I'm going to echo a previous poster and preface this by saying I'm no legal authority, nor should I be seen as one. Please consult with a legal professional for legal advice that would apply in your own personal circumstances.
I recently heard this story on This American Life (TAL from this point forward) and I was left with a lot of questions that were quite similar to yours, Mr. Art. So I came here, and lo and behold, here's your post with plenty of good questions! On a side note, I quite like the structure =D
For the Average Developer
a) Continue on as before and ignore everything legal
I'd think this is pretty dangerous. To paraphrase Wikipedia, the legal concept "ignorantia juris non excusat" holds that a person will be held liable even if said person claims ignorance to the law that they have infringed. True, IP laws and Patents are convoluted cesspools, but an aggressive Prosecutor likely won't concede that when he's after your money.
Along with this, Non-Practicing Entities (NPE's) have every incentive to pursue litigation: they've got investors to make happy. The specific subject of TAL's story, Intellectual Ventures (IV), a prominent NPE/Patent Troll, has $5 billion invested into it, but has only earned $2 billion in revenue since 2000 (it's founding year). Over the next ten years, Mr. Tom Ewing projects IV's revenue goal to be at $35 billion, since the investors want high returns, but he predicts that licensing alone will not be able to bridge the enormous gap. So what's an NPE to do? Well, with plenty of attorneys available and many more targets, it would make sense to pursue the higher-yielding, litigation warpath. The vast majority of those working in software development are likely going to be affected by this at some point, so it's in one's own interest to keep aware of it, the amount of concern varying based on one's future plans in software development (see the answer to the next question).
b) Educate themselves in local and international laws related to IT
I think a familiarity with the law is certainly helpful, but to what extent?
I don't know.
Between raising your family, studying/improving your professional practice, sleep, food and recreational activities, where will you find the time? Would you cut into the time of tinkering with xyz language/algorithm/concept for the sake of legalese? You could justify that it falls into "improving your professional practice", but it's more of a meta than it is a central body of what you really want to do, isn't it? Unless, of course, you want to become a Software/IP/Patent Lawyer...
I guess this one requires each individual to consider what they're doing now and what they plan to do, i.e. a QA Analyst moving toward a Software Engineer position probably doesn't need to know as much as an executive manager or a start-up owner would.
c) Always get a professional legal advice before venturing to do anything programming related
Now that's gotta be expensive. I guess that depends on how much money you have and how much you feel your project/product has the potential of being profitable (not just revenue generation, but profit). This question has a close relationship with the answer to the next question.
d) For any kind of project register an LLC to protect himself even for the most basic and harmless projects
I've been at a couple business seminars, some with legal advice, others with more anecdotal experiences, and the general rule of thumb seems to be that you don't set up an LLC until you actually start making money. If you're really interested in protection, then it's often suggested that one should also get liability insurance for the LLC too. That was general business practice, so I'm not entirely sure if it would apply in this paradigm, but it seems reasonable. I say this considering this quote from the TAL story:
"Patent lawsuits are so common now that it's hard to find even one semi-successful startup in Silicon Valley that has not been hit with a suit, which slows innovation, makes it harder for companies to prosper, hurts our global competitiveness (is this getting big enough for you?), costs us all more money when we buy the stuff these companies sell."
I added the italics to emphasize the ideal targets of Patent Trolls: companies actively making money.
For the Macro Economic View
e) Is any new company at potential risk? If so, is this risk local like in US with all its software patents or global?
This is extremely complex and, quite obviously, beyond me. I do have some thoughts, but that's all they are. There are a few instances that come to my mind concerning locale and law applicability: Russia, China and Germany.
In Russia, Copyright Laws have plenty of loop-holes, causing many in the entertainment industry to suffer much anxiety. It's been moving in the right direction, but only after much pressure from the international community, which set it's sights on Russia because of the numerous small-time infractions to the high-profile cases like allofmp3.com. I'm certain you're more aware of the problem than I am, as you're currently residing in Moscow.
Source :
The US has had ongoing disputes with China over the loose copyright laws employed in Big Red, again much to the $3.7 billion chagrin of the entertainment industry. What's been done and being done? Well, the US introduced the World Trade Organization into the mix in 2007, with both success and failure. To be honest, it's more on the failure side, considering that both Russia and China are in the top five of the US' Anti-Piracy "Watch List" for 2011; interestingly enough, Canada ranked right along with them. Intellectual Property violations have been going on for many years in these countries, yet there's anemic progress being made from the US' standpoint.
Sources:
Finally, something on the more positive side: Germany and LibreOffice. Not exactly directly related to what we're talking about here, since LibreOffice is of an Open Source nature, but it's worth mentioning. LibreOffice, as the Foundation, is centrally located in Germany due to it's legal construct for "stability", both for the Developer Community and the Users. There are several other reasons why, but a fair portion of the reasons fall within the legal domain.
Source:
Of course, these citations don't directly address Patents, but I think it gives us a good snapshot of what the Intellectual Property, and more generally the legal, landscape looks like internationally: it's all over the place. Certain legal precedents may be acknowledged by one sovereign nation, yet those same precedents are ignored by another. I guess this is really something that ties in closely with how much due-diligence any new company is willing to put in (this would be closely tied in with point b of our discussion).
The first part of this question, "Is any new company at potential risk?", has been partially answered in the previous question d), the one about LLCs. Another part of the answer is related to the next question, so you'll get part of it there too. So what's to be said about it here? Well, there's been many variations of this said, but I think it bears repeating: there's no such thing as 0% risk. If we didn't take risks, we'd never drive our vehicles, swim or eat at a restaurant. You already knew this, whether conciously or subconciously, so this naturally segues into the more general business practices of due-diligence, calculated risk management, etc.
f) Can any new company survive without getting lawyers from the start and applying for all possible patents?
Again, I'm going to quote the TAL story:
"It's such a mismatched fight that your best defensive option is security by obscurity. They have the potential to literally obliterate startups."
That was Chris Sacca, a Silicon Valley insider, but from an entrepreneurial/investment background.
So, from a business strategy standpoint, it seems to return to the principle of "don't get the extra fluff until you're making money". You want to keep overhead low by refusing to employ services or products that are not beneficial until you start turning heads, otherwise you'll be bankrupting your company before you even get it off the ground. Morris Rosenthal, author of Start Your Own Computer Business: Building a Successful PC Repair and Services Business by Supporting Customers and Managing Money, concurs with this thought by drawing on his personal experience of seeing how consultants (replace with lawyers for our discussion) had leeched a company dry of all it's money, yet provided very little in solutions. Unfortunately, Mr. Rosenthal was subjected to witnessing a long, drawn-out death of the company, yet at least there's a silver lining here: a lesson for aspiring entrepreneurs.
It would be wholly unfair to say that all consultants/lawyers are out to rip everybody off, but this experience speaks to a broader point: timing and circumstance. Bring them in too early and you burn through your start-up capital (personal savings, in most instances). If you introduce them into your operations too late, then you're buried in problems, whether legal, managerial, financial, marital/familial, or any combination of those. If you hire a consultant to implement a 3rd-party software package for you, yet your company infrastructure/business-practice isn't compatible or is still undergoing "on-the-fly" changes, then you've wasted money for a solution you didn't need. Bottom line: you probably don't need legal help or patents/licenses at the start, but at some [successful] point, you likely will. Consider Mr. Sacca's characterization of NPE/Patent Trolls:
A mafia style shakedown, where someone comes in the front door of your
building and says, “It would be a shame if this place burnt down. I know the
neighborhood really well and I can make sure that doesn’t happen.” And saying,
“Pay us up.” Now here’s, here’s what’s funny. If you talk to ... when I’ve seen
Nathan speak publicly about this and when I’ve seen spokespeople from
Intellectual Ventures, they constantly remind us that they themselves don’t bring
lawsuits, that they themselves are not litigators, that they’re a defensive player.
But the truth is that the threat of their patent arsenal can’t actually be realized, that
it can’t be taken seriously unless they have that offensive posture, unless they’re
willing to assert those patents. And so it’s this very delicate balancing act that is
quite reminiscent of scenes you see in movies when the mafia comes to visit your
butcher shop and they say to you, “Hey, it would be a real shame if somebody
else came and sued you. Tell you what, pay us an exorbitant membership fee into
our collective and we’ll keep you protected that way.” A protection scheme isn’t
that credible unless some butcher shops burn down now and then.
Harsh comparison? Maybe, maybe not, but at least it gives us an idea of the nature of the risk and it's implications.
g) Is it a risk factor for the registration of a new company to choose a location which supports software patents in its legal code?
I'm really not sure how patent law works outside of the US (there's the Patent Cooperation Treaty, but it also has non-participating nations along with different nuances in comparison to direct US patent laws - Patent Cooperation Treaty), but if a nation were to use and implement a system that was closer to the purpose of promoting innovation and securing the patent holder, rather than as a vehicle for unrestrained, litigious money-grabbing by NPEs, then it would make sense to go to such a locale. This would have to be measured against the other risk-factors, such as tax liabilities, company structuring mechanisms, exchange rates, [ideal] labor force availability, natural language barriers (albeit, you seem to be approaching the capability of a hyperpolyglot), distribution channel arrangements, regional stability, cost of moving operations, and so on and so forth.
There have been interesting reactions to the story that TAL aired, as noted on their blog.
The Forbes link has a refreshing proposition for a permanent solution, yet it seems that it's a pipe dream in consideration of the influence that NPE's have in patent legislation. It doesn't really answer any of your questions, nor does it provide start-ups with the tools to effectively work with patents and NPEs, but I think it's still worth a read.
The IV link defends it's interests in patents and their current uses; first time I've heard of the term "disruptive innovation", but it certainly is another way of describing changes to an established system, whether for better or worse (I keep thinking of the caboose and the controversy of change there). At least their use of the euphemism makes clear their future interests.
Thank you for posting a meticulous question, as it gave me an opportunity to research the topic with more focus and to post my conjectures here. Also, I apologize to everyone who read this long-winded post, especially since it's a post filled mostly with hot air, as I'm not capable of providing any real legal assistance nor a panacea (then again, there's no such thing as a "cure-all" for the world of business and law). I also compound the aforementioned apology with a request for forgiveness from those who feel that I'm kicking the dead horse (seems that most of the activity flared and died on May 9th). Furthermore, I hope I didn't come across as a harbinger of FUD, but if I did, then allow me to slightly redeem myself with two suggestions:
- Look for a, hopefully free/cheap and unbiased, seminar that addresses the specific concerns that a start-up would have about software patents
- Search for free, initial consultation time with some of the hungrier attorneys (just try not to get sucked into the sales pitch of "further research" they can conduct at a price you can't afford)
Well, mon ami, it seems that the current state of affairs in patent laws are pas bon, but hopefully we'll see a l'arc en ciel somewhere in our lifetime ;D
