Troll Survival: RevoStock's Patent Troll Lawsuit Story
The Worst Email I Have Ever Received
The subject line of the email in my inbox simply said, "Patent Infringement Lawsuit Against RevoStock." It was February 28th, 2012. I was about to turn in for the night and was checking some emails while watching TV with my wife. That's when I saw the e-mail subject line. A deep and nauseating pit started forming in my stomach. In this lawsuit-happy world, being the victim of a lawsuit is a scenario often lingering in the back of a business owner's mind, but being sued for patent infringement had never even entered my conscience. "How could this even be possible?!?" I thought. The look on my face gave away that something was very, very wrong. My wife asked me, "What is it?" I just stared at my computer in disbelief. "We've been sued," I said. I had no clue that this lawsuit would be far beyond anything I could have ever imagined.
As the sole founder of RevoStock, since December of 2005 I poured my heart, soul, and personal finances into my dream of creating the first microstock multimedia community specifically focused on video related media. While RevoStock was a small bootstrapped (self-funded) company without any outside investors, I worked hard to make it look and run like a large, funded company. I would never have imagined that giving the impression of being a larger sized company would draw the attention of a company known by many as a "Patent Troll."
Patent Troll? What's That?!?
The day after I received that infamous email, I frantically started doing my research to find out more about the lawsuit. I discovered that we were being sued by a company that many have called a "Patent Troll." Prior to this experience, I had never even heard this term.
I quickly learned that Patent Trolls are companies that own or acquire broad software patents. Then they use these patents to sue companies that may or may not be infringing on the patent in hopes of receiving a settlement or 'license agreement. In most cases, the troll does not make a product or utilize the patent. They just sue those who do. I was in shock. I couldn't believe this was happening, and I had never even heard of it. Every person I shared the story with was equally flabbergasted.
Learn More: What is a Patent Troll?
Most of the patents litigated by patent trolls are broad software patents, many of which should not have been awarded in the first place. Like most other Patent Troll lawsuits, our suit was to take place in The Eastern District of Texas Federal Court, which has become 'the place' for Patent Trolls to assert their cases as the courts and processes have historically been favorable towards the plaintiffs/trolls. See a pattern here?
I became most concerned when I learned that in general, the cost to go to trial and be able to defend yourself in front of a jury can often be close to 2 million dollars or more. You heard me right. Even if you don't infringe on the patent in question, you will need to pay upwards of 2 million dollars just to show that you don't infringe. I knew we didn't infringe on the patent in question, but how would we possibly afford to prove it?
Again, RevoStock is a self-funded small business. While I was very proud of the success of my company and the fact that we had seen steady and constant growth over 6 years, as a self-funded company it is important to pour back into the business to continue to spur growth. Additionally, there really isn't any insurance available that covers Patent Troll lawsuits.
You see, Patent Trolls don't want to go to court. In the grand majority of cases, they want you to settle and pay a license fee whether you are guilty of infringement or not. If you are a smaller company like us, they bet on the fact that you won't be able to afford to go to trial and defend yourself. If you are large as Google or Apple, they bet that you would rather pay a settlement fee than pay to go to trial.
Having read through the patent in question, and the claims they said we were infringing upon, I was more than sure that we weren't infringing on this patent. While there were some general similarities, in order to infringe on a patent, your product has to do everything as listed in the 'claim' that you are being accused of infringing upon, and I knew that we did not infringe.
Normally, when you are accused of a crime, you are innocent until proven guilty. I quickly learned that when you are sued by a Patent Troll, you are guilty unless you can afford to show you are innocent. I have never in my life experienced such a feeling of injustice.
Even though we had attorneys who were fair to us with their fees simply because they believed so strongly that we didn't infringe on this patent and we were unjustly sued, the attorney fees quickly multiplied.
Trolling "After Effects"
When companies like Google or Adobe get sued by Patent Trolls it is still a very frustrating and difficult experience, but they have teams of attorneys on staff to handle it. However, when smaller businesses like RevoStock get sued, it can be life altering. From a personal perspective, I can honestly say that the last two years have been the most difficult years of my entire life. The stress, pain and anxiety put upon me, my family and my employees because of this lawsuit has been off the charts and unlike anything I have ever experienced.
Here are some of the effects small businesses are required to bear when dealing with a patent troll lawsuit:
• Financial - As mentioned above, the average cost to go to trial is $2M. For some, simply consulting a patent attorney can cost tens of thousands of dollars. But that's just the legal cost. A suit like this affects a company financially in so many other ways. For instance, it is almost impossible for a company of our size to get any type of financing or investment when under the siege of a patent troll. For all intents and purposes, your company is financially held hostage.
• Psychological - When threatened with potential legal fees in the hundreds of thousands to millions, a small business owner must be careful in how they proceed with business. While one might normally be willing to take risks in order to move forward, innovate and grow, the psychological effects of a pending lawsuit puts the owner in a bearish mode.
• Emotional - Quite frankly, a frivolous and unfounded lawsuit like this steals your joy. The joy of running a business, creating and innovating becomes the bane of attorney's fees, court dates and legal strategy.
• Temporal - Smaller companies that don't have their own legal team have to find the time to deal with all of the issues surrounding a patent troll lawsuit on top of running the day to day affairs of their business.
I personally spent the first 2 months after the lawsuit was filed researching the lawsuit, learning about trolls, trying to locate a good but affordable attorney, coming up with a defensive game plan and networking. The time that I should have spent working on new products or new website features or new partnerships I had to spend focused on this lawsuit.
The Bigger Picture
In 2001, there were 500 defendants in "Patent Troll" cases. In 2013, the number was around 3,700. That's almost a 600% increase in just over 10 years!A paper entitled, "Patent Assertion and Startup Innovation" by Colleen V. Chen outlines how Patent Trolls are stifling innovation. New companies with less than 10 Million in revenue make up 55% or more of patent troll lawsuits. Some startups are not "starting up" solely because they are afraid they might get sued. Innovation is being held hostage.
Our patent system is broken. While there are bills being entertained by Congress and the President to reign in trolls, I am concerned that these bills will help larger companies more than they will help the little guys, and it's the little guys that need help most of all!
While our battle began in March 2012, the actual trial was not set to happen until November of 2014. Yep, that is almost 3 years from the start of the suit to the trial date.
For almost two years we carried on. Along the way, we had several milestones where I was hopeful that justice would be served, and we would be vindicated only to have those hopes dashed each and every time. Things began to appear hopeless, but my wife and I continued to pray, trust and hope that everything would turn out ok. If ever there was a time that my faith was tested, this was it.
Then, one day, we got a surprise phone call from our attorney. After 593 days, (November 14th, 2013 to be exact) the patent troll suit was going to be dismissed, just like that. As quickly as it came, it would be gone. The feelings I had during that phone call were the exact opposite of that feeling I had when I read that initial email. I can't begin to describe how excited and relieved I was. It felt like a miracle.
While it is glorious to know that the lawsuit is over and we are free, it is sad that so much pain had to be endured for something that would end up being dismissed. I have thought to myself many times, "What a sad waste of life."
What To Do?
There is much to be done concerning this issue. First of all, people need to know about it. As mentioned before, when this happened to us, I had never even heard of a "Patent Troll." As I shared our story, I found very few people who had heard of it either. However, every person I shared our story with was shocked that this is happening in increasing numbers to small businesses like mine.
While the average joe may not be aware of it, in Washington, there is a lot of buzz about this issue right now. President Obama, in fact, alluded to it in his State of the Union address when he said,
"And let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation."
While there is more and more movement on this issue, small businesses are still the most vulnerable. I hope that you might contact your congressman and encourage them to stand up against the trolls, especially as they relate to small businesses!
There are a few websites that you can check out to learn more about the issue:
There are a few websites that you can check out to learn more about the issue:
The Electronic Frontier Foundation: A non-profit group fighting against trolling. They are home to Julie Samuels whose official position is, "The Mark Cuban Chair for the Elimination of Stupid Patents."
TrollingEffects.org: A relatively new site organized by the EFF where those getting harassed and sued by trolls can share their story, post threatening letters, etc.
How I Beat a Patent Troll: A "Ted" talk by Drew Curtis the founder of the website "Fark" talking about his patent troll situation.
Thanks for reading about our journey and I would love to hear any comments or questions. Post away below!