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Ask HN: My startup is suing a company and I need help

12 points by throwaway1028 ↗ HN
We've spoken with multiple lawyers and have a very solid case. We'll likely be duking it out in the US court system. We've exhausted all other options.

This will be my first real experience dealing with the law & order and I admit I'm pretty green to the subject. If you have any resources, books or advice which you believe would aid us in learning more about the system I know we'd be grateful.

A little background:

My startup of 9 months was recently stonewalled by a partnering company who provides various datasets for licensing. In short: they've "stolen" our idea and are now preventing us from licensing their data because it's going to compete with a project they're working on.

19 comments

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egiva
Step number one - don't go to court after speaking with just one lawyer or firm. Seek multiple legal opinions before filing. I can't stress enough the importance of this. Also, ask specific questions about how things might go wrong - including whether or not the other company can require you to pay their court fees if you lose.

Secondly - think about the size of this company and what might happen if you win, but they appeal the case. Be very wary, because some companies will have a large financial incentive to fight you through various cases and appeals. The reason for this is that allowing you to win your case sets a precedent that affects their other business dealings with other partners.

Finally, ask them what happens if the other party counter-sues you, who pays those fees for your defence, etc.

PS - I'm not a lawyer, so this is not legal advice. Just devote the majority of your time considering what might go wrong, and ask hard questions of your lawyer before you go to court. Winning in court, unfortunately, isn't always about who has the best legal argument, but rather who has the best defense in terms of legal resources, money, etc. Make sure you have enough resources for the entire process.

throwaway1028
So far we've walked away from all meetings feeling as though our case has some serious weight to it. We've even run it by members of our families who practice law and have received the same sort of response.

Thanks for the advice I'm making a note of it all and have updated the post to mention that we have in fact spoken to multiple firms. Should have been clear on that.

egiva
I paired down the last comment just to make it informative for other readers who might have a similar problem, so perhaps this doesn't all apply to your case.

Lawyers in your family provide good legal advice, but make sure to seek third-party advice from lawyers who have worked in your industry for 10+ years. They will be more aware of precedents, what your chances are, etc.

gyardley
Good lord, what a waste of your time and money and emotional energy when you could be working on your startup.

How much time and energy have you put into this already? That's a sunk cost - it's gone, not matter what you do, but I wouldn't do a minute more. Tell the lawyers you've decided not to bother and get back to work.

I'm sure you have a solid case, and that every fiber of your being is crying out for justice. You might even win. But even if you do, what you're going to get out of this lawsuit is almost certainly going to be less than the opportunity cost of pursuing it.

throwaway1028
Our startup was dependent upon their data feeds and they're the sole provider. There's nothing to get back to work to.

This startup has been my baby for 9 months and has been a roller coaster... blood, sweat, and tears. We're two weeks away from launching and we get stonewalled.

It's either give up completely or fight.

ianpurton
What kind of data ?
throwaway1028
Pricing
teyc
You can always turn this into little guy vs Goliath in the media, get free PR and crowdsource the data.
JoachimSchipper
If they are willing to fight to the end, couldn't it take years (assuming you don't run out of money halfway/lose)? Would winning still help you any in that case?
coffee
Sorry to hear this, must be very hard after 9 months of hard work. If they are the sole providers of this data, a great business may be to compete head-to-head if you can start becoming a provider of this data. That may be good use of your time (not that the legal action isn't).
JoeCortopassi
Not to be too much of a downer, but your entire company revolves around the licensing decisions of a single 3rd party provider? Not sure what you are trying to accomplish by a lawsuit, but your business is over, and here is why: Option A) You give up on the lawsuit and get bullied out of the market by the sole provider. Option B) You win the lawsuit, but piss off the sole provider in the process. It's not going to be long before they make things tough on you in other ways.

Bottom line is, you put all your eggs in one basket, and someone took your basket. The lesson to be learned here isn't how to get your basket back, it's to not put your self in that situation again

ianpurton
"Tell the lawyers you've decided not to bother and get back to work."

Probably the best legal advice you're going to get.

drallison
It might be time to review your start-up's intellectual property situation and file for those patents you've been intending to apply for, but have not gotten around to doing so. Would your intellectual property block others from competing? Note that the "new" patent law changes the priority of patents from "first to invent" to "first to file" at some point in the future (2013?).
Peter_V
The GigaLaw Guide to Internet Law. Part 3 on Patents, case studies are interesting.

http://astore.amazon.com/gigalawcom/detail/0812991982

In 2002, it was a great book, but it has not been updated. Probably still relevant. That link connects to gigalaw's recommended reading for many other books as well.

Definitely recommend educating yourself, but forget about the lawyers. Lawyers always think you have a good case, because that means dollars in their pocket. Ask them if they will do it on contingency and you will hear the truth (they typically get 1/3 of the award). If most firms (IN YOUR SPACE) won't take the case on contingency, you don't have much of a case. If you find one firm that will, but you found him in the phonebook, run, don't walk.

You are looking at 3-5 year endeavor to sue, so 9 months in the grand scheme of things is nothing. I would Provisional Patent immediately, and look for a different way to apply your technology to another problem and keep it quiet until license is signed and you have launched.

wavephorm
This is why you never rely on another company for your data. Corporations have so little ethics these days they cannot be trusted.
blakdawg
I find it hard to believe that a startup has the funds to engage in protracted litigation or that you've found a competent attorney/firm who's willing to undertake that on a contingency basis.

Even if you do have the funds to pay for ongoing litigation (I would not be shocked to hear of bills in tens, of not hundreds of thousands per month) do you also have funds to continue operating your business until a resolution is reached?

If you've only got 9 months in on this thing, walk away and find something else. This has been a cheap lesson for you so far.

teyc
You are not suing Twitter, I hope.

Court fights can be very taxing emotionally and financially. Someone I know spent 13 years fighting a case. Led to years of alcoholism and missed opportunities.

Meganduma
What does your contract with the company say? To answer your question regarding resources or books, every litigator in California generally first turns to The Rutters Guide. The Rutters Guide is basically a how-to-practice-law-without-going-to-law school guide. That being said, you haven't seen blood, sweat, and tears, until you are knee deep into a gnarly litigation.
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