Paul Graham’s Patent Pledge

Posted on January 25, 2012

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In recent months, Paul Graham, a trailblazing venture capitalist in the Silicon Valley-based technology industry has focused his efforts on a movement to protect start-up technology companies. Graham asks larger established technology firms to commit to his patent pledge, to act ethically in relation to start-up firms with quality products. According to the American Bar Association, Graham asks of these companies, simply, “‘No first use of software patents against companies with less than 25 people,’ which is based on the ongoing problem of having larger competitors snuff out competition from start-ups by threatening them with lawsuits.”

The scare tactic that Graham refers to was explained by Sachin Agawal, CEO of Posterous, in a recent article by the American Bar Association. As a signatory, Agawal says, “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 start-ups.” Other signatories like Agawal feel that this second tier of companies opt to take this unfair route rather than what Graham’s supporters would call the more ethically-sound route of competing by innovating their products and staying up to speed with smaller companies by generating fresh ideas.

One significant aspect of the pledge is Graham’s acknowledgement of patents as a necessary evil – but he feels that the appropriate mode of action is to bypass the government. “Companies that use patents on start-ups are attacking innovation at the root. Now there’s something any individual can do about this problem, without waiting for the government: ask companies where they stand.”

As shown on the pledge website, 33 companies have signed the pledge so far. The pledge is progressive in that it is a new way to go about patent reform. The question then arises of the pledge’s effectiveness. Will the companies being targeted actually take the pledge?  Additionally, some feel that the recently passed Leahy-Smith America Invest Act bypasses the need for the pledge, as the Act lists several new protections in first-use claims that could be a potential benefit for the small companies on which Graham focuses his efforts. Only time will tell if the pledge will end up with a place in history or will go the way of the dot.com startups of the early ‘90s.

Elizabeth Ritter
Ritter Law Firm, LLC

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