The Application Developers Alliance and United for Patent Reform took to Capitol Hill this week as Alliance members fought for fair patent laws—a crucial issue for the developer workforce. Small business owners understand that patent trolls inflict damage beyond business costs. They know the real human costs of patent trolling.
Patent trolls don’t simply threaten business models and stifle product development. Trolls crush innovators’ dreams and endanger family businesses such as our member Binary Formations. Kevin and Diane Hamilton own and operate this family-founded, family-run software company just outside Richmond, Virginia. Specializing in productivity apps, the core of Kevin and Diane’s business is building products that help people.
Inspired by their son Adam, Kevin and Diane have solved problems for growing families with the award-winning Chore-inator app and the Adam Learns Shapes and Colors app. The Hamiltons also invented the Home Inventory app—an essential tool for property insurance, and the My Reasons and Too Phat apps, which encourage setting and committing to personal goals.
Kevin and Diane’s products help people in their everyday lives, yet their livelihood is threatened by the current court system that allows patent trolls to extort hundreds of thousands, if not millions, of dollars from small business owners. Though they haven’t been sued by a patent troll, Kevin and Diane live in fear that they will fall victim to shameless trolling and lose their business.
“We know that it’s probably not if we get targeted, it’s when,” Diane stated. “We see it in our industry with many, many other companies who have been the target of patent trolls and what happens to them. We know at this point with the current system that if a patent troll were to target us . . . we couldn’t afford it. We don’t have the capital for defending ourselves.”
For small developers like Kevin and Diane, the threat of patent trolls stifles ingenuity and radically reshapes product development “Every time we put a feature in a product, every time we build a new product, one of the things we always have to do is research and make sure it’s not going to make us a target for the patent trolls.”
This fear became a reality for Alliance member Todd Moore, founder and CEO of TMSOFT, who was sued by a patent troll over his popular White Noise app. Todd’s product has garnered critical acclaim and remains a top health and fitness app, helping people fall asleep to ambient noises.
After years of harassing letters, a patent troll sued Todd in the eastern district of Texas—a common haven for patent troll litigation. This unfounded lawsuit claimed ownership of simple technology standard in many apps: a button within the White Noise app that links to the App Store.
Todd soon learned the patent troll business model: bullying small, independent developers into settling the suit out of court, siphoning hard-earned money out of homegrown businesses. “Patent trolls know what they’re doing,” Todd said. “They know small businesses like mine can’t afford that, so it’s really just flat-out extortion.”
While patent trolls target both large and small businesses, small businesses like Todd’s are disproportionately impacted by patent trolling due to limited resources. “This really hurts the startup and small business community more than anyone else,” he stated.
In addition to overwhelming financial burdens, small businesses are forced to waste time and energy mounting their defense instead of innovating, helping people through their products, and growing their business.
Drew Curtis is another small business owner and UFPR member who knows the real costs of patent trolling. As founder and CEO of news aggregator Fark, Drew became a target of patent trolls at the peak of his company’s success. Five years later, his business still suffers.
“It wasn’t just the direct financial hit we took,” Drew said. “I couldn’t hire new people. I couldn’t add new code. I had to put absolutely everything on hold to make sure that if the worst actually came to pass, that I could survive it. And even today we haven’t recovered from it yet.”
Todd agrees that patent lawsuits drain crucial time and energy out of small businesses. “I can’t even quantify how much time I’ve spent on this,” he said.
“I’m a software developer,” Todd stated. “I write code. I sit in front of a computer 12 hours a day and I hack out code. I feel like I’ve had to become a lawyer. I’ve had to learn a lot about IP law and where the eastern district of Texas is and why I’m being sued specifically in this place.”
Todd notes that his is not an isolated story. “I hear it over and over and over,” he said. “I have friends who have been sued in frivolous lawsuits. They’re spending hundreds of thousands of dollars, millions of dollars to defend themselves and they can’t win. There’s no way to win with these guys. They’ve figured out the system.”
Todd’s story would have turned out like so many others if it weren’t for a nonprofit that offered Todd pro-bono legal representation. Once the troll learned about Todd’s legal defense, they reduced the settlement price and eventually dropped the suit, resulting in zero financial losses to Todd’s business.
Unfortunately this resolution is highly unusual. For every favorable outcome to a patent lawsuit, there are countless examples of businesses destroyed by the unbearable burdens inflicted by trolls. Some entrepreneurs even lose ownership of the companies they worked so hard to build because they cannot pay the trolls.
The Application Developers Alliance and United for Patent Reform are committed to comprehensive patent reform because small business owners shouldn’t have to forfeit the companies they have built from the ground up. As Todd asserted, patent trolls are the “wrecking balls that are just crushing the dreams of innovators.”
The Alliance and UFPR support patent reform provisions that curb baseless demand letters, allow businesses to recoup attorney fees when lawsuits are brought to court in bad faith, and force trolls to specifically detail how a patent is infringed.
“I think we can have a strong patent system and shut down the patent troll racket so that we can get back to innovating,” Todd stated. “It’s not good for innovators out there that are trying to build real products—building real products that people use.”
Congress must act to ensure a fair patent system so that innovators can focus on what they do best: creating products that help people. Inventors like Kevin and Diane Hamilton, Todd Moore, and Drew Curtis need to be protected from vicious, unfounded litigation. Their apps teach our children, organize our homes, visualize our goals, soothe us to sleep, and inform us about our world. And when these people are defeated, we all lose.
To learn more, visit the Alliance's Patent Reform Update Center here.
Communications & Content Intern