Innovators need protection from 'patent trolls'
In my West Loop Chicago neighborhood, $350,000 can buy you a pretty nice condo. Or it can pay for four years of college and three years of law school - in full, no loans. But instead of investing in a law degree, I spent my $350,000 on legal fees and lost revenue, defending myself against predatory litigation that was totally without merit.
Today, I have less than $3,000 to my name.
After carefully saving my money when I served our country in two wars, as an Air Force combat pilot and later putting away savings during my employment at Credit Suisse, I invested my nest egg - $350,000 worth - into launching my tech startup, Jump Rope.
But now my decade of savings have been wiped out after a bogus patent-infringement lawsuit. My decision, but not my choice: I decided I wasn't going to surrender to legalized extortion and give the patent troll that filed the bogus lawsuit the satisfaction of settling out of court.
In 2011, I raised capital, developing and marketing my company Jump Rope - a dynamic pricing app that lets you skip the line at clubs, restaurants, the airport, museums, virtually anywhere, for a small dynamic fee. I received a phone call from the patent troll's lawyers, threatening me if I didn't pay a royalty, but I refused to settle. I returned the capital I raised back to my investors, because nobody wants to buy a lawsuit.
Eventually, I even had to borrow money from my brother and mother. This experience has caused me more stress and fear than I faced during my tours in Iraq and Afghanistan - at least my combat missions were finite, and I knew I'd be dead or alive after 38 seconds of terror.
The patent upon which I'm supposedly infringing is held by a Chicago-based shell company; the patent troll attacking me, waived confidentiality and vowed in a mediation session that even if they lost the first lawsuit, "we will sue you again with a different patent in our portfolio as soon as this is over."
Right about that point, I met Erich Spangenberg, from IPNav. He offered to invest in my company, and take over the litigation. He thought the company that was suing me was certainly giving the industry a bad name, and truth be told, he believed in the business model.
He followed through, and if it were not for him, I would have had to declare bankruptcy and find some work in the middle of the greatest recession we have ever known.
Patents are a constitutionally protected right, and they should be. But real reform of the patent system will require changing the economic incentives of patent suits, shifting the economic burden of frivolous claims to the plaintiff instead of innovators and entrepreneurs.
The fee-shifting provisions of the Innovation Act and the PATENT Act would ensure that the plaintiff has to pay the defendant's legal fees if it brings a bogus lawsuit and loses.
But even that might not be enough, as I won part of "reasonable" legal fees. In a software startup, a patent infringement case is instant death.
Millions of innovators and entrepreneurs are being victimized by meritless patent-infringement suits - more than 80 percent of them small- and medium-sized businesses that can't always afford to fight back.
The Innovation Act and PATENT Act will hopefully provide greater transparency and much-need clarity for our patent system.
On behalf of our nation's small business leaders and job creators, I urge Congress to continue to support and defend meaningful patent reform legislation, and deliver a strong but fair bill to President Obama - and I, for one, will continue to fight for the opportunity to build a business in this country unmolested and encumbered by frivolous and meritless lawsuits.
Peter Braxton is founder and CEO of Jump Rope Inc., a Chicago-based tech startup.