Connecticut companies are increasingly the targets of “patent” lawsuits that demand thousands of dollars and put businesses in jeopardy.
Now one company is questioning the lawsuit it recently received and called Fox CT to investigate.
From the Hartford Marathon to the Sandy Hook 5K run, Capstone Photography was the company behind the lens as runners hit the road.
But now, the small Middlefield photography company finds itself in a race against time.
“It was a shock,” says Capstone Photography owner, Michael Skelps.
Skelps is a US Navy veteran, who quit his job and used his life-savings to start the company in 2005. He received notice of a patent lawsuit on New Years Eve.
Peter Wolf, owner of California company, Photocrazy.com, claims that Capstone essentially used his methods of cataloging race photos online without paying licensing fees to him. Wolf alleges in the suit, that Capstone operates in his state of California, most recently at the “Dirty Girl Mud Run” in November.
He’s demanding thousands of dollars in damages and thousands per year as a licensing fee for use of his multiple related patents.
“The vast majority of those practices are not even ones which we use,” says Skelps.
Skelps says his process is a basic and abstract concept that had been done before Wolf’s patent went through. But forced to respond to a lawsuit, he says the 400 photographers he contracts with nationwide and even his five full-time employees in Connecticut are at risk.
Skelps asserts, that if Capstone goes under, those photographers and employees would also stand to lose.
“Here we are just trying to make a living, trying to do our own thing and an outside entity with deep financial pockets and high powered attorneys is now on the other side, so we have to figure out how to survive that,” says Skelps.
This isn’t the first time Peter Wolf has sued for patent infringement.
He’s sued a dozen other companies and each one eventually chose to settle and pay Wolf, instead of continuing to fight in court.
“I’m really sorry to see Mr. Skelps head down the same path that a dozen other people have. I think he’s just going to spend an awful lot of money with attorneys, when we could sit down and come to a reasonable agreement and move on with life,” says Wolf.
But online, there are blogs dedicated to fighting Peter Wolf’s patent lawsuits. Some go as far as calling him a “patent troll” which is a negative term to describe someone who establishes patents, not necessarily to use the idea, but more often to aggressively sue other companies who use the idea.
“That’s not at all the case with me. I don’t fit that definition and I take offense to someone calling me a patent troll. I’m simply defending some ideas that I invented and I expect other people to respect those patents,” says Wolf.
Wolf says like Skelps, he’s also a small businessman living the American dream. In his case, after making a “daring escape” from East Germany in the early 1960s with his mother.
But Capstone isn’t the only Connecticut company that’s been sued for patent infringement recently according to Attorney General George Jepsen.
“They typically prey on small businesses and realize that they would run up far more costs in legal fees than they would just to pay the licensing agreement and get rid of it,” says Jepsen.
Jepsen didn’t comment directly on the Capstone case, but he has kept an eye on others in the state.
On average nationally, it costs just under $1,000,000 dollars in attorneys’ fees just to fight a patent lawsuit in court, win or lose.
Last year, Attorney Generals in 42 states, including Connecticut, expressed support for anti-patent troll legislation pending in the U.S. Senate, already approved by the House.
But it’s a complicated job finding a balance between so-called patent trolls and those who are not “rent collectors” but business owners who sue to defend patents in the field they actually practice.
“It’s trying to sort through so that legitimate patent infringement can be enforced but small businesses are not victimized by those who would prey on them,” says Jepsen.
Skelps vows to fight the lawsuit and is seeking help.
He started www.endpatentabuse.com, a site where he hopes to “crowd-fund” money for his defense, from companies like his, who he says, could become the next targets of a patent troll.
“After serving America in the military and then corporate America for about 20 years total, and choosing to follow this dream, it’s just very discouraging that you’re put in a situation where you’re almost guilty until proven innocent,” says Skelps.
Capstone Photography has hired a high-profile law firm for its defense.
Skelps says that a loss could force him to shut down.
There is also a bill proposed in Connecticut set for discussion during this legislative session.