Lesson: Startup IP with Jack Russo

Step #7 Infringement: Balancing the cost of infringement

Startups with a lot of infringement happens because they just don't think that the management time plus the legal cost is worth the effort. Now, they might send a few letters. They may try to get what's called a tolling agreement, which is to say to the infringer, "Look, what you're doing is wrong, but we don't have time right now to deal with it. But to suspend the statute of limitations from running against us, we want you to sign this." And the truth is, most defendants won't sign it. So the real truth is probably most startups litigation is the last thing on their mind.

However, occasionally, a startup will find a law firm that's more entrepreneurial and will take a case on a contingent fee. We've done it, where they say: "Look, we'll share whatever outcome", sometimes even as high as 50-50. Because their view of life is, "We can't afford to do it for legal fees, but we think what's happening here is just crazy and we need someone to take action on it."

But I'd say most startups keep their head down and they kind of view it as maybe it's a form of flattery. Maybe the fact that they're being plagiarized is viewed as, "Hey, they must like what we're doing." But there is a lot of frustration when people think they're being copied and there's lots of infringement. In fact, the world is a place where there's mostly lots of infringement. Because people do all kinds of stuff all the time, including with copy machines. And people just accept it as the price for moving on.

Now, there are counter-cases. We recently had a client that sent us a demand letter, where it was a law firm representing someone that had a photograph that I guess has become viral on the Internet. Photographs have been registered for copyright and they're going around finding everyone that's ever got that photograph and trying to sue them for copyright infringement. And the federal courts are not equipped.

If tomorrow morning, everyone that was ever infringed upon from a copyright or patent or trademark point of view filed suit in federal court, our federal courts would grind to a halt. They'd say, "We have no time to deal with millions of new cases." And to some degree, some of the push-back from the Supreme Court is a little bit like, "We don't have the time and resources to pursue every possible incremental invention. So we're just going to draw some lines here." And that may be part of what's going on. We don't have that many federal judges. And copyright patents, and for the most part, trademarks are federal matters. They have to be in federal court.