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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Countries where the streets are safe from patent lawyers

I think Scott made a good point in http://discuss.joelonsoftware.com/default.asp?biz.5.852399.19  "Tip: moving outside the US makes it so much harder to sue no one bothers."

There must be countries with low(er) business taxes where it is easy to incorporate and the legal system is unfriendly to budget American lawyers.  Corel is headquartered in Canada, owned by an American private equity fund, yet its online sales are done through a subsidiary in Portugal.  Up to now, the question has been how to establish a presence in the U.S., what about offshore havens for software developers to operate their business from even if they don't live there?
Howard Ness Send private email
Tuesday, April 09, 2013
 
 
There is such a country.

- the law here  doesn't allow software patents.

- if you register as a sole proprietor and don't have employees then your tax will be 6% from your turnover. The tax declaration is 3 pages only.

- if you register as LTD you need to pay also 9% as dividend tax + minimal salary to yourself (500 USD/month is enough, about 200 will go to taxes as salary tax)

Nobody will try to sue you from US or EU.

The Name of this country is Russian Federation.
MatrixFailure Send private email
Tuesday, April 09, 2013
 
 
I forgot to mention one drawback.

No, it is not about Putin. :)

Russian banks usually require some paperwork (nowadays via e-banking system) for each incoming wire transfer from abroad,  and not all popular e-commerce providers  provide required papers or scans.
MatrixFailure Send private email
Tuesday, April 09, 2013
 
 
>The Name of this country is Russian Federation.

I read (in the book 'Dark Market') you can go to prison if you are found with a single encrypted file on your harddrive. Is that true?
Andy Brice Send private email
Tuesday, April 09, 2013
 
 
Never heard about this.

But it seems there is such a thing in UK
http://www.legislation.gov.uk/ukpga/2000/23/section/53
MatrixFailure Send private email
Tuesday, April 09, 2013
 
 
Yes, I believe it is true that the UK government can require you to provide an encryption key in some circumstances. But I think they need reasonable grounds for suspicion and a court order. There there nothing illegal about having an encrypted file. But I am no expert on this.

I read it was illegal in Russia to even possess an encrypted file. I don't know if this is true.
Andy Brice Send private email
Tuesday, April 09, 2013
 
 
Back to the USSR indeed.  Too humble to mention the highly skilled workforce of programmers to draw upon?  From what I understand the main drawbacks to doing business in Russia is a lack of English speakers, crime in the major cities  and an unhealthy interest in your assets from the government once you become a big fish.  The Russian companies I've dealt with (industrial manufacturers) complain about the infrastructure (roads, institutions, services) but that's not much of a problem for a software company run from an Internet connection and a bank account.
Howard Ness Send private email
Tuesday, April 09, 2013
 
 
Change "drawbacks to doing business in Russia is " to "drawbacks to doing business in Russia are."  Sometimes having English as your first language isn't as much of an advantage as you might thing.
Howard Ness Send private email
Tuesday, April 09, 2013
 
 
* think.

:)
Wyatt O'Day Send private email
Tuesday, April 09, 2013
 
 
According to:
http://www.cryptolaw.org/cls2.htm#ru
Crypography is permitted in the Russian federation only with a licence from the FSB.
Andy Brice Send private email
Tuesday, April 09, 2013
 
 
Howard's question is important, let's try to answer it:

"[countries that software developers can] operate their business from even if they don't live there?"

Can this be done?  You, the developer, live in the U.S. but the company lives elsewhere?  Is this a way of escaping the problem?

I do know this, there is nothing that can prevent someone from suing your *customers* in the U.S. if they use your infringing software.  (Of course, how they will know who your customers are is another matter; maybe that's the answer...).  Example, right now there is a company trying to extract $1k per employee from companies that user scanners. 
(http://arstechnica.com/tech-policy/2013/04/meet-the-nice-guy-lawyers-who-want-1000-per-worker-for-using-scanners/)

I also know that a number of iOS devs who live outside the U.S. (UK, France, Asia) have been sent "The Letter" from these entities.  How that plays out is yet to be seen; can they collect since the money is gotten through U.S.-based Apple?
Racky Send private email
Tuesday, April 09, 2013
 
 
I think New Zealand :)......especially for software and algorithm patent. But they may already change the rule.
Fherry Send private email
Tuesday, April 09, 2013
 
 
A lack of English speakers:
- Yes this is  a big difficulty. It is not that easy to find someone here who can translate well from Russian to English and who knows computer terminology well.
I tried to learn English from age of 11. I can read and can speak English but still I need a  someone to proofread/copyedit almost any text I write.  You can imaging how hard it is to make a blog in English or to make landing pages, SEO, documentation, e-mail campaign e.t.c..

Another problem is the image of Russian hackers.  There are some companies who became famous: Parallels, Acronis, Kaspersky, Abbyy (FineReader, Lingvo) but I guess all smaller ones are  suffering from a trust problem. Many smaller Russian companies try to hide they are from Russia.
 
crime in the major cities: 
- Yes, it is a problem but it is not that bad in compare with 90s.
 I guess Russia is safer place in compare with Brazil and Mexico.
But now we have too many non-qualified illegal immigrants from "whatever-kistans".  And I guess the situation can get a little bit worse.

unhealthy interest in your assets from the government once you become a big fish:
- At first you need to become a big fish.  I wish I had such a problem. :)
MatrixFailure Send private email
Wednesday, April 10, 2013
 
 
I am a native English speaker, but I still get my wife to proof read anything important I write. It is hard to spot your own mistakes, even when you are fluent.
Andy Brice Send private email
Wednesday, April 10, 2013
 
 
Andy,
You are partly right. If you develop, export or import cryptographic software you need to have a license here. The governmental organizations need to use certified crypto-software.  But it doesn't mean you cannot purchase a WinRar license and add a password to your RAR archives.
MatrixFailure Send private email
Wednesday, April 10, 2013
 
 
BTW you can find reasonably priced native English speaking proof readers on elance and similar sites. I guess the problem is how to know if they are any good. I suggest asking several of them to proof read a page or two then ask a native English speaker to rate their work. Once you find someone good - stick with them.
Andy Brice Send private email
Wednesday, April 10, 2013
 
 
Andy, thanks for your advice.
MatrixFailure Send private email
Wednesday, April 10, 2013
 
 
"Countries where the streets are safe from patent lawyers"
Just reading the title of the post is very telling of how bad the situation is. We have now reached a point where legitimate business owners don't feel safe from patent abuse. How is that helping with fostering innovation? Patents were created to create an environment friendly to the small inventor. Software and business processes have exactly the opposite effect. Look at this example

Read this article . It is very interesting.
http://www.cato.org/publications/commentary/patently-absurd-copyright-law-can-meet-needs-software-developers

Patent reform didn't address any of real issues.
cn Send private email
Wednesday, April 10, 2013
 
 
Perhaps we should start referring to it as 'patent extortion', 'patent racketeering' or 'patent blackmail' rather than the more innocuous sounding 'patent trolling'?
Andy Brice Send private email
Wednesday, April 10, 2013
 
 
Here is a crazy idea. We write an open letter to Google, Apple and Microsoft pointing out the damage the trolls are doing, asking them to use their vast resources to aggressively pursue them and promising our undying love if they do (cough). Then we ask developers to sign it online. If we could get thousands of signatures (which might be possible through Hacker News etc) perhaps they might take notice?

No idea if it would work - just throwing it out there.

Maybe somebody has already tried it?
Andy Brice Send private email
Wednesday, April 10, 2013
 
 
In the past, businesses just died when they died.

Now it seems, they can turn into zombie trolls by a necromancer lawyer. Zombie trolls then roam the country and feed on living businesses.  Just picture a scene from "walking dead". An army of the living dead. With no sheriff in sight.

I am not a hardcore libertarian. But current state of patents is a perfect example to prove a libertarian point of view. What started as a way to protect and encourage the small inventor, has turned into the exact opposite. No one can argue now that patents can protect or encourage the small inventor. Patents have actually now removed copyright as a way of protecting and demonstrating ownership for the small business.
cn Send private email
Wednesday, April 10, 2013
 
 
Andy, all three of those companies are painfully aware of this problem already.  Apple is currently slated to go to trial against an infamous entity this October.  MS wrote about this problem 20 years ago, Google constantly deals with it.  ALL software companies over a certain size are dealing with it.  There is poison in the well and everyone knows it. 

As I posted in the other thread, major companies (SAS, Adobe, J&J, etc) are giving witness to the U.S. Congress (in March) about this blight:
The House Hearing on Abusive Patent Litigation
http://www.groklaw.net/index.php?page=2

I found the Adobe witness's testimony blood-curdling:
"Adobe’s experience illustrates this point.  Through the first 26 years of its history, Adobe faced 19 patent lawsuits. Since 2009, 30
patent infringement suits have been filed against us. Before 2009, we had received eight demand letters alleging patent infringement. In 2012 alone, we received 33 such letters."

Or the Senior VP/General Counsel  from Cisco Systems, Inc:
"We currently spend more than fifty million dollars per year on outside lawyers fighting about 50 PAE [troll] lawsuits, making up virtually my entire litigation docket.  In 2000, we had none."

Or JC Penney:
"When I joined the company 4-years ago jcpenney had no patent cases. Over the last four years the company has had to defend or settle over two-dozen patent infringement lawsuits that have nothing to do with the products jcpenney actually sells."

Big Pockets know about this, and are not pleased.  In the end, though, it's going to almost certainly be government that can fix this (since it's government that caused it).  Although I would be happy to hear that I am wrong and there is another tactic that would work.
Racky Send private email
Wednesday, April 10, 2013
 
 
@cn
> I am not a hardcore libertarian. But current state of patents is a perfect example to prove a libertarian point of view.

Well, with a libertarian point of view you would have no copyright protection, either, and so your software would be instantly in the public domain.  Does that sound good?

Just because part of something is currently dysregulated doesn't mean that we ought to condemn the whole mechanism.
Racky Send private email
Wednesday, April 10, 2013
 
 
That is a good point and that is why I am not a hardcore libertarian.
We need to get the system back on track. What is interesting is that all the deep pockets have not been able to outspend and drawn these guys out of existence.
cn Send private email
Wednesday, April 10, 2013
 
 
"drown"
cn Send private email
Wednesday, April 10, 2013
 
 
"What is interesting is that all the deep pockets have not been able to outspend and drown these guys out of existence. "

That's the whole point I am harping on:  "these guys" are impervious to *market* forces!  To quote the movie, "Creepshow":  "You can't kill us, because we're already dead!"

As with the undead, only certain things will "turn" (or finally dispatch) them.  And I think in this case it is the Holy Hammer of the Law.  But first that law needs to be written!
Racky Send private email
Wednesday, April 10, 2013
 
 
I would highly recommend reading the groklaw link. I was able to get a much better understanding of the scope of the problem, even though I'm nowhere near smart enough to grasp it fully.

> What is interesting is that all the deep pockets have not been able to outspend and drawn these guys out of existence.

I think one of the major issues with this is that the burden (i.e., cost) of discovery is on the defending company, not on the plaintiff where it belongs. Patent trolls can send out blanket notices of patent infringement for next to nothing! Companies would need to spend millions of dollars per case to go to trial against these trolls...and for what? The company may have a high likelihood of winning the case, but there won't be much of an award because these trolls are set up as shell companies with almost no assets. Even if the court could force the troll out of existence, I'm sure 10 more would just pop up in its place the next day.

It's just not in big spender's interest to spend big money going to trial. It is a battle they can't win under the current rules. Patent trolls can accuse infringement while incurring no risk to themselves. So there's no point in fighting them in court and it's less expensive to settle. Unfortunately, I don't think writing heartfelt letters to Microsoft et al will do much to change this fact.

It seems the only way to fix this problem is for the government to take action. It may be as simple as shifting some or all of the burden of discovery from the defendant to the plaintiff. Make the plaintiff put some skin in the game, as it were. That should hopefully be enough to make patent trolling unprofitable, but still leave the current patent system in place for the actual legitimate patent infringements (yes they are out there).
Shawn O'Hern Send private email
Wednesday, April 10, 2013
 
 
@Shawn O'Hern

That clarifies the situation, thanks.

Its even worse than I thought.
Andy Brice Send private email
Wednesday, April 10, 2013
 
 
@Shawn

> The company may have a high likelihood of winning the case, but there won't be much of an award because these trolls are set up as shell companies with almost no assets.

*What* award?  There's no monetary award in prevailing against a patent troll at all.  All there is is (you hope) escaping having to pay the damages to the troll.  Their structure as shell companies makes no difference to this point.  The shell company nature does matter though in jurisdiction selection; what they do is they all put their empty offices in Marshall, Texas so that they can claim the trial ought to be done in the Eastern District of Texas where there is a major history of pro-troll trial outcomes. 

But--The recently re-introduced SHIELD Act, if approved, “shall award the recovery of full costs to any prevailing party asserting invalidity or noninfringement...” Nice coverage here:
http://essentialpatentblog.com/2013/03/the-new-and-improved-shield-act/
Racky Send private email
Wednesday, April 10, 2013
 
 
You could easily require the troll to pay in a substantial sum when they go to court, in case they lose. A sort of surety or bond. They can't then just fold the company claiming no assets if they lose. Something similar was done in a recent UK libel case to ensure that the (non-UK) plaintif didn't disappear without paying his legal opponents costs if he lost the case.
Andy Brice Send private email
Thursday, April 11, 2013
 
 
Andy, the SHIELD Act does stipulate they have to put up a bond to cover the "loser pays" costs it also stipulates, just as you suggest.  Of course, there are problems (how can the court know how much is enough before the trial begins, when the costs can vary wildly, by more than $1mil, depending on how long discovery takes).

Although I applaud that they are trying *something*, I am quite unconvinced that the SHIELD Act is the right approach here.  There is way too much room for "lawyering" around it, and the least advantaged player in the room is the small developer/businessperson.
Racky Send private email
Thursday, April 11, 2013
 
 
"require the troll to pay in a substantial sum when they go to court, in case they lose"

So let's say you're a small guy and you have a valid patent on something that cost you a fortune to develop and was completely inobvious.

So some big company Oogle violates your patent, undersells you, and starts to drive you out of business.

So you file a suit. The big company Oogle has billions in cash to pay lawyers  though, as well as PR firms and lobbyists to convince the public you are a bad guy.

In the end your case loses on a technicality. But remember, you really did invent something.

Under "loser pays", you now owe Oogle the $100 million they say they spent on the case.
Scott Send private email
Thursday, April 11, 2013
 
 
Question: who wins in this system? The small innovator producing and selling novel products or the big corporation with billions and a team of thousands of lawyers whose strategy is innovation through acquisition and lawsuits.
Scott Send private email
Thursday, April 11, 2013
 
 
Scott, from the little text I provided that's a very reasonable concern.  Fortunately, your scenario is taken into account in the part that I didn't quote, so I'll quote it here now.  Basically in order for this "infringement claimer pays if they lose" clause to be in effect, none of the following can be true...

That the infringement claimer:

"(1) is an inventor or original assignee of the patent; (2) has made “substantial investment…in the exploitation of the patent through production or sale of an item covered by the patent”; or (3) is a university or university-associated tech transfer organization. "

So, your scenario fails (1).  The inventor isn't on the hook.

In summary, SHIELD is trying to make it harder for those that buy up old patents and do nothing with them productively to troll away with impunity. 

(Of course, what's to stop a troll from getting into the inventor game just for the purpose of later trolling.  So many of these inventions are a complete joke anyway)
Racky Send private email
Thursday, April 11, 2013
 
 
OK, that's cool then.
Scott Send private email
Thursday, April 11, 2013
 
 
Software should not be patented regardless of the size of the company. Software is math.
cn Send private email
Friday, April 12, 2013
 
 
Although should be copyrighted.
cn Send private email
Friday, April 12, 2013
 
 

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