In an increasingly global economy, even startups need to consider where their companies fit in internationally. Entrepreneurs wear many hats — operations, marketing, engineering and sales among them — but few tout themselves as patent law experts. Often the last thing on their minds is an intellectual property (IP) strategy — but this can be costly in the long term.
Patent assertion entities (PAEs, also referred to as “patent trolls”) are a growing threat to companies in the UK. Patent trolls are companies whose primary revenue model is to acquire patents for the sole purpose of using them to sue other companies. They’re a big problem in the US, where they have resulted in more than 60 billion GBP in lost wealth annually, and where many UK startups look as a secondary market. They’re a growing problem in the EU, as German courts have proven to be favourable to trolls.
Startups doing business in these markets expose themselves to patent troll risk — and the cost of defending against those lawsuits — to the tune of 2.4 million GBP per suit — can easily put an early stage company out of business. Because of these risks, nearly 50 UK-based companies have joined LOT Network, including well-known names like Ocado and Boots.
What can a start-up do to protect itself?
One of the easiest and most cost-effective ways to protect your company against patent troll lawsuits is to join a community of businesses who share a common goal of protecting themselves and other members against costly patent litigation. LOT Network, is an example of a non-profit community of more than 500 companies that agree that if and only if a patent owned by a member company falls into the hands of a patent troll, that company grants the other members a license to that patent. That means that the patent can no longer be used by trolls to sue the members of the community. The usual uses of patents, like buying and selling, and suing companies who infringe on your IP, are still preserved. Best of all, membership is free for startups with less than 19 million GBP in annual revenue.
Is it too late if I’ve already been sued?
If you’ve already been sued by a patent troll, there are other communities that may be worth looking into. Unified Patents looks to deter patent abuse and focuses on challenging the validity of low-quality patents that form the underlying basis of many patent troll campaigns. Allied Security Trust is a community of companies who pool their resources to buy patents for defensive purposes.
As a member of the executive team of a high-growth startup, I believe that every company, especially those who are looking to grow internationally, should include an IP strategy to their business and protect themselves from avoidable litigation.
By Alex Tame
Bio: Alex Tame is Head of Licensing & IP Management at Oxbotica, a platform providing software to bring autonomy to any industry. He is listed on the IAM 300 of the world’s leading IP strategists.
