How to slaughter a patent troll in 5 steps
A few weeks ago, I got a letter from the scum of the earth: a patent troll. As an entrepreneur, I’m no stranger to having to deal with patent trolls, but it still gets me fired up every time.
At FindTheBest, we are building a research hub where people can access the best information and research tools to help them confidently make big decisions. What’s the patent troll doing? Hiding in a cave trying to squeeze a few bucks out of every company he or she targets.
You may be asking yourself, what exactly is a patent troll? A “patent troll” is defined by the Ninth Circuit Court of Appeals as “a small company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question.” Essentially, a patent troll is someone who has an economic interest in the patent, but is not using the patent to create his or her own products or services.
This is war. A war nobody really wants to fight, and yet here we are. So, what should you do if faced with a similar situation? Follow these five tips to win the battle against a patent troll:
1. If the lawsuit is frivolous, don’t settle.
When a patent troll serves you with a lawsuit, you need to review the lawsuit as quickly as possible to determine if your company is infringing the patent referenced in the lawsuit. If you determine your company is not infringing and the lawsuit is frivolous, don’t settle. If you settle, more trolls will come knocking on your door. It’s like negotiating with terrorists: if you give them an inch, they’ll demand another mile.
Patent trolls aren’t interested in the technology covered by the patent or your business, and they won’t give you any specifics about the lawsuit they served you with: They just want your money. The second you signal that you are open to settling, they won’t stop knocking on your door. They don’t have any skin in the game, they are simply exploiting a faulty legal system.
The mess started in the mid 90s when an over-eager patent office started granting patents to every vague business process under the sun. Take the patent involved in our lawsuit: the patent essentially refers to people indicating preferences and receiving a response.
Let's say you're online shopping for a new tie. You tell the website you like the color blue more than red. The website comes backs with a selection of blue ties. Stop right now: You might be in violation of patent no. 8,069,073.
2. Do your research.
Use your resources to find out as much as possible about the lawsuit. You want to dig through documents, court dockets, and websites to find out everything you can about the people behind the lawsuit.
Chances are you will immediately find a shell company, but don’t be discouraged. It’s important to understand why the patent troll is operating through a shell company, and it’s usually one of two reasons:
1. If a troll operates through a shell company (meaning a company with no assets), people have little incentive to sue the troll for frivolous lawsuits.
2. Deep down, patent trolls are embarrassed. I know I would be. They don’t want the publicity, they just want your money.
If you can take time to do the research, and educate yourself with as much knowledge as possible, you can come back armed and ready to win the war.
3. Ask specific questions.
After you’ve done your research, you should call the troll’s lawyer and ask as many specific questions as you can about the lawsuit. Ask if they have an economic interest in the outcome of the lawsuit. Ask them to explain the patent. Ask them to describe the specifics of how your company supposedly infringes the patent. The troll’s lawyer knows he is exploiting a broken system, and every question you ask makes him more uncomfortable and irritated.
When we were served with a lawsuit at FindTheBest, we started digging for information the second the lawsuit hit my desk. We immediately called the lawyer serving the lawsuit, Damian Wasserbauer, from Aeton Law Partners LLP in Middletown, CT. We asked very specific questions about the case, the patent, the parties involved, and how our company was supposedly infringing. It quickly became clear that Wasserbauer did little due diligence and knew little about our company and how we were supposedly infringing the patent. Mr. Wasserbauer only wanted to talk about us writing a large settlement check.
After hitting a wall with Wasserbauer, I decided to try and find the inventor of the patent and the person who I believed had a financial interest in the lawsuit: Eileen C. Shapiro.
I reached out to Shapiro directly to ask her a few questions about her interest in the patent and let’s just say she was not thrilled. I asked Ms. Shapiro if she held any economic interest in the patent and she repeatedly recited the same thing, “I was a co-inventor of the patent but no longer own the patent.” In other words, she refused to answer the question and claimed not to know the lawyer I was referring to. Later that day, we received another phone call from Wasserbauer. Wasserbauer claimed that we had committed a “hate crime” against Shapiro and were in violation of the discovery process, which was false. He then told us we had until the end of the day to settle the case or face criminal charges for harassment. We immediately notified the FBI of his extortion attempt.
4. Expose the troll.
At some point in the lawsuit, you may be asked to sign a nondisclosure agreement. Don’t sign it.
The second you sign an NDA, you lose power. The only thing an NDA protects is the patent troll. You want to be able to talk freely about the troll, his or her tactics, and bring as much of the process to light as possible to help other entrepreneurs facing the same issues.
If I had signed an NDA, I wouldn’t have been able to use Shapiro’s name, talk about Lumen View Technology, the shell company that served us with the lawsuit, or the Hillcrest Group, where Shapiro is a venture consultant. I probably wouldn’t have even been able to write this article. I’m certain they will threaten us with more lawsuits after going public, but fortunately our Constitution’s 1st Amendment protects free speech like this article.
Patent trolls hide in the shadows because aside from their involvement in these patent schemes, it appears they live relatively respectable lives. Take Shapiro for example. She’s a former MIT professor, a venture consultant for the Hillcrest Group, and a published author for the Harvard Business Review. Nobody would assume she was killing creativity as a patent troll.
5. Team up with other companies fighting the same patent troll.
The more people you have behind you, the better chance you have of coming out of this thing alive. The second a war is declared, parties go running to find their allies. Who is going to stand with them in this fight and help defend the issue at hand? You have to do the same thing. Nothing unites people like a common enemy.
Find other companies that were sued by the same patent troll. You may even find that there are companies out there that were served with identical lawsuits, using a boilerplate template and simply changing the name of the company and product in question.
The second a lawsuit is served, it is a public record and available on the court’s docket. All you have to do is regularly check the docket to follow the lawsuits as they are filed. Reach out to companies facing the same patent troll and suggest pooling resources to fight back against the troll as one strong army.
When we received our lawsuit, we immediately checked the docket and found a dozen other companies that were sued with the same boilerplate lawsuit. We reached out to the companies and formed a joint defense agreement. Now instead of fighting this troll alone, we have at least five companies working together to take the troll down.
In the end, remember you have more to fight for:
You have more at stake. Don’t ever forget that. You are fighting for the entity you have poured your time and resources into. You’re using technology to solve a problem that you believe in. What is the patent troll fighting for? A settlement worth a few thousand dollars? Your cause is bigger and worth the fight.
The bad news is the patent troll has a formula -- he knows what kind of threats will scare you, which legal levers to pull, and when to increase the pressure. Don’t let that scare you off. Be brave and remember what you are fighting for.
I’m personally willing to commit over $1 million to fight this injustice and I am certain we do not infringe the patent. I doubt the trolls and their attorneys are as confident in their position. The troll wants to play chicken? I love the game, so game on.
* The PandoDaily series “Patent Troll Smackdown” is brought to you by the Application Developers Alliance. To join the fight against patent trolls and tell Congress that innovators need patent reform please visit devsbuild.it/fightpatenttrolls. (Sponsored message.)