Patents and the small business inventor

Patents are often described as as useful tool for small inventors and businesses to protect their intellectual property.  While not limited to small players, this is true, but only to a point and at a price.

Competitors with patents that may or may not apply to you can sue you over infringement. The cost of defending patent lawsuits is high and time consuming.  In our case, before our own patent application was approved, we were sued for infringement by a competitor who came to market years after us.  Even though it seemed obvious to us that the patent did not apply, the legal language of patent claims were challenging and imprecise.

Patent claims are legal claims, not technical specifications, and the patent itself describes a "preferred embodiment," so many other implementations that differ from the details of the patent, but provide similar functionality, are likely covered under the legal rule called the doctrine of equivalents.  The advice of a neighbor, who is an IP attorney for a large software company, was to settle.  While he said it might be distasteful, defending against infringement claims can be tricky, seemingly fickle, and surely will be expensive.  Winning may by pyrrhic victory at best, or a crippling loss at worst.  The suing company tends to have more time and money than small inventors running small businesses.  We've read of defenses costing $500,000 to $1 million, and can be $100,000 just to reach a settlement.  Our decision, bitter as it was, was to settle after spending what we'd consider two years of our own salary on lawyers and expert witnesses, and spending hours gathering documents and specifications and revenue numbers that had to be turned over during discovery.  Had the suing company offered us the terms we eventually settled on from the start, we'd have negotiated a license long before spending any money on lawyers and going through the hassles of discovery, preparing patent claims responses, etc.  But we were never afforded that courtesy, presumably because they just wanted to put us out of business with a lethal, legal blow.  We survived, but much less money and lots of wasted time and energy.

The cost of acquiring your own patent can be high, and often can take a long time.  The Yozons '079 patent took 6 years before it was awarded and issued.  Legal fees tend to mount as time seems to work to the advantage of lawyers more than inventors.  And you will need lawyers.  Remember that you will need to devote a lot of your own time and energy to acquire your patent as your lawyers will need a lot of information from you so they can understand it in detail.  Also, you'll need to be sure to keep up on the various maintenance fees the patent office requires after issuing your patent, though it's not clear how the USPTO is maintaining anything on your behalf.  It seems that you, the small inventor, are maintaining the patent office instead.

Even after you earn your patent, unexpected expenses and issues can crop up.  In our case, an unknown law firm filed an ex parte reexamination request, challenging the validity of our patent, even though we hadn't ever attempted to enforce our rights on anybody. For a big corporation, this may be business as usual, but for a small business, you will find it takes a lot more time to read other patents and help your lawyers defend your invention, the one you thought you already had and earned when the USPTO granted it.  Of course ever more legal fees will apply.

We were fortunate that our patent is strong, and we survived with all of our legal claims intact, without any modifications.  But we did spend a lot of time and money that could have been better used to run our business and pay salaries.  On a happier note, that big competitor who sued us years before for patent infringement was itself a target of a similar ex parte reexamination from the same firm that challenged ours.  In their case, it didn't turn out well as their patent was gutted, leaving only the final dependent claim that nobody likely infringed (including their own technology!).

But having a patent is not the same as being protected by the patent.  The USPTO won't help you defend what you might assume it asserted when it issued your patent in the first place, that your patent and legal claims are valid. That's left to you to do.

You can, of course, request that competitors and others who make, use or sell your invention acquire a license to your patent, or that they should cease doing whatever it is that infringes.  But that's easier asked than done.  If you are a small inventor, most likely they will simply say they do not infringe.  Some will not even respond at all.  They probably won't give you any details on why they don't infringe, even if you provide details on why you think they do.  They know that your bark is likely worse than your bite because defending your patent means more lawyers, and that means more time and money when you'd likely prefer to run your business to feed your family, pay your workers and serve your customers.

If you have a good idea, getting a patent is probably a wise move.  But remember that you need to expect to spend a lot of your time and your money acquiring, keeping and defending your patent.

Having a patent doesn't mean a thing if you cannot defend it, and most small inventors are up against better funded corporations that will use the legal system to their advantage, to dissuade you from moving forward because you fear you cannot afford the legal costs of securing your rights.  Others will use their patent portfolio against you, suggesting you may infringe any of a number of their patents even though they would never have suggested infringement if you didn't attempt to defend your own against them.

The patent system is flawed and doesn't serve the small inventor as much as you might think, but it really is your best hope in defending yourself from competitors who otherwise will make use of your invention, challenging you to an expensive legal fight.  When you are in a position to be up to that challenge, we wish all small inventors the best of luck.  Yozons is only now in a position to begin to defend its patent with the help of a law firm that believes enough in the strength of our case to partner with us.  Wish us luck!

Going Postal Prevented: Multi-deployments for an international corporation

The term "going postal" may have bad connotations, but for our S&P 500 customer, the post office has provided a huge opportunity that has spanned many decades and has led to myriad related products, services and software solutions.

Yozons has developed and deployed more than a handful of enterprise web applications for this customer, including divisions in the United States, Canada and Europe.  The web deployments are distinct geographically and by type of web contracting that takes place, mirroring the specialized divisions and needs of this international company.

They also have deployed our patented e-signature software on our managed private web server offering, complete with a warm standby operating in another state, freeing up their internal IT resources.  The private web server gives them the advantage of complete branding using their domain name and SSL certificate, custom secured FTP access to their back-end systems, as well as isolation of their data from our many other customers.  Furthermore, Yozons provides 24x7x365 monitoring and daily encrypted off-site storage of backups.
 
Several of their web applications involve multiple forms in a package, with a multi-step process involving their customers who sign the agreements, as well as outside third-parties who approve and authorize their customers’ applications. Reports keep them current on the status at all times.

Though Yozons generally discourages printing documents, signing and then faxing or mailing them back, a couple of deployments had this requirement as an option.  Regardless, Yozons delivered on time and within budget.  Yozons built into the web contracting process a fax processing step so that returned signed agreements can be uploaded, annotated and stored with the electronic version.  Having this feature ensures all agreement packages signed online and on paper are kept in the single encrypted repository with powerful search capabilities to find their agreements.

Web-based e-signature vendor acquires patent license

Yozons recently signed yet another licensee to the Yozons '079 patent. We expect more to come as vendors realize the reach of our patent's web-based, secure document delivery and optional electronic signature system and method, and support and acknowledge how Yozons has changed the landscape from a user-controlled PKI-based signature model to a lighter-weight server-controlled signature model.

This U.S.-based competitor develops and operates various web and mobile apps, and negotiated a patent license that fits their particular needs and ensures their thousands of daily clients are protected when using their online document signature service.

While the negotiations lasted over a month, we applaud the decision they reached after discussing the details with their attorney.  Because they were quick to understand the depth of our patent and how it applied to their technology, we were able to negotiate favorable terms.  Yozons prefers to have competitors so long as we are compensated for our invention that has created a healthy marketplace for web-based document processing services throughout the United States.

Their e-signatures service is typical of competitors who make use of our patent's teachings:

1. Documents are stored online in a centralized server.
2. Documents are transferred between parties securely, typically over HTTPS, in order to effect secure document delivery that ensures the privacy of the business communications.  HTTPS makes use of a traditional PKI in which the browser uses the web server's SSL digital certificate to establish a secure link using the web server's asymmetric public key, and then generates a unique symmetric encryption key that's shared only between the user and the server for the purpose of encrypting the document and related data transferred over that link. But the key is that previously, end-users created and exchanged their own keys, as well as performed their own encryption and digital signatures.
3. The entire process makes use of a web application, giving them the ability to communicate and e-sign with a myriad of devices connected over the Internet, including PCs, start phones and tablets.
4. The e-signing ceremony typically involves typing their name, drawing their signature or clicking in the relevant areas to indicate their agreement.
5. Typical routing of documents is handled using the e-mail address of the parties involved, generally sending a unique ID that links the user to the correct document and party in the online process.  Some users, typically customers of the service, authenticate using traditional username and password, and can initiate transactions, track them, download completed agreements, etc.
6. Users can add their electronic signatures quickly and easily, without requiring special client-side software, digital certificates, and/or key management.
7. The server provide an audit trail including IP addresses and timestamps.

A quick overview of the general breadth of the Yozons '079 patent, which has been practiced by Yozons since 2001, can be found in its FIELD OF INVENTION:

In general, the present application relates to computer software, hardware and communication networks, and in particular, to a system and method for securely processing digital documents, including appending digital signatures, without requiring pre-established individual identity verification, digital certificates, end-user cryptography, key management or key exchange.