along with Yahoo, MSN, Reddit,

AOL, TechCrunch and others

by a company called Gooseberry Natural Resources.

Gooseberry owned a patent

for the creation and distribution

of news releases via email.

(Laughter)

Now it may seem kind of strange that such a thing can actually be patented,

but it does happen all the time.

Take something already being done

and patent it for an emerging technology --

like phone calls on the internet

or video listings for TV shows

or radio but for cellphones,

and so on.

The problem with these patents

is that the mechanisms are obscure

and the patent system is dysfunctional,

and as a result, most of these lawsuits end in settlements.

And because these settlements are under a non-disclosure agreement,

no one knows what the terms were.

And as a result, the patent troll can claim

that they won the case.

In the case of Gooseberry Natural Resources,

this patent on emailing news releases

had sort of a fatal flaw

as it pertained to myself,

and that was that in the mainstream media world

there is only one definition for news release,

and it turns out that is press release --

as in P.R.

Now my company, Fark,

deals with news, ostensibly,

and as a result

we were not in violation of this patent.

So case closed, right?

Wrong.

One of the major problems with patent law is that,

in the case that when you are sued by a patent troll,

the burden of proof that you did not infringe on the patent

is actually on the defendant,

which means you have to prove

that you do not infringe on the patent they're suing you on.

And this can take quite a while.

You need to know that the average patent troll defense

costs two million dollars

and takes 18 months when you win.

That is your best case outcome

when you get sued by a patent troll.

Now I had hoped to team up with some of these larger companies

in order to defend against this lawsuit,

but one-by-one they settled out of the case,

even though -- and this is important --

none of these companies

infringed on this patent -- not a one of them.

And they started settling out.

The reason they settled out

is because it's cheaper to settle than to fight the lawsuit --

clearly, two million dollars cheaper in some cases,

and much worse if you actually lose.

It would also constitute a massive distraction for management of a company,

especially a small eight-man shop like my company.

Six months into the lawsuit,

we finally reached the discovery phase.

And in discovery phase,

we asked the patent troll to please provide

screenshots of Fark

where the infringement of their patent

was actually occurring.

Now perhaps it's because no such screenshots actually existed,

but suddenly Gooseberry wanted to settle.

Their attorney:

"Ah, yes. My company's having a reorganization on our end."

Never mind the fact

that the address led to a strip mall somewhere in Northern L.A.

with no employees.

"And we'd like to go ahead and close this out.

So would you mind giving us your best and final offer?"

My response:

"How about nothing?!"

(Applause)

We didn't have high hopes for that outcome.

(Laughter)

But they settled.

No counter offer.

Now, as mentioned before,

one of the reasons I can talk to you about this

is because there's no non-disclosure agreement on this case.

Now how did that happen?

Well during the settlement process, when we received our copy, I struck it.

My attorney said, "Nah, no chance of that working."

It came back signed.

Now why? You can call them.

They're not under NDA either.

Now what did I learn from this case? Well, three things.

First of all, if you can,

don't fight the patent, fight the infringement.

Patents are very difficult to overturn.

Infringement is a lot easier to disprove.

Secondly, make it clear from the beginning

that either you have no money at all

or that you would rather spend money with your attorney fighting the troll

than actually giving them the money.

Now the reason this works

is because patent trolls

are paid a percentage of what they're able to recover in settlements.

If it becomes clear to them that they cannot recover any money,

they become less interested in pursuing the case.

Finally, make sure that you can tell them

that you will make this process

as annoying and as painful

and as difficult as possible for them.

Now this is a tactic that patent trolls are supposed to use on people

to get their way.

It turns out, because they're paid on contingency,

it works really, really well in reverse.

Don't forget that.

So what does all this mean?

Well to sum up,

it boils down to one thing:

Don't negotiate with terrorists.

(Applause)

Patent trolls have done more damage to the United States economy

than any domestic or foreign

terrorist organization in history

every year.

And what do they do with that money?

They plow it right back into filing more troll lawsuits.

Now this is the point in the Talk

where I'm supposed to come up with some kind of a solution for the patent system.

And the problem with that

is that there are two very large industry groups

that have different outcomes in mind

for the patent system.

The health care industry

would like stronger protections for inventors.

The hi-tech industry

would like stronger protections for producers.

And these goals aren't necessarily diametrically opposed, but they are at odds.

And as a result, patent trolls can kind of live in the space in between.

So unfortunately I'm not smart enough

to have a solution for the patent troll problem.

However, I did have this idea,

and it was kind of good.

And I thought, "I should patent this."

(Laughter)

Behold, patent infringement via mobile device --

defined as a computer which is not stationary.

My solution: award me this patent

and I will troll them out of existence.

Thank you.

(Applause)