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so I've been working on developing an idea for an application that I think has the potential to be successful, however after some initial research I've discovered that at least part of my ideas are covered by a patent out there, the patent in particular is held by a really large company (I don't want to give away specifics for fear I'd draw their attention for sure).

I'm debating a few options:

1) Develop patents around my ideas that don't conflict and maybe approach the company in question for a license exchange

2) Just approach them for a license outright

3) Just develop around it anyways and hope for the best :-p

What have other people done in these situations? Are companies generally willing to grant patent licenses? Are they willing to grant them at reasonable prices? Thoughts?

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Before doing anything ask a lawyer. We are programmers, and any advice given here might not be 100% correct. –  Sergio Mar 5 '11 at 3:22
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Generic adivce: Seek a Lawyer. We are not lawyers (or most of us aren't), and legal advice will trump all of our advice. –  Samuel Walker Mar 5 '11 at 3:23
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Good idea, I'd likely seek a lawyer before starting down any path in particular, I'm just curious what other people have done before starting down this path to begin with (Is it even worth it to go there, or just start over?) –  tekiegreg Mar 5 '11 at 3:33

3 Answers 3

up vote 6 down vote accepted

The options that you list are STRATEGIES.

The issue you have with patents, especially when you find that you might cross paths with one that is granted to somebody else, is that you must have a strategy.

This might be to get a license, to work around it, to fight it, to ignore it, or any of a number of other things you might come up with.

If you are in the USA and you know there is a patent, and do something that infringes - and get taken to court then the damages will be much higher for knowingly infringing than for doing so in ignorance.

You might have patents of your own and use them in a license swap. Or you might use your patents as a defensive shield, or you might even use your own patents in a form of mutually assured destruction. It all depends on what you have, the value, your legal resources, your budget, and how much time you wish to spend.

Remember that making up your own IP and getting a patent is not trivial. Drafting a patent application and lodging it is very time consuming and will cost a lot of money in legal and patent attorney fees. From lodging to adding claims to examination can take 1-3 years depending on country. Examination usually leads to objections by the patent office, leading your to re-write bits of the description and claims. Then re-lodge. The whole process from start to grant normally takes around 3 to 5 years.

Patents, also, are only as good as your willingness to enforce them. They might give you a warm inner glow having paid all that money, but if somebody infringes your patent - you then need more legal $ to be spent in investigating the what / why / how, and getting your legal pleadings written and lodged. Then the horse trading begins. You may or may not go to court, you may or may not settle. Whichever way you go, big big bucks are involved.

So - building your own portfolio of patents is a far from trivial matter, and you won't do it quickly. Allow yourself years and its a maybe. You need to have a lot of $ behind you. Budget on about $10K to $30K (US$) PER PATENT and you might be getting close. If you want to get international protection then start adding 0's on the end.

Oh, and don't forget the annual fees. If you don't pay the annual fees then your patent lapses, but your publication is still in the public so your invention / IP is lost to you - its now in the public domain.

Something to consider: If you have found a patent and it worries you, then consider Prior Art. Anything in the public domain, published or available anywhere at all in the world, before the priority date of the patent means that the patent you are concerned about is null and void. If you find this to be the case you probably want to keep that fact to yourself. Stuff in the public domain includes things sold commercially, published in scientific journals, magazines, newspapers, hobbyist magazines, books... anything at all. If its out there for the public to see and consume, it can't be patented. Stuff shown at trade shows before commercial release is still public domain also. Patents published in another country (but not your country) covering the same invention also invalidate a later patent. This use of prior art is a strategy, but you generally only want to pull it out if you end up in court for infringement. You better have your facts very straight to use this one.

There is no such thing as a world patent, there are treaties (WPO) for initial lodgment that will get you a common priority date but you need to follow up with lodgment in each country. If you don't lodge in a country you have no protection there. Because patents are country-by-country, it is difficult if not impossible to to international searches. There are therefore many overlapping patents (the USA is a good example where many patents are not valid because of a prior lodgment of the same idea in another country, and many US companies don't bother lodging their patents outside the US, meaning they have coverage only in the US.

Finding all the linkages and foreign lodgings can be very difficult. The best resource I know of is the European Patent Office (ep.espacenet.com) - their search ability covers most countries in the world. Not all - but better than going country by country.

For you, this all means if you have a bright idea that can be patented, DO NOT discuss it with anybody else unless they have signed a non disclosure agreement. DO NOT put it on a blog or internet chat room. Do not show it. Do not publish, do not open source, do not do anything at all that puts it in the public domain. If you do, your idea is not patentable. [You'd be amazed the number of neat ideas that slip away because of careless demonstration.]

Finally: I am not a lawyer. I know enough about patents to be dangerous. You need professional advice. Understanding all the details will not be something you can do in an hour. Expect it all to be expensive. Get professional advice.

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Get a lawyer.

That said, read the first claim, which is the broadest. It likely contains several steps. If your program were to cover some of those steps, but not all, then, in theory, you would not infringe.

If your process covers all the steps described (and possibly some more beyond what is stated in the patent), then your patent would infringe.

So this will at least give you an extremely-simplistic starting point.

That said, do consult a lawyer.

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Remember that if you have read a patent and infringe it, that's wilful infringement which carries worse damages than accidental infringement (3x in the USA). but then, I'm not a lawyer either. –  user4051 Mar 5 '11 at 10:16

1) IANAL

2) Never read patents period. This is what almost all the large players do- not read them.

If you read them, you're liable for treble (3x) damages if the entity with the patent sues you and finds out you read their patent or knew of its existence. Such infringement is called "willful infringement". The default assumption WILL BE simply that you knew about the patent, understood it and stole it deliberately.

Never read them, never browse them, never click on a link from some of the patent spam websites out there who push patent results on searchers. Their business model, if you can call it that, is to record the IP address of everyone who reads any patent then sell that information to patent holders for the purposes of securing treble damages in lawsuits.

3) consider not selling software in the following jurisdictions: USA, Australia, Japan, South Korea. Those are the big countries who are completely promiscuous with respect to patenting virtually any anything; essentially they permit the patenting of ideas, although they will tell you that's not true. You can still make a fine living selling into the EU New Zealand and other more enlightened and business friendly countries and not risk being sued out of existence.

Finally, people will tell you false things to convince you you'll be OK selling in the US. Don't listen to them. Here are some of the things they'll say:

* No one will sue you until you have enough money to make it worth their while, at which you won't care because you'll have a lot of money.

This is false. Small companies who make no money and whom you've never heard of get sued every day by slightly larger companies. Why? For a variety of reasons.

One is because if it can be shown in court that the patent-holder did NOT pursue patent enforcement, their patent can be rendered unenforceable. Companies have a statutory obligation to pursue known infringers or risk losing their IP rights.

Another reason is to kill off free alternatives to their product offering. To take one current instance, this is happening now to a flight planning software named Navmonster and a few others by a competitor. Navmonster doesn't make money; it didn't save them.

Another reason is to kill off a slightly smaller competitor or nip a new entrant in the bud,

Remember, it takes many hundreds of thousands of dollars to defend yourself against a lawsuit. If you get served, you're done. They know this and leverage it.

No one will notice you.

Lionel trains noticed the home hobbyist who was using software to control Lionel trains. They shut him down. Don't kid yourself. Is it worth risking everything you have on a hope that you fly under the radar when flying under the radar also means not becoming really successful?

Only large players sue each other. This is simply false. There are many many counter examples but no one knows how many companies throw in the towel upon being served with infringement claims. No one tracks this number since it only amounts to a letter from a lawyer to a company in most cases and no court records are generated. If you look for counter examples, you'll find them. Lots of them on an ongoing basis.

Patent trolls only go after deep pockets. This is really the same argument as the above, and it's not true. It's based on the idea that patent trolls all act in the same way, essentially some scenario in which they sue seeking huge compensatory damages against rich companies. This describes ONE reason someone would sue and ONE kind of plaintiff. In no way does it describe the motivations of litigants or the variety of legal activity that results in a company being put out of business by a software patent lawsuit.

Take this seriously. The best way to not have everything you've worked for taken away from you is to not release it in jurisdictions that could happen in in the first place. Markets that are not going to permit that to be done to you are big enough for an ISV.

Incidentally, it's interesting to reflect on where the term ISV came from. It came from the press's wish to distinguish Independent Software Vendors from Microsoft. Or in other words, the software market is so dominated by Microsoft that all companies are divided into M$ and ISVs.

It's also interesting to note that M$ pushes software patents as a strategic device to deny entry by small players who can neither afford to acquire nor defend them.

Of course they're aided in this by all companies and individuals who are positioned to benefit from the enormous barrier to entry such a system creates against small companies.

Essentially software patents are a way for largish companies to make sure no smaller company can compete with them on value to the consumer. They are also a way for IP attorneys to inject themselves into the software revenue stream where they would naturally have only a limited role. In this they are completely parasitic, contributing nothing of productive value. Software patents are best thought of as a tax upon software by IP lawyers who have developed a pay-to-play scheme against software developers.

Best of luck. I agree you should consult a lawyer. Perhaps one the best questions you might ask is how to get set up to do business in the EU, New Zealand, India, Canada and anywhere else where you can produce software, sell it and rise and fall by the goodness of your efforts and the value you deliver rather than live like a serf in the US: only at the pleasure of the King.

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The treble damages only applies to the US. What you suggest is also a little difficult when you consider my business: I sell on the internet. Anybody, anywhere in the world can buy from me. So far about 90% of my sales are in the US. Its really hard to NOT sell in some countries. –  quickly_now Mar 6 '11 at 7:51
    
In your jurisdiction, you probably are already under some kind of obligation just like this, except you're unaware of it. Almost all nations have a list of other nations that it's not legal to do business with. It's each companies job to not sell to them, e.g. North Korea and Iran (for the US). Write an end user agreement that specifies no one from country X may download or buy this s/w, screen downloads by the IP country and take other reasonable steps as specified by a lawyer. At some point you'll discharge your obligations to ensure no improper sales or reach "safe harbor" as it's called. –  swingProgrammerrr Mar 6 '11 at 13:39
    
This has to be some of the word advice I have EVER read. If you skip those major regions, and you forgot about most of Europe in your rant, you have no customer base to worry about. –  Ramhound Jan 26 '12 at 20:35

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