Once a technology becomes successful, it is cheaper for a large company to prove another company's patent is invalid, than it is for the large company to pay royalties to the patent holder, says Mitchell.
Ali Guryel is the boss of another small business that has had its patents challenged by a larger organisation — in this instance, the UK government. The managing director of Frontline Technology, had a patent for school attendance registration system, challenged by the UK Department for Education and Skills (DfES).
Guryel filed the patent in 1993 but it was only once when it was successful that the DfES launched its challenge. "I invested and took so much risk. It took eight years until we had a market breakthrough and then big companies started muscling in. They lobbied the government, who then took us to the high court to revoke the patent," says Guryel.
The Secretary of State for Education at the time, Charles Clarke, admitted that challenging the patent was cheaper than paying license fees. "These proceedings were primarily brought because the patent restricted schools' access to a full range of technology. Additionally, my Department assessed the potential additional costs to schools for licence fees, based on Frontline Technology's published terms and scale of charges, to be substantial over the life of the patent to 2013…the litigation costs incurred to date are a fraction of the potential cost that schools could have incurred by way of licence fees," said Clarke in a written answer to the House of Commons.
Although the judge in this case accepted the DfES' claim that technology used by a college in Solihull in the 1990s predated the Frontline's claim, he did not totally revoke their patent, according to a Guardian report on the trial.
Unisto has had fewer problems defending its patents, but Hayward admits that if it went to court it would probably prove too costly. "If someone violates your patent and makes a product you should go after them. If you hit them hard — 'I will sue you for x, y, z and damages' they will often back off," he says. "The chances of you following that through are slim — you will probably never defend it as it's a waste of time. It's much better to spend your money marketing your product and establishing your brand."
Proposed solutions
Concerns with the difficulty that SMEs may have defending their patents, lead the UK Patent Office to investigate possible solutions. A study carried out by a UKPO working group last year stated that "the cost of patent litigation is an obstacle preventing SMEs from enjoying the benefits of the patent system".
One of the main solutions proposed by the UKPO following this study was a mutual assurance scheme, where through paying subscription fees, members have access to legal advice and services. Although the UKPO is likely to look to the government to kick things off by providing some seed money, eventually the scheme could be wholly funded by members.
The UKPO hopes to set up such a scheme in the near future, but has not set any deadlines as yet, according to Smith-Higgins. "We are in negotiation with one of the large insurance companies with a view for them to come up with a scheme to take this forward," he says.
Another solution being investigated is a service offering non-binding opinions to the two parties involved in a patent case. If one of the parties decides to ignore the advice and later loses the case, the court is likely to take this into account when deciding on what damages the losing party must pay. Smith-Higgins says he has "no doubt" that this service will eventually be offered, and is likely to cost around £200.
As for the cost of filing a patent, the UKPO says there is little it can do to reduce this. "Our official fees for a patent from start to finish is £200 — this is a small amount if you consider the time and effort put in by our organisation to get the patent into its final stages," said Smith-Higgins.
Although the UKPO's suggestion may make a difference, the costs of both filing and defending patents will continue to be more difficult for SMEs than their larger brethren. As multinationals scoop up more than their fair share of patents there is a risk that they can use these patents as a barrier preventing small companies from producing a competing technology.
Talkback
Looks like some happy few are hoping that the politicians will be stupid enough to simply hand them on a silver platter a complete new international market that they have the monopoly over.
And on top of that rows of rich, mostly overseas, internationals that will stumble over eachother to get their hands on anything they can.
But, as they say, to make a few people richer you need to make lots more poorer.
And that is exactly what this patent thing is boiling down too. Some want to be the arms dealer in this legal arms race and some are looking to conquer new lands and profits. But what's left then for the rest of us?
Maybe the captains of industry see a glorious future in this new legal war they envision. But what about the soldiers, corperals and sergeants? Is it really the case that the politicians are telling the generals what they can and can't do or is it vice versa?
Ignoring the tricksy "per se", that the UKPO/EPO use to pretend (absurdly) that they were talking either about written source code or about whole applications or about some phantom "non-technical" kind of software, when they are forced into a corner, it is a simple fact that the unamended directive will *codify* the EPO's legally questionable practice of granting software and biz method patents.
Never mind what the opponents of the Council version of the directive say: just read any independent analysis, such as the EESC opinion or Rossi's paper. Still not convinced you can patent the same software and biz methods at the EPO that the USPTO notoriously allows? Go to amazon and get yourself a copy of Keith Beresford's book, which tells you exactly how to do it, or read this:
http://www.european-patent-office.org/epidos/conf/patlib2000/presentations/beresfordk.pdf
Or look in the EPO and UKPO databases, which already hold around 50,000 software and biz method patents. So how exactly did they get there if they're "not allowed"? And just how exactly will the directive stop the recent avalanche of more of them, if - as claimed - it makes no changes to what the EPO considers patentable? This disgraceful and underhand attempt by the EPO and UKPO to sow confusion about what is really going on and what they intend the directive to achieve, is one of the most depressing aspects of this issue. The door is already wide open - the directive is intended to rip it off its hinges.
"How not to do it. In this was to be found the basis of the wise system, by tooth and nail upheld by the Circumlocution Office, of warning every ingenious British software author to be ingenious at his peril: of harassing him, obstructing him, inviting robbers in the guise of "IP companies" to plunder him, and at the best of confiscating his property after a short term of enjoyment, and giving it to the few largest companies, as though invention were on a par with felony. The system had uniformly found great favour with the Barnacles, and that was only reasonable, too; for one who worthily invents or writes innovative software must be in earnest, and the Barnacles abhorred and dreaded nothing half so much.That again was very reasonable; since in a country suffering under the affliction of a great amount of earnestness, there might, in an exceeding short space of time, be not a single Barnacle left sticking to a post."
From "Little Dorritt (for the modern reader)", by P.L.Hayes.
Thanks for info. We're a small software company and used the services of a legal firm specialising in patents on the advice of a government-backed advisor.
The experience was very expensive and bruising.
For anyone thinking of applying for patent on software, here is our experience.
First, trusted third-party advice is that up to 60 per cent of any software created will be stolen and modified/reused within four years - even if it is patented or patent application is filed.
Second, the legal profession work by the second and charge highly for their "expertise".
Third, we entered the process with the legal firm in good faith. When we decided not to pursue the patent application (at a MINIMUM cost of £4000 plus VAT), we were hit by an invoice for around £800. This was for the legal firm's time in looking at our hard work (all the patent searches we had done globally), a two-hour meeting with two legal representatives to discuss this, and a promise of a full questionnaire after agreement to pay the minimum £4000 (with no ceiling and no advice on how high the costs would go).
Fourth, a trusted third-party with experience in this field advised that we would need at least a £2 million "war-chest" to protect our patent.
So, our conclusion is - please, think very carefully before you enter into any patent process.