The true cost of a patent lawsuit
I’ve gotten into more than my fair share of cocktail party arguments with patent lawyers (note to self: talk about football next time), and greatly desire an overhaul of software patent legislation (fat chance). Jason Mendelson, has a great post at AskTheVC about the true cost of a patent lawsuit. Here are a few numbers from his post:
Litigation costs of controversies where $25M or less in damages is concerned:Through close of discovery (pre trial)
Through trial and appeal
75th percentile: $1M
Median: $1.25M
25th percentile: $600k
75th: $3.5M
Median: $2M
25th: $1.2M
He goes on to quote uglier numbers for lawsuits that awarded greater than $25M in damages. These numbers don’t include loss of management time, focus, etc.
While I was at Quova, a smaller startup started an irrational patent pissing match. We eventually averted huge legal fees and a giant time suck (although the same company is suing Google last I heard). It was a distraction that neither company needed, and we greatly detested being dragged into it - we each needed to focus on building our businesses and more broadly speaking, growing the market.
Prosecution or defense of a patent is an unreasonable undertaking for a startup. Not only are the costs absurdly high, but patent lawsuits are siginficant drains on management focus. Everyone at the startup needs to be focused on actually building a company and building a market (hard enough without distractions), not the details of ‘who built what first’ and ‘why my blue widget is different from your green widget’.Related Posts
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22 patents and going strong ;)
Healthy =)