The last couple of years I've been observing an exponential growth in the news related IT companies and individuals taking their cases to court, on one side, and the questions concerning legal matters everywhere on the web, on the other side.I very much doubt people and companies have suddenly started stealing each other's ideas, but something is different. Is it that:1) IT people on average are getting more legally-educated?2) Some changes in legal systems of various countries I have missed are causing that phenomenon?3) IT is now being perceived as the source of potentially unlimited revenue and the trolls and lawyers have turned its attention to it?4) Any other development in place?The first part of my question is how should an average developer react to this perturbing trend:a) Continue on as before and ignore everything legalb) Educate themselves in local and international laws related to ITc) Always get a professional legal advice before venturing to do anything programming relatedd) For any kind of project register an LLC to protect himself even for the most basic and harmless projectsA second part is a bigger one: how does this all affect IT companies and start-ups:e) Is any new company at potential risk? If so, is this risk local like in US with all of its software patents or global?f) Can any new company survive without getting lawyers from the start and applying for all possible patents?g) Is it a risk factor for the registration of a new company to choose a location which supports software patents in its legal code?I admit my question is complex but the matter at hand is even more complex. If you see any restructuring potential, it'd be welcome.I'm also seeking any input either global or related to local markets. We'll figure out the common ground from particular cases.
Are IT and software industry getting more and more litigious?
business;legal;startup;risk
First the obligatory disclaimer: I'm not an attorney. Nothing I say can or should be construed as legal advice. What I'm saying is purely descriptive, not prescriptive (i.e., telling what I've seen, not telling you what to do).The short answerThe situation has changed very little for quite a while. I suspect a large part of what you're seeing is simply a difference in reporting, or perhaps even just a difference in what you're noticing.The long answerIn reality, the number of patent lawsuits in the US grew almost linearly up until 2003, then dropped (quite a bit) for a year or two. Since then, it has grown, but the rate has been sub-linear. Statistics tend to be somewhat out of date though -- it's hard to get them for really recent activity. My guess would be that much of the recent lull is related to the slow economy, and when it recovers more fully, we'll see something close to linear growth again (though some recent court decisions have trimmed it a bit, such as making many business method patents unenforceable).It's harder to get statistics on the percentage of those related to software (software and hardware are largely just classified as computers, which is itself just a big chunk of the electronics classes), but at least in the spot checks I've done, it seems to be pretty close to constant (about 10% devoted to electronics, and somewhere in the vicinity of 5-10% of that devoted to software) for quite a while now.A patent lawsuit is expensive enough that small companies don't get sued very often. Almost no company is going to sue you if your total sales are less than the lawsuit would cost them. That's not to say you can/should knowingly infringe on patents or anything like that, but it does mean that it probably doesn't make much sense to put a huge amount of time and effort into researching every patent that might be relevant either.As far as writing your own patents goes, it's open to a lot of question. If your strategy is to be bought out by a larger company, then having some patents can help. If you're just a small company planning to make a decent living for a few people, chances are that almost anything related to patents is/would be a waste of time and effort.There are a few other forms of intellectual property: Copyrights, trademarks and trade secrets. For more companies, protecting copyrights and trademarks should be pretty much a given. In the US, you'd want to register your copyright. You'd want to mark appropriate names (e.g., name of your software) as a Trademark, and after you've used it long enough, register the trademark. That's all pretty straightforward, and all honesty unlikely to ever be much of an issue -- if somebody really does infringe one, it's usually a pretty straightforward matter of showing that they used your (code|name) or a close derivative (e.g., in the case of trademark, something close enough that a consumer might buy their product thinking it's really your product).Trade secret cases typically involve one of two situations:1. Somebody leaves your company and takes things they know to some other company.2. You form a partnership with a company, and they continue to use your information after the partnership dissolves.These can be pretty big, but (again) don't seem to be a very close fit with what you're talking about.One big difference between patents and either Copyright or trade secret infringement is that it's pretty easy to infringe a patent innocently, where copyright or trade secret infringement usually involves something that's pretty clearly wrong.TrollsWhen questions about patents arise, patent trolls (aka non-practicing entities or NPEs) will be brought up. These are companies that (in most cases) do nothing but own patents. In particular, they don't create/sell any products based on those patents. Quite a few people really dislike this general idea. From a practical viewpoint, however, this trend is interesting primarily to large companies.A patent holder that makes products is often restrained from suing other companies because those other companies also hold patents, and are likely to counter-sue (and probably win) if somebody sues them. Just for example, let's assume that some of IBM's Java stuff infringed on some Oracle/Sun patents. Oracle probably would not sue IBM, because IBM holds more US patents than any other company, and there's a pretty fair chance that in the end it would turn out that Oracle infringed at least as many IBM patents as vice versa; about the best Oracle could hope for would be coming out about even, and there's a pretty fair chance they'd end up owing IBM some money. A patent troll is more or less immune to that: since they don't make anything, they never infringe on any patents, so IBM's traditional recourse doesn't work. For a small company, this is largely irrelevant. Most don't own enough patents to represent any major danger of counter-suit in any case. There are a few other differences. First, traditional patent holders tended to use their patents in dealing with relatively direct competitors. As long as you didn't compete directly with somebody chances of them suing you were pretty minimal. Second, patent trolls often seem to deal more in sheer numbers -- they own enough patents on a general technology area that they assume everybody in that technology area must infringe at least a few. This makes defense much more difficult. It's almost impossible to describe how you don't infringe on each of, say, a quarter of a million different patents.SummaryA lot less has changed than it probably looks like. All but the very tiniest companies will need to consult an attorney now and again (and even they might), but chances are pretty good that most of it will be about things like contracts, not about intellectual property.