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PatentShield helps startups fight patent litigation in return for equity

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Re: PatentShield helps startups fight patent litigation in return for equity

#21

Post by DaiPlusPlus »

anon374939 wrote: post #2

Its always nice when the private sector figures out a way to solve a problem that should be solved by government, but government is incapable or unwilling to do so.

This solution works, but it's far from ideal - the trade of equity for protection (or rather: access to their arsenal) could be unappealing to startups without much equity to hand-over in the first place - given a $1m lawsuit (which might cost $1m to defend against), or giving up $1m of equity for access to counter-suit weapons (with no guarantee of success - and also probably costing $1m to file anyway).

Re: PatentShield helps startups fight patent litigation in return for equity

#22

Post by pnw_hazor »

DaiPlusPlus wrote: post #16
dis-sys wrote: post #6

so.. patent laws are so broken that patent trolls are everywhere suing startups to get $ from them. google now has a business that can directly benefit from such increasing number of patent trolls. sounds not very inspiring to me. who is always on the losing side? average small companies. who is screwing the economy & innovation and show no sign of change? governments who refuse to actually reform such a 100+ years o…

This service is not for defending against non-practicing entities - but to defend against patent suits from large enterprises that the startups might be competing against (e.g. Microsoft, Facebook, Samsung, etc) - not that Microsoft et al. engage in that kind of warfare against small-fry, but it's plausible.

IBM, Microsoft, et al. certainly throw their patent portfolio weight at small companies when it suits them.

For example, they may bring out their patents to force a lower valuation when acquiring companies.

Re: PatentShield helps startups fight patent litigation in return for equity

#24

Post by pnw_hazor »

greglindahl wrote: post #15
anon374939 wrote: post #2

Its always nice when the private sector figures out a way to solve a problem that should be solved by government, but government is incapable or unwilling to do so.

It doesn't solve the problem of getting sued by a troll -- what patent are you going to use to counter-sue a business that doesn't have any business?

There is some good news though. Recent court cases (Alice, etc.) are really cramping the trolls' style. Intellectual Ventures and the like are backing away from the troll model because their crappy software patents are getting invalidated in court left and right.

Re: PatentShield helps startups fight patent litigation in return for equity

#25

Post by samaparicio »

caf wrote: post #18
jshmrsn wrote: post #10

Earlier quoted context omitted.

Let's say I pay into this fund, then I get sued for patent infringement. How does the fund decide whether this lawsuit is trolling or legitimate? Or would the fund pay for all patent lawsuits?

Couldn't the fund just use arms-length consulting patent attorneys to answer the question: does defending this case have a reasonable prospect of success?

It could. It could also force the startup to hand over control of the defense (which the startup would most likely be ill-suited to control) and therefore control the defense strategy.

All that is required is a big enough defense fund that acts as a true deterrent.

Mind you, if the startup loses it doesn't mean that it would not be responsible for the payout - but at least the startup wouldn't fold simply because the costs of defending itself are out of reach.

Re: PatentShield helps startups fight patent litigation in return for equity

#26

Post by jacquesm »

caf wrote: post #17
jacquesm wrote: post #12

Earlier quoted context omitted.

Commercial fire insurance does not typically take equity in the places they insure.

Does payment in the form of equity rather than cash affect the incentives in a negative way? It's not enough to call out a distinction: how does it make a difference? If anything, the equity should mean that Google's incentives are more closely aligned with the startup's than the fire insurer's are with the insured.

Yes, because obviously if that equity turns out to be worth a very large amount of money and the company is never sued Google is not going to turn around and say 'oh, sorry for this vastly disproportionate payment, here is your repayment'.

In fact, the best outcome for Google would be if nobody ever got sued. (That's also the best outcome for the companies but there is no way of knowing if they would have gotten sued had they not paid their protection fee.)

Re: PatentShield helps startups fight patent litigation in return for equity

#27

Post by caf »

jacquesm wrote: post #26
caf wrote: post #17

Earlier quoted context omitted.

Does payment in the form of equity rather than cash affect the incentives in a negative way? It's not enough to call out a distinction: how does it make a difference? If anything, the equity should mean that Google's incentives are more closely aligned with the startup's than the fire insurer's are with the insured.

Yes, because obviously if that equity turns out to be worth a very large amount of money and the company is never sued Google is not going to turn around and say 'oh, sorry for this vastly disproportionate payment, here is your repayment'. In fact, the best outcome for Google would be if nobody ever got sued. (That's also the best outcome for the companies but there is no way of knowing if they would have gotten sued…

How is that different to "You paid an awful lot of fire insurance premiums over the years but never had a fire"? The insurance company certainly isn't giving you a refund either.

It seems to me that if the equity turns out to be worth a lot, then the value of the protection is greater as well - the potential losses are likely to pretty closely track the company's value.

Re: PatentShield helps startups fight patent litigation in return for equity

#28

Post by badminton1 »

Patent law needs reform.

If you analyze the life of important inventors and innovators of the 20th century, there has always been some patent pain involved that is not in the interest of the "greater good".

The reason America didn't have a significant air force for WW1 compared to other powers was in part due to the legal battles between Wright and Curtiss. The government intervened in the patent driven battle so planes could mass produced and used in the war effort.

Then, the inventor of the TV (Farnsworth) got sued by radio manufacturers and could never actually profit from his creation.

Then, many patents get extended for excessive periods of time to prevent things becoming public domain (e.g: Disney).

Re: PatentShield helps startups fight patent litigation in return for equity

#29

Post by Tanegashima »

dis-sys wrote: post #6

so.. patent laws are so broken that patent trolls are everywhere suing startups to get $ from them. google now has a business that can directly benefit from such increasing number of patent trolls. sounds not very inspiring to me. who is always on the losing side? average small companies. who is screwing the economy & innovation and show no sign of change? governments who refuse to actually reform such a 100+ years o…

The problem, is not the law, the problem is the bureau.

They keep attributing patents that are obvious and meaningless.

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