Law.com has an article highlighting how incredibly devastating a bogus patent infringement lawsuit can be to small businesses. In this case, someone hiding behind a series of shell companies is using a ridiculously laughable patent that appears to cover the concept of putting press releases online (6,370,535) and suing a bunch of companies that do exactly that. The article highlights the head of one tiny company -- which, it should be noted, has been in business and doing the same thing since before the patent application was filed -- who is debating whether he should go without a salary or company profits for three years to fight this, or just pay up. It's really a sickening display of how patents are used to seriously harm small businesses.
A Texas company called InNova is suing 36 companies – including Google, Yahoo, Apple, Dell, AOL, Bank of America, RIM and 29 others saying it that all of these companies are infringing on InNova’s patent for – get this – email spam filtering.
More than 1,300 high technology entrepreneurs in the software, biotechnology, medical devices, and computer hardware fields filled out the Berkeley Patent Survey. All of these firms had been started no more than ten years before the survey was conducted. We drew our sample from a general population of software firms registered with Dun & Bradstreet (D&B) and from the VentureXpert (VX) database that has a rich data set on venture-backed startups. (Just over 500 of the survey respondents were D&B firms; just under 200 were VX firms.)
Why do entrepreneurs and startup companies file for patents? Why not? How often do startups acquire patents from others? How important are patents in fostering innovation at startups? In helping them raise financing? In providing leverage in cross-licensing negotiations? Are entrepreneurs and startups subject to patent thickets?
Some experts in Europe are coming to agreement that a tipping point might have been reached with regard to biological patents.
[...]
“We noted that IPR rights was no incentive,” said Pelegrina. Instead, feeding the community and adapting seeds to climate change are important motivations. She concluded that the current seed policies imported from industrialised countries do not fit the highly dynamic development of breeding in local communities.
Comments
Jose_X
2010-07-23 11:47:14
We should not be creating tools (and artificial scarcity) by helping wealthy groups tax small groups or even put them out of business with these tools.
One possibility for patent reform is to limit how any patent can be used on entities which have revenues/profits below a certain amount and are not mostly owned or controlled by another entity that itself might fail to qualify.
An additional possibility is to outright prevent "information" or abstract patents. The SCOTUS has ruled this way over the years, but that hasn't kept litigation down in the US. Congress should pass a clear law to remove "information" patents. The broad coverage possible from a patent (or from a broad copyright "derivative works" definition) is too far reaching and hence stifling unless it only affects a small number of groups that already have significant levers at their disposal.