Possible US patent infringement and German company

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We are currently trying to set up a startup that sells a software product online. The software can be downloaded worldwide and paid for via Paypal. Our company is a limited liability company based in Germany.

We recently got mail from a US attorney stating that we are infringing a patent they own.

The patent in question covers a process commonly used in software products and depicts a simple backup scenario. (More here: Prior Art for Onsite backup for internet-based data processing).

Our feeling it that it is a classical example of a patent troll and that we might want to wait at least for the SHIELD act.

The interesting thing is that in Germany that kind of patent does not exist (for some very good reasons I guess).

We are not dependent on the US market and could block US visitors from entering our site. But would that be enough? What is the worst thing that could happen? Any advice on how to proceed would be great.

Thanks!

Ra_

Posted 2012-11-20T13:34:26.740

Reputation: 223

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@Raph Allow me to disabuse you of that notion that "such kind of patents don't exist in Germany" with something a random 2-minute search turned up: http://www.google.com/patents/EP1540441B1?cl=de

– kinkfisher – 2013-01-30T03:18:29.733

@kinkfisher The main difference is that the patent is about hardware and software. Software per se is not patentable. But the patent you described is really scary, too. And really basic. Does not make me feel that the patent system in Ger is working either... Thanks! – Ra_ – 2013-01-31T08:34:18.097

2@Raph The "onsite backup" patent you originally cited is about hardware and software too; the claims clearly require "central" and "client" computers and "communications links", which are essentially hardware components. My point was that so-called "software patents" exist in many parts of the world outside the US, including the EU. Software not being patentable in the EU is a myth stemming from misunderstanding what "software per se" really means. The reason you don't have many lawsuits over patents like this in EU, though, is the litigation environment is very different (loser pays etc.) – kinkfisher – 2013-01-31T19:49:29.177

@kinkfisher: I totally get your point and you are absolutely right. There is imho one difference however: In EU you can only patent and sue against a hrdware / software bundle (say if we sell a NAS running our software). In the US it is easily possible to sue against software alone (that involves hardware at some point). But you are right that another big difference is the litigation environment... – Ra_ – 2013-02-04T07:44:25.487

A patent is a territorial right. Period. But cloud computing and networks of networks add another layer of complexity to some scenarios. One cannot answer your question without looking at your system architecture and what happens where. – infotiger – 2013-02-26T10:18:53.060

You should consult a licensed U.S. attorney with experience in defending against patent infringement allegations. If you deal with an attorney in Germany for other matters, consider asking him/her to get a referral for you. You should not, in any way, rely on legal advice given on an internet forum. – Jay Smith-Hill – 2013-01-23T21:54:50.110

Is the case settled or still pending? Regarding what you called hardware/software bundle you might be interested in that case: http://www.epo.org/law-practice/case-law-appeals/pdf/t971173dp1.pdf Of course software never comes alone but always on some kind of medium/ hardware. My very personal opinion is that such an application will never be allowable in germany.

– Jochen Reich – 2013-10-25T13:27:56.313

See related post re. foreign entity and US patents http://patents.stackexchange.com/questions/48/consequences-of-unwilful-us-patent-infringment-by-a-foreign-legal-entity-when-es

– Ron J. – 2012-11-20T21:47:19.507

Answers

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The second worst thing that can happen is that you do not defend against a lawsuit in the US and this will allow the patent holder to obtain an injunction, forcing you (and your customers) not to use the offending system in the US. If you are not dependent on US revenues, this is actually an attractive option, but be aware that this can be a barrier to entry into the US for years to come.

Absolutely the worst option is if you have US revenues to protect and then engage a US patent lawyer to defend you. He/she will explain to you that it will cost you $1.5 million to take it to court. If you win, you will have gained nothing other than ability to continue operating in the US (but will not be able to recover any of your costs). If you lose, you will have to pay (modest) damages (determined by a formula relating to the revenue) (plus, of course, your own legal fees). If you settle, you will have a bitter taste in your mouth for settling with what appears to be a common scam. As you may discern, I speak from bitter experience (and we chose the 3rd option, as we had US revenues to defend).

Constantine

Posted 2012-11-20T13:34:26.740

Reputation: 11

Be American, spill coffee over your hand, sue vendor, ???, profit...

Does that mean you had 1.5 mio in expenses + the damages only because someone had a patent that should've never been granted and that you maybe or maybe not infringed? – Mark – 2014-01-15T13:15:54.077

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People giving you the wrong suggestions here - do not even try to come to any US attorney. Do not even reply to any requests from that US "patent troll" company - you will make even worst, because reply will state that you at least received their claim and process can go further. Ignore them - you have the full right to that because you are not required to comply with any USA laws, esp. if you are not based physically there. There's no state borders in Internet - they cannot prevent you to advertise or sell software on Internet. Any lawyer tell you the same - ignore them. Be very cautious with letters or post mail from USA - warn everyone to not signing for any mail from USA as "received" (they will send the big packet of documents to your address with their claims - for this matter better is to get the postal box in third party company). Software patents forbidden in many countries - such things as algorithms (which always patented in USA even by such giants as Apple and Google), user interfaces and program code – cannot be patented (or protected in any way) in such countries of world as Russia, New Zealand... I can't say about EU, but you can check that.

westsomething

Posted 2012-11-20T13:34:26.740

Reputation: 9

Pure, disembodied algorithms are not patentable in the U.S. – George White – 2014-01-22T16:43:45.393

This, and all SE sites, are collaborative efforts designed to have answers be commented upon and voted up and voted down so the result will be the most helpful to current and future readers. – George White – 2014-01-25T19:13:49.507

@GeorgeWhite, I won't tolerate anymore that you're deleting my comments - i will notify administration again about you, if they don't do anything - this situation will be public, this is definetely the hostile environment to users, i recommend you to stop that right now. – westsomething – 2014-01-25T19:38:05.253

I flagged your comment as "not constructive". A moderator seems to have agreed with that and removed it. I have found SE sites and Ask Patents to be environments very free of the flaming and personal attacks of many sites. The strict Question/Answer/Comment format seems to encourage on-topic posts that address topics factually and without rant. I'm sorry you haven't found it to be welcoming. – George White – 2014-01-25T21:18:46.337

@GeorgeWhite, your critics is not "objective" at all but very subjective after our first dispute, you know that, all this is already looking like pursuing a user. I hope that sanctions will be made by administration, we got here much serious situation of expropriation by some users the whole resource to their needs, their moderation system makes a very big flaw exactly in my case. Any another deletion will be reported and this case will be described publicly in my blog. Also please take to the mind the freedom of speech of other people. – westsomething – 2014-01-26T08:23:51.640

1As I said, I did not delete any of your comments; I do not have that power. Regarding freedom of speech, that principle has to do with censorship by the government. – George White – 2014-01-26T08:40:55.653