Combat Your Fear Of Non-Practicing Entities

By Mary Juetten

I often like to say that if I had a dollar for every time someone denied having any intellectual property (IP), I would not have to raise funds to grow Traklight. The same applies for questions around the value of patents for small businesses with little capital to assert their rights. Startups are scary enough without being frightened about being accused of infringing on someone else’s technology by a Non-Practicing Entity (NPE).

In the world of modern business, the NPE, or “patent troll,” is scarier than any monster Hollywood studios could conjure. Instead of threatening life and limb, NPEs threaten the livelihood of your business with potentially costly litigation. Given how broad most of the NPE patents are, seemingly every business operation in the digital sphere is susceptible. So how can entrepreneurs defend themselves against the threat of patent trolls?

In the spirit of Halloween this week, we are excited to interview Shawn Ambawni the COO of Unified Patents.

Mary Juetten: What does your company do? What problem are you solving?

Shawn Ambawni: Unified Patents (“Unified”) deters Non-Practicing Entities from monetizing patents in strategic technology areas, called zones. Unified’s activities exclusively focus on creating deterrence by monitoring NPE activity and combatting the use of low quality, invalid patents. Unified does not pay NPEs for patents or licenses, which it believes guarantees alignment with its members and avoids any conflict of interest by incentivizing further NPE activity.

Unified is currently deploying its solution across four technology areas involving cloud storage, content delivery, electronic payments, and wireless. Each zone includes a definition defining the scope of technology protected by Unified.

Mary: When did you start?

Shawn: Unified was founded in 2012 by Kevin Jakel (former head of IP litigation at Intuit) and Brian Hinman (IP executive at IBM, Verizon, and Philips) and currently has over 60 members consisting of large companies, small and medium-sized businesses, and startups.

Mary: What’s the vision for your company?

Shawn: Unified’s solution operates within each zone like a trade association with the goal of reduced NPE risk, increased freedom to operate, and increased patent quality and validity. To accomplish this, the company engages in a set of services specifically designed to deter NPE activity by identifying it as early as possible and delivering long-term strategic risk reduction.

Unified’s model relies upon participation of startups and large companies to create additional protection for a zone. Understanding that small companies are often vulnerable and the first to receive demand letters, Unified encourages start-ups and small companies to participate. Small company participation provides Unified with valuable data into demand letter campaigns as soon as they begin. Furthermore, when startups participate, the entire Zone is less appealing for NPEs by limiting the number of small companies that are vulnerable as easy targets.

Mary: How does Unified differ from other third party solutions?

Shawn: Unified’s model focuses on deterrence in specific technology areas, e.g., defensive patent aggregators, that broadly acquire patents. For small companies, a single zone should be ideal for protecting only what they care about. For large companies, Unified’s zone approach allows them to join one or more zones while assuring their membership fees only pay for the defense of technology areas that matter to them.

Unified offers a deterrent service on behalf of a strategic technology area but, unlike other solutions, never monetizes a settlement between operating companies and NPEs. Unified also refuses to buy patents from NPEs. Unlike other solutions that closely work with NPEs, this hard stance allows Unified to assure is membership that their participation will never, even indirectly, support or incentivize additional NPE activities. Moreover, because of the sheer number of patents available for NPEs to purchase, Unified believes that simply purchasing patents or licenses from NPEs not only fails to reduce overall NPE activity, but actually sustains and encourages future NPE activities.

As you ready your business to enter the marketplace, you want to ensure that you’ve taken the necessary steps to protect yourself from future litigation. Research on any patents related to your enterprise can help you understand if any potential risk exists. If possible, consider keeping documentation related to your business behind an internal firewall or at least a membership wall. Unfortunately, patent trolls try to capitalize on some of the most basic functions of a business, so you likely can’t mitigate the risk entirely. But understanding what patents are out there in your field can help to keep you from being blindsided.

The threat of litigation can be frightening. Like a parking ticket or an overdue library book, the thought of having possibly transgressed can be disconcerting; but that doesn’t mean that you should look to immediately settle to make the matter go away. Patent trolls make their proverbial hay from scaring companies into a quick and easy settlement with ominous letters. Be aware that settling with one troll could open the door to countless others trying to make a quick dollar off of you.

In most horror stories, the worst fate tends to befall those who venture out alone. Teaming up with other businesses can provide a stronger defense and greater resources in the fight against patent trolls. Traklight is proud to partner with Unified Patents in their efforts to put an end to these frivolous lawsuits. For more information, visit http://info.traklight.com/unifiedpatents.

[This post originally appeared at Forbes / Entrepreneurs.]

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