FindTheBest is taking a stand and saying “screw you” to patent trolls.
The company is filing a civil RICO (Racketeer Influenced and Corrupt Organizations) suit against a patent troll, which sued it for patent infringement earlier this year.
Accusing a patent troll of racketeering is a novel strategy for a patent countersuit. But FindTheBest thinks it has a winning strategy.
“Patent trolling issue has been a growing problem and it will hit epidemic proportions here very shortly,” said Kevin O’Connor, FindTheBest‘s CEO and founder. O’Connor spoke with us from Washington, D.C., where he was meeting with members of the staff for Sen. Chuck Schumer (D-NY). In addition to filing a civil suit, O’Connor is making a tour of nine elected officials’ offices this week to push for patent reform.
“These evil geniuses have figured out that for very little work, they can extract a tax on our industry,” O’Connor said. “I’ve been in tech for 30 years and to have these guys come in steps over an ethical and moral line. I don’t like it and we figured we would fight it.”
O’Connor described patent trolls as the “parasites” of the tech industry. They are generally shell corporations that buy up patents, not to use them in business, but merely to file lawsuits against other companies that allegedly infringe upon them. The patents are often extremely vague and the suits “frivolous,” O’Connor said. However, defending a lawsuit in court is so expensive that companies will write settlement checks, regardless of the validity of the claims.
FindTheBest offers data-driven comparisons across hundreds of topics, products, and device categories. (Disclosure: VentureBeat has a business relationship with FindTheBest, which provides the content for our product comparison pages.)
Plaintiffs Eileen Shapiro and Steven Mintz, acting under Lumen View Technology LLC, sued FindTheBest in May 2013 for infringing on patent no. 8,069,073 — “system and method for facilitating bilateral and multilateral decision-making.”
The patent filing describes the patent as follows:
Techniques for facilitating evaluation, in connection with the procurement or delivery of products or services, in a context of at least one of (i) a financial transaction and (ii) operation of an enterprise, are disclosed. The techniques involve retrieving party and counterparty preference data from digital storage media; performing multilateral analyses of the combined preference data by computing a closeness-of-fit value; and delivering a list matching the at least one party and the at least one counterparty using the computed closeness-of-fit values.
O’Connor and FTB director of operations Danny Seigle said that FindTheBest doesn’t even violate this patent because its engine only takes one set of preferences into account
“This patent is for the process by which two parties’ sets of preferences are matched together using an algorithm,” Seigle said. “This could be anything, from a dating site to an applicant-to-employer recruiting system. It is a pretty fruitless patent, but you are basically guilty until proven innocent and have to defend yourself. It is legalized extortion.”
Patents are, in theory, meant to protect people from having their ideas and/or work wrongfully used. To get a patent, in theory, the requirements include “novelty” and “non-obviousness.” Alas, this is not the reality, and some pretty ridiculous patents are out there, such as those for human genes, online press releases, and hyperlinking.
“The patent office has been issuing garbage patents for the past 15 years,” O’Connor said. “When they are held up to scrutiny, they don’t pass. It is a broken system, but there are people with money on the other side that want to keep it that way. Most companies don’t want to take these suits to court, and they are screwed.”
As mentioned above, lawsuits are expensive, and the trolls set the settlement price just at the point where it is cheaper to settle, even when the claim is invalid. Their goal is settlement, and they bank on companies’ quiet acquiescence to cash in.
“Outright trolling is a big threat and a terrible problem — they are basically collecting fees for everyone who is trying to do legitimate business, like a wolf at the edge of a fox hole,” said Gil Silberman, an attorney and managing partner with Equity LLP. “It’s the cost of doing business, but almost no startup company, even a well-financed one, has enough money to fight a patent lawsuit all the way to the end, whether or not it is going to be victorious.”
Equity LLP has a unique model where it exchanges legal services for equity. Silberman works extensively with startups, often advising them on patent issues. He said that venture-funded companies (like FindTheBest) have a responsibility to their employees and shareholders and are put in a difficult position where fighting back can be a greater risk than settling.
However, the problem with “rolling over and settling” is that patent trolls realize you are an easy target and will hit you with suits again. Build.com is dealing with lawsuits from as many as five trolls.