Saturday, September 11, 2010

I'm Thinking of Closing Down ScopeRoller

The more I look at how easy it is to sue someone in federal court--and how expensive it is to deal with such a suit, even if you have essentially no involvement--the more clear it is that you would have to be an utter fool to do anything that provides an excuse for a suit.  Anything.

Ideally, you would not own a home, or drive a car, but at least you have liability coverage for those items.  Some things are hard to avoid--but running a business that helps people is clearly on the list of unnecessary things that open you up to great risk, unless you have a $400 an hour lawyer watching everything you are doing, and warning you about what steps you need to take before do something.

It is a really, really scary country in which we live.  I would be curious to know if the situation is this crazy in countries that don't have so many lawyers.

UPDATE: While trying to figure out whether to close it down, I have discontinued the ZeroMotion version of the caster product, not out of fear of lawyers, but because the German-made casters that I used for this turned out to be too inconsistent.  The first few shipments were really excellent.  Once locked down, they did not move even a little.  The last shipment was sloppy, and the manufacturer considers this sloppiness unfortunate but within spec.  (Even Germans don't make everything perfectly!)

The number of customers that actually needed the ZeroMotion version wasn't huge, but I was trying to meet a customer need.  Now I have to pay the restocking charge to return the half a case of these that I have.

15 comments:

Carl's Blog said...

Yes, sadly that's the reason I quit my furniture repair side business years ago. If someone sat on a repaired chair for example and it broke, injuring the person, I'd be paying to this day, maybe even lost my house. I had insurance but it got too expensive and I'm sure they would have found a way to sue anyway.

Griff said...

I haven't practiced law for several years but federal courts require a jurisdictional basis before they can assert their might.

Diversity of citizenship applies to suits between individuals of the different states. But, it comes with a minimum financial requirement for the amount in dispute. I believe that amount is currently $75,000. Simply saying it is so doesn't satisfy the requirement - there must be a certainty that the amount in dispute is actually in excess of $75k.

If you're regularly anticipating potential damages should something go wrong with your product of $75k or more, then you should probably be insured - which would provide for a legal defense to any such claim.

Have you considered forming a LLC (or whatever the term is in Idaho), a limited liabilty company?

Should all this not make economic sense, that's another matter.

Hope this helps some.

John

mollo said...

I live in a rental apartment but I also have to think of lawsuits. I have a tire swing which we only put up occasionally. I carry rental insurance with liability just in case some kid breaks a leg and their parents sue me. When I hear about "friendly lawsuits" friends suing friends to get the insurance money, I get sick to my stomach.

Clayton said...

I understand about the diversity jurisdiction requirement--but I have also seen a lot of apparent requirements thrown out in these current suits. The requirement of specific jurisdiction for federal district court in Nevada? Thrown out, and not apparently on correct grounds. People sued who are not even involved with the infringing website? Apparently--and so poor that they can't afford a lawyer to fight the suit.

Is there any patent law infringement here? Not that I can see--there's nothing new in what I make, except the item for which I have applied for a patent. But I also know that patent trolls can do what copyright trolls do--look for something that is not going to survive at trial--but it doesn't matter, because you end up spending $10,000 on lawyers before you even get to trial. As long as there is some claim that isn't obviously false, the case proceeds, and you have to spend thousands of dollars to make it go away.

No ethical lawyer would do something like this. But that doesn't prevent this sort of stunt.

Allen Cogbill said...

Clayton,

Quite simply, you must get liability insurance. Whether or not you choose to continue ScopeRoller really depends on the price of the insurance premiums. You could try another route (getting customers to sign a waiver before selling to them), but I'm dubious as to whether this would afford any real protection.

Epsilon Given said...

This as a major reason I'm completely against both copyright law, and patent law. I don't know what could be done about injury law, though.

I won't go into the other reasons, because I want to keep this comment brief :-).

Epsilon Given said...

Oh, and I hate how you have to monitor all your comments; as much as I understand that it's because of silly copyright laws (and accompanying copyright trolls), I still find it annoying!

I hope that the lawsuit is finished soon, and that Righthaven gets hit hard for this.

Rorschach said...

Clayton, generally speaking, if you are insured and if someone were to sue you, generally the maximum they sue for is whatever policy limits are because they know that getting money out of a judgment against an individual is a fairly long and expensive undertaking. Also if you are insured the insurance company pays for the defense. I can understand your skiddishness given the situation with you know who, but do you really want to let them win by crawling into a hole and pulling it in after you? Scoperoller has supplied you with a decent fallback income when things turned south for you did it not? I'd be loathe to throw that away unless I had no other choice. I'd be looking at the LLC and insurance precautions and assessing my needs, but I'm not sure I'd let them scare me into catatonia.

Consider this, any patent troll would have to assess the marketability of the product. Scoperoller is profitable, but not wildly profitable, it is pretty much a niche product. Why spend a bunch of money going after something that won't make enough money to pay the legal bills to litigate? the product's limited profitability is a help in this case, not a hindrance.

Clayton said...

The problem is that Scoperoller is not a high income situation. It is an antihobby. (A hobby is something that you enjoy doing that loses money; an antihobby is something you enjoy doing that makes money.)

My concern is not liability. The worst that someone is likely to have as a claim would be a damaged telescope.

My concern is patent trolls, who are not going to care if your business is making money or not. They sue big to get a several thousand dollar settlement because it is crazy to spend $20,000 defending it in court. I am skeptical that there is troll insurance.

Epsilon Given said...

I'm against patents, and since I want to tinker and write programs, I'm also concerned about patent trolls. One solution that has been bouncing around in my head is something I'd call a "Declaration of Prior Art" or DPA. In this DPA, I would write out my idea, complete with claims, and so forth, and then hunt down a Notary Public and get it notarized.

Such a document would theoretically have the full force of a patent, without the cost of filing one, in defending your work from patent trolls, if the patent is filed after the date of notarization (perhaps even before the date, if the prior art can be demonstrated to be a lot older than the date of notarization). In practice, though, a lawsuit can still cause problems (costs of litigation, etc won't go away); and if a patent is filed before date of notarization, you would be left arguing that the idea is "obvious" because you came up with it independently of the patent holder.

In other words, a "Declaration of Prior Art" is at best, an imperfect solution to a serious problem. And it is only intended to prevent someone from suing you; it has absolutely no force, if you want to sue someone else for "infringing" on your idea. But if you're against patents, like I am, then this wouldn't be a problem at all!

Rorschach said...

Business liability ins. should cover that. It will also cover any injury claims that might arise out of having a telescope fall on someone. LLC filing (or whatever Idaho calls it) will prevent anyone from going after your personal assets. In fact you might even want to file the incorporation paperwork in a state like Delaware where there are no corporate income taxes.

Heck, if you are looking to get out of the business, email me and let's talk, I might be interested in taking it over.

Rorschach said...

by the way, your personal liability insurance would probably also cover this (not sure of that but I think it might.)

Clayton said...

From everything that I read when applying for a patent, a Declaration of Prior Art doesn't do the job. You have to have the product publicly offered and available.

Robin said...

As Clayton states, Epsilon, a "DPA" is meaningless. Prior art must be publically disclosed, published, etc.

Epsilon Given said...

I've developed the idea of a "DPA" from what I've read of software patents. A big problem with software patents is that there's a very large body of prior art, much of it not even written down (but considered either "obvious" or "common knowledge" in the field), a lot of which is now being patented. The purpose of a DPA would be to declare "I came up with this idea myself" or at least "this is common knowledge", with documentation to prove it.

Certainly, if you write up a DPA, and then start selling your product, you've made the product publicly offered and available.

Furthermore, after writing up a DPA, it wouldn't take much effort to publish it on a website.

It is my understanding that, for a patent to keep its standing, the person applying for it has to demonstrate that he was the first to come up with the idea. If it can be shown that someone else had the idea first, then the patent is in jeopardy. The idea could be something as simple as an obscure idea in Emacs, or some Master's dissertation filed away at an obscure school in Europe, or some device set up in a castle in Europe.

It should be kept in mind that a PDA isn't to be written or made available so that the writer could sue others (in this sense, the PDA has no force), but to be used as a barrier, however weak it may prove to be, to fend off attacks from patent trolls.

It's also a work in progress :-). I haven't yet explored all the corners needed to make sure that something like this would work...and I have a feeling that, at some point, a patent lawyer will have to be involved.