News for hackers. Stuff that matters.
Re:Life for a startup on the receiving end of a patent law suit by slowdown on Friday July 19, 2013 @04:09PM (#6072633)
I have an LLC (US), but this is one of the blunders I've made and I plan on dissolving it soon. There are many reasons to my answer, here are some:

The problem with a US based LLC is that you open up free access to thousands of patent trolls waiting to eat your hard earned money. This isn't a problem if you can afford a decent Lawyer for $5000-15000, but for businesses like mine, which are bootstrapped, it's totally unaffordable.

Well funded startups usually have a separate legal department to resolve these issues, but when you're running a startup totally from your own pocket, it becomes extremely hard and annoying. I was wondering for a solution until a very good friend of mine suggested me something nice.

If you set up a company somewhere in India (or some other popular, Start-up friendly developing country), these patent trolls have little access to you in terms of licensing, etc. Usually a patent troll will send you a legal letter threatening you about violation of some kind of absurd technology patent, etc. But, when you start up elsewhere, these become nulled[1]. Meaning, they can't touch you. Worse-case scenario, even if someone DID sue you, the lawyers are really cheap in such developing countries. We're talking about price ranges of $50-1000. And for $500 bucks you can get some really nice lawyers to get the job done.

There's also a LOT of start-up friendly exemptions for companies in such developing countries simply because they don't have enough of them and they want more people to start up.

So, even though these countries are often referred to as 'third worlds', they are really good places to start up. If you know of anyone wanting to start up from those countries, you should probably team up with them as their co-founder and that should be good enough.

Of course, all this assuming that you aren't interested in seeking funding and you want a bootstrapped start up. But then, if you are seeking funding, you'll probably have enough cash to afford a $5000 lawyer anyway.

One potential issue you may find running a startup from a developing country is the access to decent payment gateways. But then, if you don't mind sharing an extra 1% with the gateway provider, you can probably use someone like skrill.

Re:Life for a startup on the receiving end of a patent law suit by rfctr on Friday July 19, 2013 @04:58PM (#6072931)
Samsung was in South Korea. Apple blocked Samsung's sales in US based on patent issues.

It doesn't matter where you're located. What matters where you want to do business.

Re:Life for a startup on the receiving end of a patent law suit by studentrob on Friday July 19, 2013 @10:10PM (#6074049)
Blocking business seems like an unusual step, or at least we rarely hear about it in the news. Is there any precedent for a patent case successfully blocking a business whose service is all on a website? If so, what happened? Did they simply take over the domain? What if a business used a foreign owned domain?

I feel like there are options here that may not have been tried. Presumably a patent troll could try to tell your payment service and US based servers not to do business with you, but I haven't heard of that either, aside from credit card companies blocking Wikileaks and the US govt seizing servers suspected of hosting illegal stuff. I forgot why the US govt seized servers in VA a few years back but the point is that is pretty unusual too and I wonder how far a patent troll would go or how difficult it would be for them to get through all that.

The only way China blocks Facebook, for example, is through a massive firewall, and their businesses generally don't accept any foreign credit cards. The US seems unlikely to put in a huge firewall or modify DNSs to go after small businesses for patent trolls..

Re:Life for a startup on the receiving end of a patent law suit by rfctr on Friday July 19, 2013 @11:25PM (#6074221)
Wikileaks blockade is a good example of the power that can be used when parties fail to come to an agreement.

Most companies though prefer to settle out of court because the court is quite a gambling, that's why we do not hear it more often.

Re:Life for a startup on the receiving end of a patent law suit by studentrob on Saturday July 20, 2013 @12:06AM (#6074303)
Wikileaks is based in Sweden and was seen as threatening by the US govt.

Companies that settle out of court are, from what I have read, small to medium sized US based companies that can face legal action if they do nothing.

What I am talking about is a small company that is foreign based in a place that does not comply with US patents. Has there been one that has ignored US patents and been shut down by having their domain blocked or their US payments disallowed?

Re:Life for a startup on the receiving end of a patent law suit by rfctr on Saturday July 20, 2013 @08:37AM (#6075027)
In other words, is being small & poor a good defense against trolls? Yes, it is.

Try to get bigger though or get a investment round, and troll will come after you.

It is not a coincidence that the company in the article's got trolls about the same time it's got an investment.

Re:Life for a startup on the receiving end of a patent law suit by WildUtah on Friday July 19, 2013 @10:30PM (#6074107)
What matters where you want to do business.

Only if you're a hardware startup.

If you're doing software as a service and you can deal with latency issues, you can operate many places where US patent law doesn't apply to you or to your customers. Canada and Mexico have high speed connections to the USA and Germany or Korea aren't so slow either.

Re:Life for a startup on the receiving end of a patent law suit by rfctr on Friday July 19, 2013 @11:19PM (#6074209)
SaaS are not immune too.

Example:

http://www.ca.com/ca/en/news/Press-Releases/na/2013/CA-Techn...

"... seeking ... an injunction against AppDynamics prohibiting the infringement of CA Technologies patents"

In case CA wins, the court will prohibit AppDynamics to sell any product that violate CA's patents.

Yes, one may host the company in Canada. How to sell to US customers though? VISA, MC and AMEX all have US presence and will comply with the court order (CA's lawyers will undoubtfully provide a copy). Paypal and other various Stripes are just facades to the very same VISA et all.

Without ability to charge for the product, where the business is going to be?

Re:Life for a startup on the receiving end of a patent law suit by WildUtah on Saturday July 20, 2013 @12:01AM (#6074290)
CA is in New York; AppDynamics is in San Francisco. Those are both places in the USA.

Getting an injunction against a company outside the USA for software running outside the USA is not within the claimed jurisdiction of US patent laws.

Re:Life for a startup on the receiving end of a patent law suit by rfctr on Saturday July 20, 2013 @08:31AM (#6075014)
So we has just established that not only hardware companies are at risk. Good.

Now, step two: US trolls will not sue a company doing business outside of US; too much trouble. But any company doing business in US is a subject to local laws, and most SaaS companies want to work on US market simply because it is the biggest one.

"Doing business in US" means, among other things, having US customers and using US payment processors.

Re:Life for a startup on the receiving end of a patent law suit by lccarrasco on Friday July 19, 2013 @05:13PM (#6072998)
Somewhat unrelated, but what other countries have you considered? I wanted to open a US LLC to sell Android/iOS apps (my country is limited to free apps) but given that I can't open a US Bank Account (at this point) I've been looking for other options.
Re:Life for a startup on the receiving end of a patent law suit by cpursley on Friday July 19, 2013 @05:33PM (#6073088)
Look into a Nevis LLC or IBC. Pretty cheap to start ($2k USD) modeled after US Delaware LLC and they have a stable British based law system. Anybody who wants to sue you must post a $25k USD bond to the Nevis government before even proceeding. And this doesn't include the money they'd have to spend to fly down, hire a local attorney and then sue your company.

http://www.nestmann.com/nevis-llcs/

Edit: I see you're from Bolivia. A Panama corporation might be a better choice for you. They'd have to first hire a translator to sue you : )

Re:Life for a startup on the receiving end of a patent law suit by rfctr on Friday July 19, 2013 @11:30PM (#6074229)
> Anybody who wants to sue you must post a $25k USD bond to the Nevis government before even proceeding.

Why would they do that? o_O

They will file at their local US court. You're free to sell to Nevis all that you want -- but do not come with your product into US until the US litigation is won.

Re:Life for a startup on the receiving end of a patent law suit by WildUtah on Saturday July 20, 2013 @12:03AM (#6074294)
Right! US Customs will just confiscate your network traffic at the border.
Re:Life for a startup on the receiving end of a patent law suit by rfctr on Saturday July 20, 2013 @08:28AM (#6075009)
The traffic is not interesting. Business transactions are; incidentally, the transactions are trivially blocked.
Re:Life for a startup on the receiving end of a patent law suit by lccarrasco on Friday July 19, 2013 @05:55PM (#6073217)
Thanks for the info, I'll look into it : )
Re:Life for a startup on the receiving end of a patent law suit by slowdown on Saturday July 20, 2013 @06:05AM (#6074798)
I haven't considered others, since India works well for me. There's not concept of 'class action suit' in India which makes it even more attractive for me. And there is very little capital involved too to start up a company - Somewhere like $50 max (for a proprietorship).