Patent trolls attacking small indie developers

Started by
24 comments, last by Tom Sloper 8 years, 3 months ago

It doesn't matter what country you live in, if you sell your product in the US (and who doesn't with digital content in english?), they can sue you in an american court.

Good luck with them dragging you from your home country to America, just to go to court. ;)

I don't think that would happen...

Sure, if you choose to visit the US in the future, it might be an issue.

Advertisement

It doesn't matter what country you live in, if you sell your product in the US (and who doesn't with digital content in english?), they can sue you in an american court.


Good luck with them dragging you from your home country to America, just to go to court. ;)

I don't think that would happen...

Sure, if you choose to visit the US in the future, it might be an issue.

You don't have to be there for the case to go ahead, and for an injunction against you andyour product to be granted inside the US. It's not a "criminal" case, where they want to drag you there so they can punish you, it's a "civil" case where the other party wants to get their hands on your money.

Visa, Mastercard, Paypal, Steam: many of the companies that move money from your customers to you, exist in the US, which means your supply of money can be cut off, or redirected to this other party.

If you don't sell your game to American customers, and don't use any American middlemen, then it's not a problem... but almost everyone uses American finance, and the American market is one of the biggest for selling games...

Good luck with them dragging you from your home country to America, just to go to court. ;)

I don't think that would happen...

Well, its not like the FBI would go to the other corner of the world just to raid your house for a console devkit...

"I AM ZE EMPRAH OPENGL 3.3 THE CORE, I DEMAND FROM THEE ZE SHADERZ AND MATRIXEZ"

My journals: dustArtemis ECS framework and Making a Terrain Generator

This is an issue for me, lucky I didn't do anything or else I might get threats, I am an indie mmorpg dev and due to this I might not ever release my project. Hopefully someone eventually tales them to court and has the patent claimed ambiguous. I am not risking anything.

If you don't sell your game to American customers, and don't use any American middlemen, then it's not a problem... but almost everyone uses American finance, and the American market is one of the biggest for selling games...

I wonder if this cannot be worked around with subsidiaries, though. Obviously it isn't all trivial to do, or everybody would be doing it...

But, as a quick brainstorming, what does this sound like? You sell your licenses in bulk to a reseller (which you own, too). Reseller sells to US customers.
Say, you're selling licenses in quantities of 1,000 for 49,989.99 currency, and reseller sells them for 49,99 each. Note the "8" in there.

Thus, reseller makes 1¢ gross profit per 1,000 licenses. Which is important because otherwise the tax office will shut you down after two years.
Of course, you have at least one employee to "manage" the transactions (yourself) who is being paid a small salary. Which means there's not much tax left to pay for the subsidiary at the end of the day.)

Now, whom can a patent troll sue? You don't do business with anyone in the US, and the entity that does has no money. In fact, it's probably possible to turn it around such that they have a debt with your main company (I'm not very versatile in accounting, but I am sure this is possible!).

So, yeah, they can sue that subsidiary, but even if they get a title they will only be the second creditor in line. Creditors are always served in first-come order (anyone who tried sueing a company already being liquidated has learned this lesson), so there is nothing to gain from sueing the subsidiary. No money, Sir.

Indeed, running this subsidiary as consignment sale entity should just about give you what's needed. But a "real" reseller may be more advantageous because in this case you would "sell" the licenses to the reseller subsidiary (which consequently owns them, but in return owes you money). When the reseller has sold the licenses, you get the money from it. If someone successfully sues the reseller subsidiary, it still owes you the money.

Of course, the payment is due immediately, when the goods are handed over. Seller and buyer agree that buyer is at default of payment if this does not happen (it never happens in time, of course, that's the idea), but seller will not demand interest for... say, 60 days. Or however long it usually takes to sell the licenses. That means that the subsidiary is basically always at default, and any money that comes in is already owed to the main company before it is even received.

So, the only thing that the patent troll can arguably seize are the licenses since there is no money to be had (but even so, actually even licenses could only be seized after you, the first creditor, have been served, which means few to none remain). Which is however no problem in any case -- let them have the licenses -- since your terms of service to which the subsidiary has of course agreed say "no money back on bulk orders, never, not ever", so they cannot be converted back to cash. Also, licenses may only be sold by authorized resellers, which you clearly state in your terms of service.

Thus, any end user tempted to buy a license from the patent troll knows that the license is invalid according to the ToS. In fact, the licenses that the subsidiary buys from you might as well be explicit "not for sale in the US" licenses (of course, you do have "for sale in US" licenses as well, but for some strange reason none of your resellers ever buys them!).

Thing is, only because you explicitly forbid your reseller selling those licenses in the USA doesn't mean you have to act immediately (or at all) when they do it. And it doesn't mean you even have to know (or have a way of knowing). Yes, the reseller is breaching the contract by doing so, which technically renders the sale, and thus the licenses, invalid.

Of course, as long as money keeps coming in, you have no reason to complain. But as long as a single license from a batch was sold in the USA (and sure enough, you do know that!), you have a valid reason to withdraw and ask back all goods. Because, hey, they broke the contract.

Unluckily, with a license code, it's not really possible to give back the "good" as it's just a number, so instead you can legitimately invalidate/blacklist the whole batch (or any subset of it). Which means of course, you can also blacklist each and every license code that a patent troll might successfully seize.

And yeah, you can leave the ones that legitimate customers bought legitimately from your subsidiary. Because, you know, you don't have an obligation to enforce your rights (a clever tax accountant might even be able to write the "lost" licenses off as loss although you got money for them...).

Hahaha... and to top it off, open that subsidiary as anonymous foundation run by a lawyer firm in Vaduz, and owned by a company in Gibraltar... laugh.png


Hahaha... and to top it off, open that subsidiary as anonymous foundation run by a lawyer firm in Vaduz, and owned by a company in Gibraltar... laugh.png

They call him samoth. Game developer by day and forensic accountant by night :lol:

Hopefully someone eventually tales them to court and has the patent claimed ambiguous.


You revived a two and a half year old dormant thread for this?

-- Tom Sloper -- sloperama.com

I'm closing the thread. If people want to have a new conversation about patent trolls, start a new thread. Let's not continue posting new replies to ancient conversations.

-- Tom Sloper -- sloperama.com

This topic is closed to new replies.

Advertisement