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Suing Open Source Startups - A New Scam? 104
Anonymous Crowhead asks: "I'm posting this anonymously for reasons that will soon be obvious. We're a fairly new startup company who specialize in products, and we have a policy of making all our software Open Source. A while ago, we received an notice from a company claiming that we were violating some of their patents, and that they had found this out by looking at our code. They gave us one of the two options - either make the product closed source and sign up for a percentage of the profits with them, or provide them with a stake in our company. Our legal advisors felt that it might be wise for us to settle, but we decided to press them further for details of the infringement and refused to yield. We haven't heard from them since - so either we called their bluff, or they've gone to come back with more legal firepower. No matter what, we feel that this is a scary precedent. Have any other entrepreneurs around here experienced anything similar? Is this one of the after-effects of the SCO episode - to go after unwitting small startups who cannot fight back? Personally, this was a nightmare for our company, and we are not aware of any patents that we may be violating."
you don't really lose anything.. (Score:3, Informative)
if their claims have any merit they'll cough up.
Re:you don't really lose anything... (Score:4, Insightful)
Like The SCO Group did?
I'm sure IBM has sunk close to $10M into the SCO litigation by now, and after that, a year and a half in court and two court orders, SCO *still* hasn't said just what their beef is.
With any luck, Judge Kimball will grant IBM's motion for Partial Summary Judgement and put the whole copyright fiaSCO to rest once and for all (barring appeal). If not, IBM could spend another $10M before SCO's bluff is fully "called".
Granted, that's a much more complex situation, and there is still a faint glimmer of a flicker of a possibility that SCO, somewhere, somehow, will actually find something IBM did wrong (not on the copyright question, I don't think, but perhaps on the contracts), but the point is that you very well can spend a lot of cash calling their bluff.
Might as well at least make them file a formal complaint, I suppose.
Re:Always let them haul YOU into court. (Score:3, Interesting)
IANAL, of course.
Re:Always let them haul YOU into court. (Score:2)
Re:you don't really lose anything... (Score:2)
I think the company did the right thing. It is only prudent to ask someone for the proof, like the numbers of the patents! Without that, it likely WAS a scam.
Big difference! (Score:2)
Re:you don't really lose anything... (Score:3, Insightful)
And IBM's defense has significantly increased the confidence of the business community in using open source software. Imagine the impact that IBM settling with SCO would have on their multi-billion dollar Linux bet.
They would have gladly spent $100M for this kind of result.
Re:you don't really lose anything... (Score:1)
(Conspiracy Theorist Version)
1. Announce move into Linux business
2. Pay SCO to sue you over some random trivia
3. Become beloved by all IT geeks
4. Sell lots of hardware and software!
5. PROFIT!!!
Re:you don't really lose anything... (Score:1)
> Like The SCO Group did?
That was a conditional statement.
And if they had as much money to blow on litigation as SCO has done, they
would be going after larger fish than an unknown startup, probably.
Re:you don't really lose anything... (Score:2)
That was a conditional statement.
Hah! Good point!
Though my point, that it's possible to spend lots of money litigating before you actually find out if they have anything to cough up, still stands.
Re:you don't really lose anything.. (Score:2)
Re:you don't really lose anything.. (Score:2, Interesting)
1. Investors pulling out, for fear of the lawsuit
2. Customers and clients being scared of the credibility of our software
Besides, we're only a startup -- we do not have an established cred, nor we have the resources. If this proves to be a bad call on our part, it might just prove disastrous, although I hope not.
Anonymous Crowhead
Re:you don't really lose anything.. (Score:2)
especially if you do it with so little information.
before caving in it's essential that you get to review which patens you may be infringing.
Re:you don't really lose anything.. (Score:2)
Re:you don't really lose anything.. (Score:2)
If it's just a threat.... (Score:3, Interesting)
Re:If it's just a threat.... (Score:5, Interesting)
Re:If it's just a threat.... (Score:3, Interesting)
I think there is a similar routine in the USPTO, basically recognition of the fact that bad patents slip through.
Re:If it's just a threat.... (Score:2)
Re:If it's just a threat.... (Score:5, Insightful)
It's in your best interests to remain polite. The company might come back with a legitimate patent infringement. Just because you're not aware that you've infringed on a patent doesn't mean you haven't done so. There are patented algorithms (the "marching cubes" algorithm for voxel rendering comes to mind). Even if you independently develop such an algorithm, you'd be infringing the patent by using it.
Now, if you never hear from them again after challenging them and feel you have a moral obligation to strike back (on behalf of future victims or something)...and after you've done your research and you're sure that the company isn't legit...then you should contact a lawyer and see what he or she suggests as a course of action.
And if you're not willing to retain a lawyer, then what are you going to do? Call them names? Idle threats won't stop them. Do something useful about it, or just forget it and move on.
Re:If it's just a threat.... (Score:1)
No, call the law society and file a complaint.
Re:If it's just a threat.... (Score:3, Insightful)
I strongly agree.
I've never dealt with patent threats, but I used to work at a company that ran on-line communities. We regularly received legal threats from loons around the world. For non-credible threats, we'd just ignore them. Usually they'd just go away. For the plausible or persistent ones, we would be friendly but do nothing.
I found it was very helpful to ask questions about their posi
Re:If it's just a threat.... (Score:2)
I'd disagree a little with this. Most lawyers I've dealt with are good at helping you reduce the risk of a course of action, but aren't so good at suggesting them. Instead, come up
Re:If it's just a threat.... (Score:4, Interesting)
It's common for lawyers to present a cost benefit analysis of this type of situation and quite often they will encourage a settlement, similar to the way a family pays off kidnappers to free a hostage or a retail business pays protection money to some street gang.
One wonders whether there is in fact a conspiracy in the legal world to encourage settlements, because if people challenged every questionable lawsuit that came down the pike, perhaps there would ultimately be fewer such suits, just as if all businesses refused to pay protection money there would be no protection racket (albeit, after some bouts of violence) and there would be no incentive to kidnap hostages either.
Lawyer is just trying to protect you (Score:2)
If you were looking at $20k in legal fees plus what
Re:Lawyer is just trying to protect you (Score:1)
open source doesn't pertain (Score:2)
Re:open source doesn't pertain (Score:2)
Yes and no. Open source code makes it much easier for a company to verify that their patent is being infringed upon, because they can look and see how things are done.
Now, with closed source, you can often tell that a patent is being violated just by how it works, but often you can't, or not easily anyways.
Suppose you had a patent on the quicksort algorithm (sorry, not algorithm -- you cannot patent algorithms
It does in this case (Score:2)
They are trying to license for a fee if closed source or get stake in the company (probably much more money) if open source. If open source, at least GPL, they would have to give everyone a free license to use their patented technology, so it would devalue their patent.
If you're talking about why the "scam" might only pertain to one, that is presumably how they discvoered that it infringed their patent. If it was a closed source product, they probably
Re:It does in this case (Score:2)
Re:It does in this case (Score:2)
Re:It does in this case (Score:2)
In fact, I'm sure it happens all the time.
Re:It does in this case (Score:2)
I still don't see anything that, singly, or in combination, precludes distributing unlicensed patent implementations under the terms of the GPL. In fact, I'm sure it happens all the time.
Well, maybe it does happen, but it isn't legal. The post you responded to lays it out explicitly: in order to distribute a program that contains a patented bit of code, you must have a free license for that code that allows redistribution.
From the license: For example, if a patent license would not permit royalty-free r
Re:It does in this case (Score:2)
> in order to distribute a program that contains a
> patented bit of code, you must have a free
> license for that code that allows redistribution.
Oh certainly. I don't doubt that. But it's not pertinent whether the code is distributed in source
form or in binary form.
They didn't tell what patents you're violating? (Score:4, Insightful)
Did i get this right - they didn't tell you what patents you are supposed to be violating?
In that case their claims don't sound very credible IMHO.
Re:They didn't tell what patents you're violating? (Score:1, Informative)
In response, we just got another cease & desist notice, which was kinda funny.
Our legal counsel (well, which honestly, is just one lawyer) felt that it might be wise to settle, since he was afraid that if they did sue us, we would be hit real bad - plus, it would affect our existing (and potential) customers, to
Re:They didn't tell what patents you're violating? (Score:2)
Probably do Infringe (Score:2, Insightful)
From this perspective, open-source seems like a liability. It's harder for companies to snoop in closed-source applications looking for violations of their patents, but open-source is... well, wide open.
Re:Probably do Infringe (Score:2)
So, it sucks to be you, but is good for everybody else.
its an easy way to get money. (Score:3, Interesting)
Re:its an easy way to get money. (Score:3, Informative)
I am speaking from direct personal exp
Re:its an easy way to get money. (Score:1)
Mod me down now
Re:its an easy way to get money. (Score:2)
They should remember that... (Score:2)
Re:They should remember that... (Score:2)
Re:They should remember that... (Score:2)
This may be a tongue-in-cheek comment, but I'm seriously surprised at how little this actually happens.
If things like this continue, we'll see more of it. When civil law breaks down (or just gets priced out of reach), vigilante justice naturally takes over. All manner of dirty deeds are cheaper than going to court these days. Although it would take a an unbalanced person to have the plaintif killed, there are all manner of unpleasant but non-fatal options.
I must admit the thought of SCO recieving the
It's a scam, but it still might be dangerous (Score:2)
If lawyers think they've go
Re:It's a scam, but it still might be dangerous (Score:1)
It doesn't reduce the validity of their advice but it's rather self serving to publish an article raising the alarm that ends with:
Rewritten it might sound like "Newsflash! Some unscrupulous law firms are suing
You are violating my patents too! (Score:2)
That should sound silly...and it is. If they are claiming something, they have proof...asking for it is a normal thing to do. Rolling over without proof is a bad idea.
Additionally, once you know what the patent is, you can research it (it may not be active anymore), dispute it, or re-write your code to avoid it (if possible). This last suggestion is the main thing that Linux kernel developers would be glad to do in the SCO case...but SCO also hasn't said what the code is or what
Say what? (Score:5, Insightful)
So your legal advisors advised you to settle without further details? Something is not right about this story.
Re:Say what? (Score:2)
Mod parent + (Score:2)
This other hypothetical company doesn't even have SCO's excuses for not revealing code. SCO supposedly doesn't want to give out what is their's because then it would be open. Patents are already open, available to anyone that wants to search [uspto.gov] for them.
Re:Say what? (Score:3, Informative)
We got a C&D notice, at which point we asked them to indicate the sections of our software in which we were violating the patents, and pointers to the said patents. That was met with another C&D letter, this time with strong worded and with a staunch warning. Our legal counsel felt that it would
Re:Say what? (Score:1, Insightful)
IMHO bad legal advice that you trust, is more dangerous than an extortion attempt that you don't trust. Lawyers can seriously screw you up despite the best of intentions. A "successful" lawyer is nothing more than a very wealthy one. Remember that!
This seems incredibly fishy (Score:5, Insightful)
That said, if it's a patent, the patent is public information. They should have to provide the number of the patent that you have infringed, and proof of their ownership of said patent. It should then be easy enough to get the relevant info from the Patent Office. There's no incentive for you to settle until they do those 2 things. They *could* try to directly file a legal case, but it looks like they are out for a quick buck, and they are just hoping to scare you into a bad call.
CC
Lawyers! (Score:3, Interesting)
In this case, you can fight, argue and whatnot with this patent extortionist infinitely. If they are really serious you will get paperwork (e.g. start of a lawsuit). Let it go that far - showing them that you will not just *take it* will most likely make them run away. If they are serious then they will push forward to sue you and that is the right time to discuss details of the infringement and possible settlements.
There
More legal advice from slashdot . . . (Score:2)
1. Get a lawyer, preferably one who specializes in these things (patent attorney). Duh.
2. Ask for proof, ie specific citations as to what code is infringing and what patent numbers it is infringing upon.
While #1 is very important in this case, I can't stress #2 enough under any circumstances! People these days are far too gullible and don't question enough. I mean, can you believe that gullible isn't even in the dictionary?
Something is missing. (Score:2)
No, your only "option" would be to cease infringing on their patent. In order for you to do that, they'd have to tell you what patent you were infringing upon. Then they may have discussed your options for licensing the patent, but that would really be step number 2. Step 1 would be ceasing infringement.
Otherwise, they have failed t
Re:Something is missing. (Score:2)
You haven't called their bluff. If they have a valid patent claim against you, then you will need to remove the infringing code from your product. Calling their bluff would be saying "No, your patent does not apply to our product" and that may very well put you in court. But you can't do that because you don't know what the patent is.
If you tell them, "We are terribly sorry for infringing on your patent. Tell us what it is so that we can s
wow! (Score:3, Funny)
holy crap you have products? I've been looking everywhere for those!
Re:wow! (Score:2)
Re:wow! (Score:2)
Re:wow! (Score:1, Informative)
I was not aware that this is not a common term -- or maybe it's just because when you are in the business, you learn these. My apologies.
Anonymous Cro
Re:wow! (Score:1)
Basically, people were forming companies and had no idea how to make money from the internet, but promising they would.
So, it's funny that you would claim to be a startup and actually have a product.
Re:wow! (Score:2)
It is a common term, everywhere except the US.
I understood what you meant.
Which patents? (Score:2)
If your lawyers do not demand to know what is that you are violating then they seem to be pretty incompetent to me.
Specialization (Score:2)
I'm opening up a restaurant that specializes in food.
Open Source and Patents (Score:2)
The possible solution? Something like "The Organization for O
Blinking cursor (Score:2)
Your hint should have been the SCO letterhead (Score:2)
FUD - Fear Uncertainty Doubt
From where? (Score:2)
Happened a few times to us (Score:2)
So far, we haven't given them much credence, and they go away pretty quickly when they realize we're not going to fork your $$$ over so easily.
The bluff is that they have the cash to take you to court to beg
Re:Happened a few times to us (Score:2)
In another case, we sent a letter from our lawyer requesting mor
ahh, the patent troll. (Score:2)
software patents (Score:3, Interesting)
There are only a few true defenses against this kind of attack. The first is to have a large patent portfolio of your own, to countersue any litigants. Unfortunately, this doesn't work against the recent trend of companies in the business of lititgation (eg. SCO). How can you sue a company for patent infringement if they have no product?
The second defense is a large bankroll. Not very many people successfully sue IBM, since IBM has an army of lawyers at their disposal to delay the lawsuit until the litigants run out of money.
My advice to any software developers is to go to law school and become lawyers. Litigation is the fastest growing industry in the US. Software companies will be put out of business by litigation companies, the only ones left will be behemoths like IBM and Microsoft, both of which will be using dev teams in places like India and China, where they can be paid a fraction of what US developers make. So quit your job, and go to law school. Try to make enough money so you can retire when the system collapses in on itself. Things won't be very pretty at that point.
We can continue to press our government for patent reform to try to prevent all this, but they won't listen. They haven't listened in the past, and they won't listen in the future. I give my money to the EFF, I write letters and emails to my congressional representatives, yet nothing makes a difference. Instead of fighting for reform, we're fighting the INDUCE act so IP law doesn't become even *more* insanse. It's a losing battle. The lack of proportional representation in the US forces the election to be decided on just a few issues. The rest are auctioned off to the highest bidder for a few campaign contributions.
Wow, I'm jaded. I remember when I used to have a shred of hope that things would improve...
Lies... Lies... (Score:5, Insightful)
And what is it that is obvious?
New startup that specializes in products
Our legal advisors felt that it might be wise for us to settle
but we decided to press them further for details of the infringement and refused to yield
we feel that this is a scary precedent
Have any other entrepreneurs around here experienced anything similar?
to go after unwitting small startups who cannot fight back?
Personally, this was a nightmare for our company
we are not aware of any patents that we may be violating.
This reads like it was written by a psychologist to scare us out of starting an open-source company (note the use of language to make as many people identify with the text as possible combined with the implicit transfer of fear). That is what is obvious.
Re:Lies... Lies... (Score:1, Informative)
Products -- I was not aware that a large section of the Slashdot crowd is unaware of this, but products and services how software is categorized into, in most parts of Asia and Europe. Products is stuff you can buy off the shelf, and sevices are those that are, well, services.
Settling -- I've explained that elsewhere in the story, please look at that.
Refusing to yield -- We had indeed asked them to point out the offensive part of the code, and what patents we were violating. At which point, we received
My views (Score:4, Insightful)
Which country are you based in? if you are UK based, as some of your remarks suggest, I might give you a little consultation time for free. I do patents and IP, BTW.
Stop asking the IANAL /. crowd for legal advice: it's a serious waste of time as many of the reponses so far demonstrate.
The signature of this company suggests a scam: if I was representing someone with a strong patent I would be only too happy to give the patent number and relevant claims. But I certainly wouldn't refuse to divulge the patent and get snotty: that suggests lack of confidence on their part, and a tactically misjudged aggressive response.
On the other hand it may be just their litigative style and say nothing of the merits. Dunno, insufficient information.
You dont say whether your lawyer is an IP specialist: this matters, a generalist is fine for routine contracts, your building lease and employment law but you must know when to consult a specialist. your lawyer maybe out of his depth and not willing to admit it to you. He may worry about losing face and having you go elsewhere for legal services, whatever. Get someone with relevant experience if he hasn't got it: ask him to find you someone. I'm an IP lawyer but if a client asks me about tax law I wont bullshit: I'll refer them or find out myself from a specialist.
As one poster said: the temptation to push it all the way in outrage is understandable. this will cost you a fortune but the most pragmatic solution may be to enter some sort of agreement. But to do so without knowing the true strenght of their case is absurd. If their patent is weak and the prior art plentiful you may get them to agree to go away period, or with a very poor deal. I might be tempted just to say "bring it on".
You're playing poker: understand that and you are some of the way to understanding your predicament.
Your approach so far suggest diffidence and a lack of confidence, both you and your lawyer - while it's difficult to assess the dynamics of the parties from a /. posting you seem to be at risk of making bad decisions from a lack of proper guidance: get a specialist lawyer. Dont 'ask /.'. Really.
mail me offline for some advice: david atsign geeklawyer [dot] org
FUD? (Score:2)
This is an old scam, not necessarily OSS related. (Score:2)
It works like this: your small business gets an official looking letter from Company X claiming that you are violating their patent, but for a one-time fee of only $yyy (where $yyy is cheaper than a couple of hours of lawyer time) they will give you a license to use the patent.
Of course, the letters are just flooded out to small companies and no one at Company X has bothered to check whether the patent is even applicable. (Rev
Better Idea (Score:2)
Hire local workers in that country.
File assests and capital in the original company and setup a fake front company in the US to deal with distribution.
First sign of trouble, fold, and reopen as a different company in countries that do software patents.
Large organizations are doing it in droves, I suggest you do the same.
-Hack
lawyers like to recover R&D expenses (Score:1)
Have you? (Score:1)