Can Small Businesses Fight Back On IP Issues?In
fairly low-key fashion, Scott Smith fires the first shot in
what he hopes will be the small business IP revolt
November 18, 2002 -- There needs to be some kind of
process put into place that will make defending themselves
against intellectual property lawsuits less punitive for small
businesses -- especially when they are forced to go toe-to-toe
with corporate giants.
It may seem like a statement of the painfully obvious to
you, but that was the primary conclusion reached by
participants at an intellectual property conference hosted in
Washington last week by EntrepreneurPR in cooperation with the
House Small Business Committee.
Readers of The MicroEnterprise Journal may recognize
EntrepreneurPR as the company whose principal, Scott Smith,
won a major victory earlier this year in an ongoing trademark
dispute with Entrepreneur Media.
A 9th Federal Circuit Court of Appeals ruling overturned a
summary judgement that had stripped Smith of his company's
name, it's publication name and it's domain name, and awarded
Entrepreneur Media more than $300,000 in damages. With the
initial decision overturned, the case is currently awaiting
trial in the lower court.
Smith took his case to Washington some two years ago, in
search of some permanent legislative remedies for him and for
other small business owners confronted with similar legal
headaches. This conference was the result. With it, Smith
sought to educate the folks in Washington on the way small
businesses have been taking a beating on intellectual property
issues in recent years and to get to work on practical
solutions.
Other small business owners at the conference represented
cases that may also be well known to regular readers. They
included Uzi Nissan, currently in a dispute with Nissan Motors
over which of them has the ultimate right to the use of the
domain name 'nissan.com', Brad Wardell, who also tangled with
Entrepreneur Media over his software company's game called
Entrepreneur, and Walt Smith, who attended as a
representative of the fifty-one small business owners
currently being sued for patent infringement by Pangea
Intellectual Properties.
Perhaps the most important contribution these small
business owners made -- assuming that some of the relevant
people were listening -- had to do with their descriptions of
the profound disruption that intellectual property litigation
can have on a small business. Other participants asked more
than once whether these business owners could quantify their
financial loss from the disputes in which they were involved,
and repeatedly received the same answer -- it's hard to say.
Defending against a lawsuit, besides being expensive, is a
time consuming business. The small business owners present at
this conference were dragged into these suits with no prior
warning and, in many cases, not even a cease and desist
letter. Since they were unprepared, they didn't have their
paperwork ready when the process server showed up and had to
scramble to create their defense.
The fundamental problem, as trademark and domain name
attorney Stephen Sturgeon pointed out during his luncheon
presentation, is that the current system gives all the
leverage to plaintiffs in intellectual property actions. Part
of the reason for that is a legal assumption in favor of
trademark, patent and copyright holders.
Another reason is that, as a group, trademark holders have
a lot of money available to pitch toward re-election
campaigns.
Unfortunately, intellectual property law did not
pre-suppose the requirements of the "New Economy" and are
badly outdated. And, while we have been seeing a spike in the
number of infringement suits (particularly against smaller
firms) in the way that usually happens when new technology
emerges, Jonathan Hangartner, an attorney who represents
several of the PanIP defendants, predicted that it's going to
get worse.
"The USPTO is only just now beginning to get through all
the patents that were filed early on," he said. "This is the
tip of the iceberg."
In the midst of a certain amount of hemming and hawing,
several practical suggestions for possible legislative and
regulatory action emerged from the conference. They included
- making it easier to have frivolous suits, or suits over
weak trademarks in non-conflicting categories, dismissed
earlier in the process;
- making it easier to request a patent or trademark
reexamination,
- requiring plaintiffs in intellectual property disputes
to make more information available to defendants so that
their cases are less time-consuming to assemble, and
- creating "bright line" tests and any other procedures
that would level the playing field when large corporations
with deep pockets decide to pick on small businesses over
intellectual property issues.
It is difficult to say whether or not anything more will
come of the conference. In many ways, it might be considered
an excellent start but small businesses have a lot going
against them. While it is not difficult for the small business
victims of predatory intellectual property lawsuits to clearly
demonstrate the inherent biases in the system, small business
as a group are not well-organized enough to mount the kind of
concerted effort that gets legislation passed in Washington.
They also don't have the kind of money to throw around that
gets attention in that town.
It would seem that what small businesses really need is
their own political action committee (PAC).
They do have at least one important thing going for them.
House Small Business Committee Chairman Don Manzullo seems to
be very much concerned with the issues presented at the
conference. While he was unable to attend the entire
conference, he did stop by to speak to participants briefly
and to let them know that he intended to hold hearings on the
matter early during the 108th Congress. Whether Manzullo has
enough clout to tangle with the powerful IP lobby, and win,
remains to be seen.
 
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