Entrepreneur

Patent trolls have come after my startup. I’m fighting back

Last week, Life360, the company I co-founded in 2008, raised $50 million in Series C financing and signed a strategic partnership with ADT Security Systems to partner on the connected home.

It was an exciting week for our scrappy team of 50, all of whom have been working hard for years to build a location and communication app used today by more than 33 million families around the world.

After the excitement of receiving substantial buzz in the media and industry, the dark side of the startup experience reared its ugly head. We received a request from a Florida-based entity, AGIS, to “discuss” a licensing agreement associated with a set of patents they say they own. Under their read, it seemed like the patents could impact any app that shows a location marker on a map.

I had never heard of this company before, so I looked into who they are. This is what I found out. AGIS has a phone number that goes to an anonymous voicemail. It has a headquarter address that links to a home in a residential neighborhood of Jupiter, Florida. I could not find any AGIS employees on LinkedIn. I couldn’t find anything that showed that AGIS still actually sold products or services at all. What I do know is we don’t compete with them, and they are nowhere on my radar.

The bottom line is that AGIS is engaging in a shakedown to take advantage of Life360’s success.

Unfortunately, this isn’t the first time I’ve received such a letter, and I know many of my colleagues can say the same. In the past, I’ve paid the “tax”, or what feels like one, and settled because it’s easier to write a check for $10,000 and get rid of problems that distract us from our business mission. To me, these people are patent trolls who do nothing but stall innovation.

Many start-ups simply do not have the resources to go to court, and risk losing the company or a huge chunk of capital if they take on these patent trolls. Patent trolls know this, and they prey on new targets again and again.

When I got AGIS’ request, my response wasn’t the usual legal-approved, cordial language. You can check out my Twitter feed (@ChrisHulls) if you’re interested in the specifics of how I aired my frustration, but suffice to say I’m tired of being bullied by companies like AGIS. We will no longer engage them or their meritless allegations. Over the past few days, as my response has circulated online, I have been blown away by the outpouring of support from my peers and others in the tech community. I think I struck a nerve in an entrepreneurial community that has had enough of the nonsense that entities like AGIS and troll-like behavior creates.

My primary reason for taking this public is to shine the spotlight on this issue and encourage other companies in similar positions to do the same. No one wants to willingly engage in costly litigation, but there comes a point where you have to stand up for what’s right, and do what’s best for your business and the ecosystem of innovation we are all a part of.

I’m also going take this fight one step further. If AGIS doesn’t agree to give a free license to this patent to all non-competing startups like Life360, I plan to bring in a legal team to invalidate not only the patent in question, but every other piece of intellectual property owned by the corporation and its founder, Malcom Beyer.

The reasoning for this strategy is simple: these types of companies expect a methodological and economically rational response to their claim; in fact they count on this. By taking an offensive approach, we break the calculus that is at the core of the “behave like a patent troll” equation. If, as a community, we all start going on the offensive, these bullies will have no option but to go away.

We’re still a long way off from legislative protection against trolls and true patent reform. In fact, earlier today patent reform took a hit when a bill meant to stop trolls was pulled because it was unlikely to make it through the Senate.

I am hoping that entrepreneurs everywhere support this effort because doing this won’t be easy and it won’t be cheap, but it is important for our community to send a message loud and clear that we aren’t going to take it anymore.

Patent trolls are not only parasites on the startup community, but to the American patent system as a whole. They try to exchange building national wealth, such as creation of new jobs and growing new companies and ecosystems, for their own personal gain.

As for AGIS, you now have my settlement terms.

To everyone who has offered their support in this case, you have my sincere thanks and appreciation. If by winning this case we cause even one company to give up their shakedown it will be worth it.

Many of you have reached out to me personally and offered your support and I’m now working with the broader industry to explore other ways to stop this behavior, so if you’d like to get involved you can join this cause at http://signup.startupsagainsttrolls.com.

Chris Hulls is the founder and CEO of Life360, an app for families and households.


Mobile developer or publisher? VentureBeat is studying mobile app analytics. Fill out our 5-minute survey, and we'll share the data with you.
22 comments
Chris Cadwell
Chris Cadwell

Innovate despite them. They do not create the world. The innovators do.

Magnus Söderberg
Magnus Söderberg

Been there done that, I told lodsys to fuck off as us law don't apply to Sweden. But we said it in a nice lawyer way of words :D

Optimistic Skeptic
Optimistic Skeptic

A few posters have come to the defence of the trolls.  Let me explain how these parasites cost my company $150K so far with pure legalized extortion.  And I don't have the benefit of a $50M war chest to fight these guys.  Fighting  is a lot easier said than done.  You can be faced with paying up, or risking your entire company if you want to fight.  We fought anyway, but I can fully understand why many others just pay the ransom.  


To begin with, there is no need for any merit at all when a troll attacks.  The patent can be garbage.  You may not infringe.  They don't have to have a business.  In fact, for them it is better if they don't.  In short, you don't have to do ANYTHING wrong to get attacked.  I believe in patent protection.  We have patents ourselves.  In fact, before we ever created our product we worked on the patents.  Even the USPTO never found the patents that we allegedly infringed.  We take our IP and the IP of others seriously.   It took us less than a day after we were attacked to find prior art that shows the patents should never have issued.  


In patent infringement, you are guilty until proven innocent.  You can win and still lose, because the litigation can cost you seven figures easily.  And when you win, if you want those fees back, you have to risk even more money to clear a very high standard of proof.  This is why patent trolling is such a great business model.  It costs almost nothing to accuse someone of infringement.  If you don't have a real business, then all the better, because you cannot be countersued.  This game is not about people with legit patents that deserve protection.  It is about using the threat of ruinous litigation costs against innocent victims, no matter what the merits of the patent are.  There is almost no downside in suing everyone you can think of.  


The accused then has a horrible choice to make.  If you are trying to raise money, forget it.  No one wants to touch a company in litigation.  If your customers find out, which is easy to do, they may run for the hills, for fear of being dragged into the litigation.  You don't dare announce your customer wins, because the troll can up the pressure on you by suing your customers.   Or your settle for a few tens of thousands, and move on.  It is 100% rational to settle.  Another reason, why trolling is so effective.  It is legalized extortion.  The trolls count on you being so petrified by the threat that you gladly settle.  I have heard of companies that essentially died because of this rigged game.


Chris Hull is talking about invalidating the patents.  Let's understand the reality of how that works.  You must pay to find prior art.  Then you must do a ton of work to pour over those patents, and attempt to build a case on defeating every claim they make.  We were "lucky".  Our in house technical people put hundreds of hours into this aspect of building our case. These are people that are supposed to be building product.  But we had no choice.  The work they did saved us hundreds of thousands of dollars.  Then you have to write up a petition.  If you really want it done right, you need to find and pay an expert to sign a deposition.  The lawyers that do this stuff make at least $600 per hour.  And guess what.  These are not the guys to actually work on your behalf in the Eastern District of Texas.  You need local representation.  The best invalidity guys are in DC.  So we had to pay TWO sets of lawyers.  Then after all that, the government charges you $23K in filing fees, just to file.    Chris has the money to take this route.  Many don't.  We had to curtail engineering and marketing spend to find the funds.


Filing is just the beginning.  If the other side puts up a fight, then both sides will spend hundreds of thousands fighting over the invalidity petition.  


MEANWHILE, you still need to work the litigation angle with your local representation in Texas.  The courts there will keep plowing forward even while you are trying to invalidate the patent.  That process is even more expensive than invalidation.  You have all kinds of documents you need to produce.  There is much legal wrangling.  You can only imagine how distracting this is.  


In spite all of this, we are likely going to blast our trolls off the map.  We turned the tables on them.  They expected us to be fearful of the litigation.  They thought they could do nothing and let the fear of litigation scare us into a ridiculous settlement.  Those pricks were wrong.  We attacked every piece of paper they filed with the court.  We figured that their lawyers were on a contingency, so kept up the pressure and made those lawyers keep spending their own money.  They kept trying to stall, and missed their deadlines.  We challenged them on every missed deadline even if they were hours late.  This cost us serious legal money, but we wanted the pressure on them.  Finally we had them in a corner where they had to spend serious money, or risk sanctions by the court.  Lawyers don't like that at all.  Then they agreed to stay the entire case, while our patent invalidation is ruled upon.  We have no doubt they will now lose their patents.


This strategy will not work for everyone.  We decided that we had a bunch of quick buck artists that counted on people settling without them risking any of their own money.  So we used that against them and it worked.  But just because it worked for us, does not mean it will work for everyone.


I say good for Chris.  More of us need to fight these parasites.  But also understand, that many companies don't have the resources to fight.  They either settle or die.  


So the next time any of you guys rush to the defence of these trolls,  try to understand that most of these cases have NOTHING to do with protecting the rights of some exploited inventor.  This crap is extortion - pure and simple.  By people who never have and never will take anything to market.  Maybe someday after you have poured your guts and life savings into a company, and find yourself attacked by people who exploit a broken system, then you will understand before you come to the defence of pure parasites.  You better hope it never happens to you.  It is pure Hell.  

Rich Lee
Rich Lee

The issue of trolls aside, I have to chime in on something I see repeatedly in these patent discussions. We should be careful about condemning patents that we, with the benefit of hindsight, consider "obvious" or "minor” -– the classic “how the heck did they get a patent on that, everyone’s doing it these days" comment. Remember that a patent is often granted YEARS after the creation of a truly innovative idea. During this interim period, the idea may have been introduced to the market, and the game-changing ones become almost ubiquitous. More importantly, also during this time, others will build on this new idea and introduce improvements and enhancements -- thus driving innovation in the field. Just because the idea achieved wide usage and ubiquity during this period does NOT change the fact that it was truly new and innovative at the time of its creation -- this is the general standard used in determining whether someone gets a patent. A patent filing is often the key protection that gives an innovator the confidence to go to market without fear of being ripped off. Without this protection, many innovators will wait until they receive the patent, thus keeping the idea from the world for years and delaying innovation in that field. For us to now say in hindsight that such a successful idea doesn’t deserve a patent is a very slippery slope and can end up stalling innovation and being counterintuitive. It’s like punishing an innovator’s success by saying “because your idea is so good that everyone’s using it, you’re no longer allowed to say it was your idea.” I don’t deny that trolls, patent litigation, and the patent system need some reform, I just don’t think this argument leads us in the right direction.

Diego Schmunis
Diego Schmunis

One for all and ALL for one! Chaaaaaaaaaaaaarge! :)

Michael Clarke
Michael Clarke

The way I do it is find a friendly lawyer that can provide advice for small fees and then represent yourself in court. They will start bleeding funds and give up. Of course you really need to spend a bunch of time to research it very well and prepare yourself...

Kevin Casimer
Kevin Casimer

Except you can't have a troll without someone innovative enough to create something new and get a patent on it. This entrepreneur is the parasite, benefiting from the useful invention of another without wanting to give anything in exchange. "Troll" is a term coined by larger companies to disparage and discredit the inventors they steal from.

Tommy White
Tommy White

The Patent system needs an overhaul. Patents that are so minor in detail, such as putting a marker on a map, should not even be considered. It would be as if I had a patent based on leaves falling in a downward angle from a series of trees, then waited until fall and demanded money from everyone that owned a tree. Somethings just don't make sense...

ImJust Ducky
ImJust Ducky

let me get this right. You're potentially infringing on someone else's patent. And only because the owner of that asses has not (yet) brought a product to market, you feel they somehow don't deserve a licensing fee? Either a patent is a protectable asset or it is not. If you want to judge companies by their economic contribution (practicing entity) then you must also consider the amount of econoic benefit (even a law firm has employees and is likely profitable and pays their taxes). You're asking to tip the playing field to the benefit of companies that make even a small, money losing, thing...then shouldn't a company that makes MORE than your company receive greater protections?

Rob Crane
Rob Crane

Patent trolls are bloodsuckers and enemies of innovation - good job to all troll slayers!

Justin Robertson
Justin Robertson

@ImJust Ducky I don't think you understand what a patent troll is. This is someone who is holding an intentionally vague and broad patent (that should never have been granted but the patent system is broken) and sits on it, not producing ANY product and then preys on companies that cannot afford the litigation to essentially blackmail money out of them.

Lizz_Porter
Lizz_Porter

@TheIpHawk I don't know enough to have an opinion. :) This is all new to me, in the last couple of weeks!