Tech entrepreneurs are disruptors by nature – to start a tech company, one needs brilliant new ideas, money, and true grit. Startups are tough places to work, but are the crucible of technology innovation and disruption. Once a hot startup comes out of the fog of incubation, it gets people’s attention – investors, employees, and customers. It’s an exhilarating ride. Then the competition notices you. Competitors come in many flavors, ranging from other startups and small companies in your market to big entrenched companies that you’re seeking to disrupt.
The stage is set – the competition readies for action. Your idea is novel, your execution is brilliant, your team is the best in the world, and then bang – you get sued for patent infringement by a big company.
Suing a potential disruptor for patent infringement is a tactic that is often employed by incumbents. Many large companies have huge patent portfolios, large legal departments, and deep pockets. The startup under attack has to defend, which is an expensive and risky proposition. Regardless of the merits, these attacks often result as a drain on the startup’s funding and as a distraction to the management team. They can be timed during funding events, right before an exit, or during key product roll outs, when the startup is expending maximum funds and is focusing on getting its product into the market.
Access to credible patents to assert in a countersuit is a key resource needed to defend against a patent infringement suit. Only by having patents to assert against the incumbent can a start-up even the stakes in a predatory patent infringement suit filed by an incumbent. The problem is that most startups don’t have access to a broad range of issued patents with which to countersue.
Intertrust lived this situation with one of our venture portfolio companies a few years ago, and thought, “there has to be a way to help startups in this situation”, and we designed PatentShield. The PatentShield program provides start-ups with the access to a collection of large patent portfolios needed to counter a predatory patent infringement suit from an incumbent. The PatentShield program provides access to a large set of patents drawn from established companies and large research labs that we make available to member startups for use in litigation. If sued, a PatentShield startup can take ownership of patents from PatentShield and use them to countersue their opponent. Intertrust operates PatentShield as part of its venture group and offers it to startups in exchange for a small equity grant. Today, the patents in PatentShield are owned by Intertrust and Google, but some have been acquired from a variety of major companies.