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Almost a third of our portfolio is under attack by patent trolls.

unionsquareventures.com

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Re: Almost a third of our portfolio is under attack by patent trolls.

#11

Post by twohey »

I really feel for smaller companies here as I know people with great products who have been trolled out of existence.

I wonder if there is a non-legislative fix available because I've heard about programmers wanting patent reform for as long as I've been programming and I believe almost no substantial progress has been made.

Brad mentions that larger companies have more resources available for fighting patent trolls. What if VCs set aside a pool of capital for defending their investments from patent trolls as part of raising their funds?

The idea would be to create a pool money whose size would ward off patent trolls. I'm sure it would take a few victories in court, but it could establish a precedent and change the game.

It certainly seems easier than attempting to reform patents.

Re: Almost a third of our portfolio is under attack by patent trolls.

#12

Post by dangoldin »

paulgb wrote: post #5

> They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a huge distraction, they do the pragmatic thing - they settle. Patent trolling reminds me of a game of chicken. I wonder whether chicken strategies have been tried to combat it. For example, if the start-up could position themselves so that it is profitable for the…

That's an interesting idea for a company! An company that insures against patent lawsuits. It would have be staffed by lawyers who know whether there are any possible patent violations but it might work.

As you said, the fact that you are even insured by this company may already signal to the troll to back off.

Re: Almost a third of our portfolio is under attack by patent trolls.

#13

Post by aristus »

I'm a little cautious about this post. He is exaggerating by stretching the definition of "patent troll", if I am reading correctly. A true patent troll is a company that produces nothing except lawsuits. With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce.

I assume their portfolio companies pool their patents together for the common defense. If not, that might be a good idea.

Still, with 26 portfolio companies, he's claiming 8-ish concurrent lawsuit threats... that's alarming. On the other hand, their portfolio is pretty high-profile (Etsy, Twitter, Zynga, Foursquare, Indeed, etc).

Also he doesn't put this claim in historical context: is this normal for a maturing (and very nice) portfolio? Are they going after the tender young startups or the bigger ones?

Re: Almost a third of our portfolio is under attack by patent trolls.

#14

Post by zaphar »

thaumaturgy wrote: post #7

I would really like to see something along the lines of a TED talk in which the presenter stands up, spends a couple of minutes demonstrating some kind of really interesting new technology -- something that could really help people, either in their lives or in their jobs -- and then the presenter would pause for a moment and say, "...but none of you are going to get to use this", and continue the talk but on the subj…

    I do think that patents hold a valuable place in certain
    areas of research and development, but there are also
    areas in which patents are crippling development.
I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.

Re: Almost a third of our portfolio is under attack by patent trolls.

#15

Post by zaphar »

algorias wrote: post #10
figured wrote: post #2

"Almost a third of our portfolio is under attack by patent trolls." That quote astonished me, I never really knew the extent of the problem.

Depends on what the meaning of "is" is, actually. What falls into the category "under attack"? threat of litigation? actual litigation? in process of settling? having settled?

Any one of those mentioned in your question are bad. If it's all of them it's still bad. No matter what meaning of the word "is" that you choose it's bad. That's kind of the point of the article really.

Re: Almost a third of our portfolio is under attack by patent trolls.

#16

Post by alain94040 »

zaphar wrote: post #14
thaumaturgy wrote: post #7

I would really like to see something along the lines of a TED talk in which the presenter stands up, spends a couple of minutes demonstrating some kind of really interesting new technology -- something that could really help people, either in their lives or in their jobs -- and then the presenter would pause for a moment and say, "...but none of you are going to get to use this", and continue the talk but on the subj…

I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development. I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.

Conventional wisdom says that pharma qualifies. Labs wouldn't spend the resources if anyone could come up with generic drugs once the hard work of finding out which drug works is done.

Re: Almost a third of our portfolio is under attack by patent trolls.

#17

Post by alain94040 »

dangoldin wrote: post #12
paulgb wrote: post #5

> They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a huge distraction, they do the pragmatic thing - they settle. Patent trolling reminds me of a game of chicken. I wonder whether chicken strategies have been tried to combat it. For example, if the start-up could position themselves so that it is profitable for the…

That's an interesting idea for a company! An company that insures against patent lawsuits. It would have be staffed by lawyers who know whether there are any possible patent violations but it might work. As you said, the fact that you are even insured by this company may already signal to the troll to back off.

Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible.

So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is no business insuring against patent troll.

Don't get me wrong, I wish there was.

Re: Almost a third of our portfolio is under attack by patent trolls.

#18

Post by csytan »

zaphar wrote: post #14
thaumaturgy wrote: post #7

I would really like to see something along the lines of a TED talk in which the presenter stands up, spends a couple of minutes demonstrating some kind of really interesting new technology -- something that could really help people, either in their lives or in their jobs -- and then the presenter would pause for a moment and say, "...but none of you are going to get to use this", and continue the talk but on the subj…

I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development. I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.

The new Google phone's lack of software support for multi-touch is something which has come up recently.

Re: Almost a third of our portfolio is under attack by patent trolls.

#20

Post by cwan »

An addendum from Fred Wilson (another one of the partners at USV): http://www.avc.com/a_vc/2010/01/why-we-need-an-independent-i... -

"But anyone who has spent a significant time in technology based businesses will understand that two groups working completely independently from each other will often solve a problem similarly. One group is not copying or ripping off the other group. They are simply coming to similar conclusions about how to get something done.

In these cases, it makes no sense to protect one group from the other. Nobody has taken anyone's "intellectual property." Both groups should own their inventions outright without having to license technology from the other."

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