Most tech startups cannot afford a protracted legal battle with a patent troll.

‘Patent trolls’ pose large threat to small businesses

September 27, 2013 5:35 pm Published by Leave your thoughts

For large technology companies like Google, Apple or Microsoft, a "patent troll" lawsuit is like a mosquito bite—annoying, but not life threatening. These companies face opposition from non-practicing entities all the time, and while the court costs can add up, rarely has such a challenge caused them to make a major product redesign. For the most part, these companies save their resources for suing each other for patent infringement, at which point the stakes become much higher.

But most tech startups don't have the luxury of large cash reserves and in-house attorneys. For them, challenges from a patent troll are equivalent to a snake bite—very dangerous, and something that should be dealt with quickly.

For example, a recent article in Slate cited a report released by Santa Clara Law, which found that nearly half of all startups that faced a patent lawsuit were forced to make operational cuts. In fact, 24 percent said they were forced to delay hiring efforts, while 12 percent said they had to leave the business.

Said one manager quoted in the report: "[N]ot only did we spend $3 million in fees waiting around for a [decision], but when it finally arrived it was clear the plaintiff had no case and the whole exercise was a waste. The plaintiff immediately stipulated to non-infringement."

Since there are few downsides for patent trolls launching these suits, they are likely to continue to do so. Victimized startups need to work with a Phoenix business attorney to arrive at the most favorable settlement, without disrupting business operations. 

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