In 2010, David Bloom founded Ordrx, an app that enables restaurants to share their menu and take orders from many apps and websites. Ordrx quickly attracted customers, investors and press. At its height, David employed eight people. Then his company was sued by a patent troll with an active practice of suing companies of all varieties.
When companies receive a demand letter or are sued, most decide to settle because the cost to settle is less than the cost of going to court. David decided to fight. Unfortunately, the cost and distraction of defending himself proved damaging. After years of litigation, David's company shut down in April. Here, David talks about his fight against Amaranth and how Congress can help small businesses like his.
ALLIANCE: You only recently revealed that you were sued by a patent troll. Before then you were known only as CEO X. Why did you choose to speak anonymously? Why did you decide to speak out now? BLOOM: Being sued by a patent troll is scary. Not only do you worry about the cost and effort of defending against one suit, but patent trolling is so prevalent you worry about attracting other trolls. They’ll know we either have a history of settling or are spending on a defense and probably can’t fight two wars at once. Every instinct and every piece of advice told me to be quiet. But Ordrx shut down so the risk from trolls is gone. I hate being a victim but if my story helps Congress pass much needed reform, I’ll know I made a difference. There are thousands of small, innovative businesses like mine. The vast majority will stay anonymous or silent. It feels good to represent them.
ALLIANCE: Had patent reform legislation been enacted, how would it have helped your business? BLOOM: The proposed legislation in Congress goes a long way to correcting imbalances in the patent litigation system. These imbalances give every advantage to trolls, creating an easy and lucrative way to exploit the Courts with frivolous lawsuits. Rebalancing the scales will make trolling less attractive. In a world with the PATENT/Innovation Act, it is very hard to imagine a troll coming after us with that patent. No troll attack and I could have invested $150,000 (plus hundreds of hours) in my product, customers and staff. In that world maybe Ordrx succeeds?
ALLIANCE: What's at stake for other small inventors and app developers if patent trolling goes unchecked? What's a troll's end game? BLOOM: Patent infringement lawsuits are up 500% in the last 10 years. And this only includes the cases actually filed; not the number of ransoms paid to trolls based on demand letters. Not only are tech companies like mine getting sued but increasingly so are non-tech business – restaurants, retailers and others – which are users of technology. Without reform none of us are safe from trolls. Patent trolling will be a legal tax on American business.
ALLIANCE: If enacted, would patent reform affect your decision to create a startup or new tech company? BLOOM: When you start you have nothing but an idea, maybe a partner, and whatever savings or investment you can scrounge up. There are a million legitimate market forces that make it very, very hard to succeed. The pain of our troll attack – emotional and financial – plays big in my mind when I think about starting another business. Trolls won’t prevent me from chasing my business dreams but reform will sure reduce the stress of trying and increase my chance of success. Anything that makes it more likely the next great industries will be built in the U.S. is something we all should support.
ALLIANCE: Some opponents of reform argue the so-called “loser pays” provision and provisions requiring more information at the outset of a lawsuit would "close the courthouse doors" to small inventors. As a developer that once operated a small company how would these changes to the law affect you? BLOOM: Right now trolls have every advantage. They can file patent infringement cases against a virtually unlimited number of plaintiffs with a standard set of legal documents and $250. And if they convince a jury that they are right, the law allows them to collect triple damages. The cost of a defense can run well over $1 million and take years. If I win I get nothing and the troll can always appeal, starting the process all over again. Loser pays is an important incentive to fight frivolous suits and a caution for anyone who would file a frivolous lawsuit. I am far, far more worried about the real and growing cost trolls pose than I am a hypothetical problem of a judge considering my legitimate patent enforcement so frivolous as to warrant loser pays. Nothing about loser pays will make me hesitate to bring a case.
ALLIANCE: We have hundreds of years of patent case law. Don't you want to have your day in court to be heard by a judge? BLOOM: Imagine if anyone could accuse you of a crime by filing court documents that say they have “information and belief” a crime was committed. No investigation, no evidence. Suddenly based on their say you “get your day in court.” Due process? Forget it. This scenario seems crazy but is the reality in patent law. I want my day in court if I need it, and if I legitimately infringe on someone’s patents I should be brought before a judge and jury. But patent trolling forces me to choose between the cost of settling and the cost and time of a defense. The system is broken and must be fixed.
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