# Safeguarding Your Tech Startup from Corporate Aggression
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Understanding the Risk of Patent Litigation
Just a month into collaborating on an exciting new venture, I received a panicked call from Robert.
"We're being sued for patent infringement by Acme!"
Acme was a sizable corporation with extensive resources, and this was Robert's worst fear — facing a potentially crippling lawsuit right after beginning his role with Awesome Corporation.
Note: Company names and product details have been altered to maintain confidentiality.
I had joined Awesome Corporation just prior to this alarming news. The company was experiencing rapid growth and receiving glowing reviews for its innovative flux capacitors, which delighted many customers with their impressive performance.
Awesome boasted a talented team of innovators who consistently generated buzz in the industry through creative ideas. These innovations distinguished Awesome's flux capacitors from their competitors and provided significant savings to customers. With each quarter, the company was capturing more market share, thanks to features unavailable from more established rivals. Everything seemed promising.
Identifying, Developing, and Safeguarding Innovations
As the Vice President of Product Development, Robert reached out to me for assistance in constructing an intellectual property portfolio and establishing a system for identifying, developing, and safeguarding innovative concepts.
An intellectual property portfolio consists of valuable business assets like patents, trademarks, copyrights, and trade secrets. These intangible assets can provide substantial protection and value to the owner. A well-developed patent can shield a company's core technologies and essential product features, creating a barrier against competitors looking to replicate those innovations.
The Dreadful Scenario
When Robert contacted me, his voice was shaky. The situation was dire, as Awesome lacked any patents. This absence of intellectual property meant they had minimal leverage to negotiate a settlement through cross-licensing. Acme likely singled them out due to their vulnerability.
Having recently gone public with a successful Initial Public Offering, Robert was understandably anxious.
"How do we explain this massive liability to our shareholders?"
Not long after, customer inquiries began rolling in.
"What’s happening with this lawsuit? Acme informed us we might have to stop using the flux capacitors we bought due to their alleged patent infringement."
"What actions are you taking to resolve this?"
Robert also faced mounting questions from the sales team and potential customers, all understandably concerned about the implications of the lawsuit on their purchases. With the legal cloud looming, selling capacitors became nearly impossible.
"Reach out to us once the litigation is resolved," became the standard reply to sales inquiries.
Believe it or Not, Awesome Was Fortunate!
Many smaller companies would have been devastated by such a lawsuit. Had Awesome lacked the resources to defend itself, it would have been akin to a formidable predator feasting on vulnerable prey.
Patent litigation is intricate and expensive. Without funds for a competent patent litigation attorney, responding to such attacks becomes nearly impossible.
Before initiating a lawsuit, the predator conducts thorough research to identify the most vulnerable targets. "Locate a small firm with no intellectual property and limited funds. We’ll make an example of them." Once the predator consumes its first victim, it sets a precedent, coercing others into submission or hefty licensing fees to settle disputes.
Regrettably, this scenario was preventable — or at the very least, its impact could have been significantly mitigated.
Strategies for Building a Robust IP Portfolio
Had Awesome taken proactive steps years earlier, investing a fraction of the millions spent later, they could have developed an intellectual property portfolio that might have deterred Acme from targeting them in the first place. With a stronger IP portfolio, even in the face of a lawsuit, Awesome would have been better positioned to negotiate a favorable settlement, minimizing disruption to operations and customer relationships.
Over my 25 years in the industry, I have encountered numerous companies that failed to take necessary measures to protect the innovative ideas that set their products apart. These organizations believed their creativity and innovation would guarantee their success.
"We constantly generate new ideas, so we don’t need to worry about safeguarding our innovations." This perspective is fundamentally flawed.
Such a fate could befall you as well.
If you have invested time and effort into assembling a talented team that produces outstanding products, it's crucial to protect those key features. Neglecting the establishment of a valuable intellectual property portfolio can have serious repercussions.
Action Steps: Begin today by identifying the innovative concepts inherent in your products, and take the necessary steps to secure your most valuable innovations.