New England Tech Lawsuit Update: Formlabs, Skyhook, VGo, & More

12/11/12Follow @gthuang

It’s a huge pain for any startup: Big Company X, usually a competitor, sues you over intellectual property. Or conversely, you have to sue Big Company X over patent infringement, business practices, or some such.

Either way, you can count on your top execs getting hauled off to court—sometimes over a period of years—to argue their case in front of a judge and jury (at least in the U.S.) who usually don’t know the ins and outs of your industry. It’s a high-priced game of lawyers and so-called “expert” witnesses.

In the best case, you win—but you still lose a lot of time and money (somewhere in the ballpark of $3-5 million for a typical court case, I’ve heard). Of course, the big company is protecting its interests too. It might be legitimate, but often that interest includes slowing down a smaller, faster competitor. And sometimes the legal shenanigans just lead to the bigger company acquiring the smaller one anyway—see Nuance buying Vlingo about a year ago in mobile speech technology. (Disclosure: My brother-in-law is a Vlingo co-founder.)

There are a number of ongoing or recent lawsuits involving Boston-area tech startups. Here’s the rundown on a few:

VGo Communications, a telepresence tech startup in Nashua, NH, says it has been cleared of patent infringement in a case brought by California-based InTouch Health. (InTouch is known in these parts for partnering with iRobot on the RP-VITA telemedicine robot.) VGo says InTouch filed suit in November 2011 after VGo declined to license some of its patents to InTouch. The suit eventually boiled down to claims in three InTouch patents, and at the end of last month, a Los Angeles jury found that VGo did not infringe on those claims. VGo said in a statement that “InTouch was using the lawsuit to try to force VGo out of the healthcare market.” We’ll see what happens between the competitors now.

Formlabs, a Cambridge, MA-based startup that has developed a new 3D printer, is being sued for patent infringement (along with Kickstarter) by South Carolina-based 3D Systems. Formlabs isn’t commenting on the case, but the company said in a blog post last week that it’s moving forward with building 10 beta printers, and that it’s using its Kickstarter funds to expand its team, particularly in software.

Skyhook, the Boston mobile-tech firm that’s been embroiled in two lawsuits with Google over patents and business practices, filed a new patent-infringement suit against the search and advertising giant in September. The new case involves nine of Skyhook’s patents in the area of geolocation. This looks like it’s going to be a long, drawn-out court battle, with the original patent case (filed by Skyhook in 2010) not slated to come to trial until August 2013 at the earliest. Maybe new Skyhook CEO Jeff Glass can speed things up—or at least keep pushing the business around the edges of these crucial cases.

Boundless, a Boston-based education tech startup, is still in the midst of its court battle against textbook publishers Pearson Education; Cengage Learning; and Bedford, Freeman & Worth; who allege copyright infringement. Boundless says there’s no news on the lawsuit, but meantime the company has been broadening its offerings to include study guides (with social/sharing features) in addition to its Web-based alternatives to textbooks in certain fields.

—OK, this last one isn’t about a current startup vs. a big company, but it’s interesting nonetheless. The founders of old Newton, MA, speech firm Dragon Systems have been in court for years trying to recover the fortune they lost after they sold their company to Lernout & Hauspie in 2000, only to watch the Dutch firm implode under revelations of fraud. The Boston Globe reported that jury selection was happening this week in the Dragon founders’ case against Goldman Sachs, their former advisor on the ill-fated stock deal. And the trial is now underway in Boston. (By the way, guess who owns the Dragon speech technology now—yup, that would be Nuance.)

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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  • http://twitter.com/therobotreport The Robot Report

    Although this article is a comprehensive recap of the legal patent activities in the past short while, the dynamic of using broad patents and well-funded legal talent to intimidate or otherwise thwart the activities of competitive start-ups is an ongoing problem in robotics, particularly in the health care marketplace.

    I wrote a short piece that discussed the InTouch Health vs. VGo Communications judgement but also brought up Intuitive Surgical as the reining 800 pound gorilla in the field.

    http://www.everything-robotic.com/2012/12/the-patent-grip-loosens.html

    In the article, I reported what occurred in the beginning of the auto industry where, after Henry Ford beat back a restrictive patent, he established the Auto Manufacturers Association which enabled all the auto companies to retain their patents but also share them through the association so that the safest driver experience could be passed on to all the car buyers – and as a result the industry thrived.

    My point was that in certain areas – health care being one such area – the well-being of the end user (the patient) is more important than protecting the patent and profits of the manufacturer of the device involved. In the area of 3D printing, I would be on the side of the patent holder because it isn’t life threatening or enabling.

    But there isn’t such an association at present and InTouch Health has filed appeals to the court judgement and patent reexaminations.