sue for a large amount of money but settle for an amount they estimate will cost the victims less than a court fight. They do no good for anyone in the world but themselves, and they can be extremely costly (in time and money) to their victims. Too many people believe patent trolls are only after big names -- big companies with big wallets. The smaller suits, the ones aimed at startups and mid-sized businesses, might not make headlines, but they do untold damage.

Startups are targets for trolls, and grow more so over time.
Startups are often targets for trolls, but many entrepreneurs are unaware of this reality. With so many things to think about -- building a product, hiring a staff, fundraising, marketing, sales -- protecting against patent trolls is not likely to be high on a founder's list of priorities, but it should still be a consideration. A company gets hit with a suit and has to respond, but by then, it's too late. The mere presence of the suit is itself a drain on limited resources, to the tune of several million dollars that startups can't afford. This is why being proactive is essential.

Related: How to Conduct a Patent Search to Make Sure Your Brilliant Invention Doesn't Already Exist (Infographic)

A disproportionate number of patent trolls target smaller companies: More than 50 percent of businesses targeted by patent trolls make less than $10 million in revenue per year and 75 percent of the companies sued by trolls are privately held. And for good reason: To trolls, the whole point is to impose a costly and scary lawsuit, so that startups with limited resources to protect and defend themselves are more likely to settle than fight.

Don't let your own patents be used by trolls someday.
I doubt that I've ever met an entrepreneur who liked the idea that his or her patents might someday fall into the hands of a troll. But they can and do. Simply to be good citizens, startups can and should take measures to ensure that their patents will never be useful to trolls. Patent-fighting networks can help protect others against abuse of your patents while protecting you against use of theirs.

Read more >> https://www.entrepreneur.com/article/310648