Suing Open Source Startups - A New Scam?

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."

Comments

you don't really lose anything..

[gl4ss]

..by calling their bluff.

if their claims have any merit they'll cough up.

Re:its an easy way to get money.

[hedronist]

There is a particular breed of scum-sucking parasite (I believe they are called small plaintiff attorneys) that look for clients that have a kind-of/might-be valid complaint in the $10,000 to $20,000 range. Unlike normal business-oriented attorneys, these a**holes will take the case on contingency. They know what it will cost for you to defend yourself, even if you win. And if you do win, they know there is little that can be done to counter-sue for fees and costs.

I am speaking from direct personal experience on this one. When we got the hit with the lawsuit (99% bogus, you got that, Mark?), I was so angry that I was ready to fight til the end of time. Fortunately, my attorney sat me down and explained how this scam works and then said, 'If you want to waste about a year of your time and also pay for my son's tuition at a nice private school, let's fight back. Otherwise, pay these clowns their money and you can get back to the business of making and selling products.'

He was right I -- but I can still feel my blood pressure go up every time I think about it.

Re:Say what?

[Anonymous Coward]

Sorry, advisors is a wrong term that I should not have used. To be fair, we have just one lawyer who has been our counsel since inception - and a couple of his associates, but essentially he is the only one.

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 be perhaps wise to negotiate, rather than challenge them -- since atleast during negotiation, we would see part of the code, or at the very least placate them for a while - or worst case, give them a percentage of the product's revenue.

But we felt that to be almost blackmail and did not go with his advice. Instead, we sent them a reply telling them that without the details, it would be pointless for us, and therefore we do not beileve that there is any patent infringment, and consequently we will not be negotiating with them unless they will provide us with evidence. And failing which, we would assume that it was a farce.

I had to fit the story within the word limitations, I should have been clearer -- my bad, I apologize.

Anonymous Crowhead