The guys discuss Fixed, the company that fights parking tickets in San Francisco. They also answer "In our industry a few competitors have very very vague patents. For example one has patented "exit intent" technology that pops up something when a user is about to leave a website. This feature essentially can be replicated in a few lines of code. Do patents like this hold up in court? Especially when there's lots of prior art? Should these patents prevent us from innovating or should we ignore them? Should we consider patenting our own vague features?"
NASIR: Welcome to Legally Sound Smart Business.
This is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: Matthew Staub joining us today. Welcome to our business podcast that we cover business legal news and answer some of your business legal questions that you, the listener, can send in to firstname.lastname@example.org.
MATT: I guess, if someone’s listening to this for the first time, they will not realize that I have been on the previous 73 episodes as well.
NASIR: As a guest, right?
MATT: As a guest. It’s the intro of Saturday Night Live where you have the actual cast members and then the featured players. I just got the bump up to the actual podcast host. I was a featured player for 73 episodes.
NASIR: No, you’ve been downgraded to just a guest. You were a co-host. Now, you’re just going to be a guest from now on.
MATT: All right, that’s fair.
NASIR: Sorry to inform you in this method but it was the best way I could think of and I think we should do a new service. Like, if we want to do a demotion or firing of someone, if one of our listeners wants to do that, they can send in the name of the person and have them listen to the podcast and we’ll do it on-air for them.
MATT: That’s like George Clooney’s business that he worked for in “Up in the Air” where he would travel around the country firing people.
NASIR: Yeah. Well, new service.
MATT: Which, I mean, I guess that would probably actually exist somewhere at least, right?
NASIR: Well, if anyone knows one, we’ve been trying to find a guest like that because we’ve talked about terminations in the workplace are one of the hardest things for a business owner to do – not only because it’s difficult to actually logistically do it but, also, it poses a lot of liability. And so, finding someone that has experience in that, that’d be great. If so, if anyone knows anyone, that’d be great.
MATT: Yeah, that’s true. I mean, there are a lot of things you need to be careful with. A lot of people would probably be fine with it but I would assume there are managers out there who don’t want to do it and they’ll probably bring in someone outside. That’s got to be the worst for an employee. You’re getting fired and your boss doesn’t even… He can’t even come in and fire you themselves. It’s pretty ridiculous. I wouldn’t be happy.
NASIR: Not to extend this off-topic but it reminds me of one of the very early episodes of The Office where Mike the boss is supposed to fire one.
NASIR: Not only does he fire somebody and then takes it back and then he brings someone else in and then considers taking it back and then doesn’t want to take it back because he just took it back with somebody else. That was a great episode.
MATT: Yeah, it’s pretty good. Actually, for those of you who stuck with it all the way through in the last season – well, after Michael Scott leaves – Dwight actually hires back that guy who got fired in that episode. Devon, I think, is the name.
NASIR: I didn’t see that.
MATT: Yeah. Well, it was towards the very end. I think it might have been one of the last couple of episodes when Dwight took over. He’s like, “Yeah, actually, I hired Devon back,” or whatever his name was. A nice little callback. Yeah, because that was in the first season and one of the first episodes.
NASIR: Yeah, it was in the first season. I’ll have to check that out.
MATT: So, this is a pretty cool thing that’s going on in San Francisco. At least for now they might expand. I guess they are planning to expand so they just got 1.2 million dollars in seed funding but it’s called Fixed. It’s a mobile app and, like I said, it’s in San Francisco right now. If you get a parking ticket, you take a photo of your parking ticket and you send it in through this app and they look at it. Apparently, there’s a lot – if you’re experienced with parking tickets – there’s a lot of things you could look at right away and see that were some sort of error. And so, if there’s any of those situations, they go with that right away. If not, they have this letter that’s drafted for you and then they send it to you and you send it in.
Right now, like I said, they just got a good amount of funding – 1.2 million. So, one percent of the city’s 20,000 weekly parking tickets are estimated are using this app which is pretty crazy.
NASIR: Yeah, that’s a lot.
MATT: I have a lot of questions about this but the first is, if they don’t find any errors and they write you a letter, I mean, the city has to be aware of this and I think it actually says they are aware because they had some sort of response but you have to imagine it’s got to be like a canned letter that they’re sending in. If the city gets this, they’re just going to look at it and say, “Yeah, we’re just going to outwardly deny all of these because we know they’re coming from the same thing and we don’t want this company to be around helping people.”
NASIR: Yeah. In fact, they had a response because they were actually faxing these in because there’s no way electronically to send it over to them. Of course, to make it streamlined, they fax it in and they responded by a very curt email saying, “Stop using the fax machine.” No reason was given. And then, they pointed out that the California Vehicle Code allowed for the submission of contest via fax. They just shut off the fax machine. I think that’s the whole problem with all this. It’s a great idea. I love it. Everyone hates parking tickets. At the same time, I think everyone will agree that there’s a necessary to enforcement of parking; otherwise, it would get too crazy. But, nonetheless, how are they going to make sure that the San Francisco City is actually enforcing the law? Not only that city but every other city that they plan to expand to because – you’re right – what if they do just object to every one? Does Fixed have the funds to actually fund a litigation matter with the city? That’s not a small bill.
MATT: I get made fun of in my office because I’m the only one I think that uses the fax machine but the IRS, unless you want to mail stuff to them, faxing is the only other way you can do it. You have to fax some things. Faxing is just so archaic and I like it. I see this as a problem when they just shut down their fax machine but they’ll have to deal with that.
NASIR: I agree. I hate using fax machines but the only reason I have to use them is because – you’re right – when you’re dealing with even the IRS but also state governments. I know Texas uses it all the time as well. Also, other attorneys – and we’ve talked about this in the past – when they send you a letter, not only will they email you a PDF, they’ll mail it to you and they’ll also fax it to you so you’ll have three copies and it’s some kind of archaic philosophy that you need to have triple confirmation of a simple letter that is of very low consequence is confirmed.
MATT: Yeah. And so, getting back to Fixed, from their perspective, I don’t know if there’s really any legal issues that’s involved. I mean, writing a parking ticket is not practicing law.
NASIR: And, disputing one, that’s a good question. You’re disputing a parking ticket on someone’s behalf. I’m sure they use forms and they give the user some leeway but, you know, this whole idea of practicing law, you know, everyone knows that there’s companies like LegalZoom and we’ve talked about them in the past and they have their limitations and they have their place. LegalZoom and the like – Rocket Lawyer or whatever the other ones are – they’ve been criticized for the unauthorized practice of law and they’ve found that fine line. But more and more of these companies are out there that are trying to reinvent the legal industry to make it more affordable to clients and, for me, I see a trend of a little bit more leeway for state bar associations. I think it depends state by state. I think California is going to be a little bit more aggressive when it comes to that. But, at the end of the day, I think this is the trend that’s going to happen is you’re going to have more of these kind of canned legal services.
MATT: It’s kind of weird. I didn’t even think that many people drove in San Francisco. I used to live in Northern California and the parking situation is horrendous and you pretty much were forced to park in a garage or a lot where you’re paying like $20.00 for every eight minutes. It’s just something outrageous. But, yeah, I didn’t realize that many people drove. I don’t know. I guess you have to drive in from outside and come into the city.
NASIR: I think I remember parking on… was it Pier 51, is it?
MATT: Pier 34?
NASIR: Pier 27, I believe? I don’t know. I just remember the parking there was literally, like, $30.00 an hour or something weird like that because, obviously…
NASIR: Was it 39? Pier 39?
MATT: 39, yeah. I actually was just up there a month ago, same situation.
NASIR: Oh, you were? Okay.
MATT: Yeah. If you come at the right time, you can find street parking. It’s still a quarter will get you 10 seconds. I mean, that’s exaggerating but it’s pretty expensive, but I park in the lot and then, actually, if you park in one of the lots and you go to a restaurant, they’ll validate you. You get like an hour free or something. They get you something at least. Yeah, it’s outrageous. I hope that this company keeps going and expands. My wife gets a lot of parking tickets.
NASIR: Does she?
They’re so easy to avoid, by the way.
MATT: We’re going to get into the question of the day because it’s really long and this definitely couldn’t have been tweeted at us – unless it was in multiple parts.
NASIR: Which you can tweet at us at @askbizlaw and follow us as well. I think we prefaced this before, when we say “follow us,” don’t follow us physically. We’re just talking about Twitter. We’ve had problems with that with stalkers in the past and we don’t want to redo that whole thing.
MATT: All right, here we go.
“In our industry, a few competitors have very, very vague patents. For example, one has a patented exit intent technology that pops up something when a user is about to leave a website. This feature essentially can be replicated in a few lines of code. Do patents like this hold up in court, especially when there’s lots of prior art? Should these patents prevent us from innovating or should we ignore them? Should we consider patenting our own vague features?”
This is supposed to be one question but they actually asked a bunch.
MATT: So, we can choose which one we want to answer.
NASIR: Actually, we cut it out. Their first question was, “How are we doing?” and I think we should just ask that. It’s the first question.
NASIR: Just avoid the issue.
This is a very difficult question to answer simply. So, we have to reiterate to make sure you listen to all the disclaimers at the end of this episode which is on every time but specifically in this time because it’s very difficult to answer fully because we’re talking about patent strategy and I think it’s very topic-specific. But let me just talk about first this code that this exit intent technology that I’m sure everyone’s experienced where you go to some website and you can’t leave until you press OK. If you hit the back button or close the window and it’s saying, like, I don’t even know what the pop-up is but it’s saying, “Are you sure you want to leave?” basically.
MATT: Yeah, I’ve seen that a few times.
NASIR: I think that’s what they’re talking about – which is very annoying. Why you would want to have that in the first place or not, I don’t know, but that’s a different issue. Nonetheless, what do you say, Matt? How do you want to tackle this question?
MATT: Well, let’s see. I’m looking at all the different questions he had here before. I’m trying to think if we can just summarize this in one succinct answer.
NASIR: Well, let’s take it one step at a time.
MATT: All right, we’ll do it one step at a time.
NASIR: Do patents like this hold up in court? The person’s referring to a patent that’s already been filed. Obviously, the patent has already been accepted. Once the patent is applied, a lot of times, what people say is that a patent is pretty much useless unless you are able to enforce it because, unless it’s enforced, there’s no government body that’s going to automatically say that, “Hey, you’re infringing upon a patent.” Unfortunately, the only time these guys come out of the woodwork is when something that you’re doing becomes successful and they may have a patent and that’s the whole concept of a patent troll and we’ve talked about that in the past. In this case, when the patent is filed, it’s accepted, and let’s say that that patent holder says that you’re infringing upon them, they sue you. Because it’s filed, there’s a presumption that the patent is valid. So, you have the obligation to actually prove that the patent is not valid and you mentioned, “Do patents hold up like this in court, especially when there’s a lot of prior art?” The reality is, when the patent should not have been granted in the first place, for example, because it was in use prior to the applied patent – which is a reason that it wouldn’t be valid – then it could be considered struck down. So, we can’t necessarily speak specifically to that specific patent but, generally, that’s how that procedure would go.
MATT: I think that’s when you really get into the attorney’s fees there for litigators because that seems like it’s going to be a tough process. I mean, I don’t have any experience litigating patents but I would just assume that’s a pretty time-consuming thing.
NASIR: And that’s the whole problem. This question is kind of pointing out the main criticism of this whole patent industry – that you can get these so-called valid patents for – he even put – “very, very vague” patents which is true. Whether they hold up in court or not is a whole different issue and you have to get a specific legal opinion regarding that. But one of the questions that he also asked – he or she – “Should these patents prevent us from innovating or should we ignore them? Should we consider patenting our own vague features?” Now, I think, in either case, it shouldn’t prevent you from innovating. Should you ignore them? Well, it depends upon whether you feel it’s a valid patent – or I should say your attorney – and it seems like you have a good case already but get a specific opinion on that. Should we consider patenting our own vague features? Well, it’s kind of your own philosophy. Obviously, the law allows you to, to a certain extent. You know, you may consider it vague and others may not. But the question is, “Do you want to be in the same camp as all those other patent trolls that just patent everything?” At the same time, we talked about last week how some of the value that you have in your business is your intellectual property. And so, not patenting it may be a problem, even if you do enforce it. Wasn’t it Tesla that had a bunch of patents but they decided not to enforce it but they have them anyway just so that they’re not sued for infringing someone else’s patent.
MATT: Yeah, that’s the “take them at their word” – the handshake.
NASIR: Yeah, hopefully they don’t actually pursue. I didn’t see anything come from that. Did they actually sign any kind of binding agreement or anything?
MATT: Yeah, you know, I never looked into it after we discussed it. We probably would see it if they went back on their word. The guy who started Tesla, he has so much money anyways, he probably doesn’t even really care.
NASIR: Yeah, I agree.
Hopefully we answered that question. That was a tough one, I think. That was one of our tougher ones.
MATT: Yeah, we got a little bit technical but hopefully we answered his/her questions. I don’t know. I think we did.
NASIR: Very good. All right, thank you for joining us and don’t forget to leave us some good reviews on iTunes which we established goes up to five stars, right? We can get five-star reviews.
MATT: Whatever the max is, yeah, five.
NASIR: All right.
MATT: Keep it sound and keep it smart.