Opening Statements

Taking the Pledge: Venture Capitalist Pushes Software Patent Pledge to Protect Small Companies

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Doctors are asked to take the Hippocratic oath. So why not ask players in the highly litigious high-tech sector to take a similar vow?

That’s the thinking behind influential Silicon Valley venture capitalist Paul Graham, who is asking established technology companies to commit to their own version of the Hippocratic oath.

Graham’s simple pledge, which states “No first use of software patents against companies with less than 25 people,” is based on the ongoing problem of having larger competitors snuffing out competition from startups by threatening them with lawsuits.

Graham, who declined to be interviewed, wrote on his blog at about the patent pledge: “One way of using patents that clearly does not encourage innovation is when established companies with bad products use patents to suppress small competitors with good products.”

At least 30 companies have signed the pledge so far.

Sachin Agarwal, CEO and founder of the video- and photo-sharing service Posterous, is a signatory. Agarwal expects his 3-year-old, 15-person company, which has received funding from Graham’s Y Combinator venture fund, to pass the pledge’s 25-employee threshold in the near future.

“Philosophically, it’s not just about wanting some protection for us; it’s just a general thing we believe in,” he says of the pledge.

Larger companies like Microsoft, Google and Apple don’t go after startups, but “I think there’s definitely a second tier of companies that don’t compete on having the best product in the market but use their patents as leverage against startups,” Agarwal says.

Joey Flores, CEO of the streaming radio service Earbits (which also received funding from Y Combinator), adds, “Larger companies don’t have that much risk in letting a smaller company innovate even if it uses some of the technology or ideas that they have patented.”

“It doesn’t threaten larger companies on a scale that is super-detrimental to their business,” he says.

Intellectual property attorneys express doubts as to the usefulness of the pledge. Heath Hoglund, chief patent counsel at Dolby Laboratories in San Francisco and an adviser to the ABA’s Intellectual Property Section’s Patents Division, says larger software companies are protective of their intellectual property but also are very aware of the court of public opinion.

“They’re not going to beat up on some little 20-person company unless it’s some flagrant theft of their IP,” Hoglund says. “Nobody wants to look like the schoolyard bully or the 800-pound gorilla, or whatever you want to call it.”

Anthony Diepenbrock, a partner at the IPxLaw Group in San Jose, Calif., and a past president of the Silicon Valley Intellectual Property Law Association, believes the recently passed Leahy-Smith America Invents Act, signed by President Barack Obama on Sept. 16, largely obviates the need for the pledge by creating new protections in first-use claims.

“That would go a long way toward protecting small operations who inadvertently infringed,” he says. “That’s better than the pledge.”

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