What is a Patent Troll?

Patent trolls are people and businesses that purchase patents and use them to aggressively sue others who independently developed technology. During a Google Hangout this past February, Barack Obama pointed his finger at these trolls saying "They don't actually produce anything themselves. They're just trying to essentially leverage and hijack somebody else's idea and see if they can extort some money out of them."

What is the SHIELD Act?

The SHIELD Act is a clever piece of legislation introduced by by Rep. Peter DeFazio (D-OR) and Rep. Jason Chaffetz (R-UT). The backronym stands for Saving High-Tech Innovators from Egregious Legal Disputes. Under the Act, if the patent troll loses in court because the patent is found to be invalid or there is no infringement, then it pays the other side’s costs and legal fees, which often stretch into the millions of dollars. This "fee shifting" system would empower innovators to fight back, while discouraging trolls from threatening lawsuits to start.  Please support this the SHIELD act to stop patent trolls!

How Big of a Problem are Patent Trolls?

In 2012, trolls filed 61% of all patent lawsuits! This is up from 45% in 2011.
Interestingly, most of those sued were smaller companies based on the results a Santa Clara study. In fact, the study also found that companies making less than $100 million annually comprised roughly 66% of the unique defendants named in cases brought by trolls and more than half of those defendants had less than $10 million in annual revenue.

Why are Trolls Focused on Startups?

Startups without huge bank accounts are targeted because they are vulnerable. Patent litigation is both expensive and time-consuming. According to the most recent AIPILA‘s Report of the Economic Survey, the average cost of defending patent suits with less than $1 million at risk is $650,000; the cost of defending patents suits with $1 million to $25 million at risk is about $2,500,000; and the cost of defending patent suits with more than $25 million at risk is over $5 million. Most startups simply cannot afford to foot these bills so they often settle out of court quickly, giving up a large portion of their limited funds.

Why Do We Care?

For us, the problem with patent trolls is very personal! My name is Kate Endress, and I cofounded DITTO.com along with Sergey Surkov and Dmitry Kornilov. We wanted to answer the biggest question people have when shopping online: Does it fit?

We decided to start with eyewear, because we had each had bad experiences buying glasses in stores and felt like we could create the ultimate online shopping experience for eyewear complete with a selection of the best designer brands in the world, cool try-on technology that let you see how they fit on your unique face, and phenomenal customer service including free shipping, free returns and a 2-year warranty. Our team consists of 12 dedicated individuals who have worked countless hours and poured their hearts and souls into creating our website: www.ditto.com.

But recently, two separate “patent trolls” have sued us for patent infringement. We don’t infringe on either one but the enormous cost of defending ourselves in court is threatening to put us out of business. As opposed to reinvesting capital in growing our business and hiring people, we have to spend all of our money on these lawsuits. It’s devastating.

Additional Details about the Lawsuits:

The first case is a patent infringement complaint filed by Lennon Image Technologies (Case 2:13-cv-00236). Lennon is a non-practicing entity based in the Eastern District of Texas – the most plaintiff friendly county in the country. They are a classic patent troll because they don’t create anything themselves but instead exist solely to buy patents and use them offensively. Trolls knows it costs literally millions of dollars to defend a patent lawsuit, so they use the threat of litigation as a weapon to force companies into cutting them checks to go away. But unlike most of the large businesses, we simply can’t afford to do this!

The second case is a patent infringement complaint filed by a competitor who is using a recently purchased patent to seek an injunction on our 3D virtual try-on technology for eyewear. The lawsuit (Case No. 2:13-cv-00145) was filed in the District of Utah by 1-800-Contacts, whose division Glasses.com, directly competes with us for online sales of designer prescription glasses and sunglasses. 1-800-Contacts is a division of managed care giant, WellPoint (NYSE:WLP).

The upsetting part about this case is that Jonathan Coon, cofounder and CEO of 1-800-Contacts, used DITTO's virtual fitting technology soon after our launch in April 2012 and then afterwards, in May 2012, moved to acquire rights to a patent, which they are now using to sue us. While they are a practicing entity, the fact that they bought a patent to impose egregious litigation costs on us when we independently developed our technology makes them a “corporate troll” in our books. We don't think the patent they bought infringes but it will cost us a lot to prove that in courts.

We garnered the support from the Electronic Frontier Foundation (EFF), a digital rights advocacy group based in San Francisco, which beats back bad litigation and champions the public interest in critical battles affecting digital rights. In a recent post, EFF accused 1-800-Contacts of “leveraging the massive expense of patent litigation to squelch the competition”.

What are We Doing about It?

We are trying to raise awareness for much needed patent reform and we think the SHEILD Act is a step in the right direction! Sign this petition to show your support for this important piece of legislation.

What Else Can You Do?

We are asking for your financial support to help cover the legal fees associated with these two lawsuits so we started a campaign at IndieGoGo: http://www.indiegogo.com/projects/save-startup-ditto-com-from-patent-trolls/x/3045317

If you donate $30 or more, you will get an awesome “I Beat Trolls” T-shirt, which you can wear with a smug smile knowing you helped save our business and raise awareness for some much needed patent reform! 100% of the proceeds from the sale of these t-shirts will go towards our legal expenses.

Thank you for your support!