I posed this question to the man with the notoriety, Erich Spangenberg, who runs
IPNav, asking if he had any words of advice for a Chicago entrepreneur named
Peter Braxton. Mr. Braxton, a former Air Force pilot, was in desperate shape
when we first spoke about a month ago — so desperate that he was borrowing money
from his mother and brother for living expenses. To understand how he got there,
and to set up what turned out to be a rather surprising conversation with Mr.
Spangenberg, let’s rewind Mr. Braxton’s story.
Three years ago, Mr. Braxton was stuck with about 200 people, waiting to get into a nightclub at the Encore Hotel in Las Vegas. A few days later, he conceived an app called Jump Rope. It would give users the opportunity to pay some fee to get to the front of a line — at a club, a restaurant, a museum or any place where a premium for entry could be charged.
Mr. Braxton, who at the time worked at Credit Suisse in Chicago, raised about $250,000 from friends and family to make his idea come to life, with more promised as the company grew. He hired code writers and two employees.
The app started in November 2011. In December, Mr. Braxton received a phone call from Geoff Baker, a lawyer for a company, also based in Chicago, called Smart Options.
“He said, ‘We have reason to believe you’re infringing on our patent, and we’d like to find a reasonable solution that involves some kind of license agreement,’ ” Mr. Braxton recalled. “I said, ‘Slow down.’ ”
Mr. Braxton hired a lawyer, who told him that Jump Rope did not infringe what is officially known as Patent No. 7,313,539, a k a a “method and system for reserving future purchases of goods or services.” When Mr. Braxton declined to pay a license fee, and rebuffed a variety of other arrangements, Smart Options sued.
Mr. Braxton returned all the money he’d raised — “Nobody wants to buy a lawsuit,” he explained — and paid for the case out of his own pocket. The ensuing dispute, by the standards of patent brawls, was brief and lopsided. Judge Amy J. St. Eve of Federal District Court in the Northern District of Illinois found for Jump Rope on summary judgment, which is another way of saying that the judge didn’t think the matter even worthy of a trial.
Judge St. Eve also ordered Smart Options to pay Jump Rope’s legal fees. She called the lawsuit “frivolous.”
This might have seemed like an obvious moment for Smart Options to cease hostilities. Instead, it reloaded. In addition to filing an appeal, in May, Mr. Braxton says Mr. Baker told him that Smart Options would sue Jump Rope using a different patent in its portfolio.
Mr. Baker, in an interview, said the judge got it wrong.
LAST month, when Mr. Braxton told me about his predicament by telephone, he sounded cornered. He was out of money, so he couldn’t afford to fight an appeal. At 35, Mr. Braxton was considering a return to the military, as a reservist. (He had already served in both Iraq and Afghanistan.)
“I have about the same amount of money in my bank account as I did when I was 15 years old,” he said in June. “I’m practically bankrupt. If you’re a start-up, you have no chance with this kind of litigation.”
What should he do? I asked Mr. Spangenberg if he would be willing to share ideas. I hoped only that the conversation would yield intriguing fodder for a profile of Mr. Spangenberg.
That night, Mr. Spangenberg read the rulings in the case and he decided that he liked what he saw. Loved it, in fact. So much, that by the time he and Mr. Braxton were chatting the next day, via speakerphone, he wanted to make a deal.
“If we came in and helped you on this, would you start your business back up?” he asked.
“One hundred million percent yes,” Mr. Braxton said.
Three years ago, Mr. Braxton was stuck with about 200 people, waiting to get into a nightclub at the Encore Hotel in Las Vegas. A few days later, he conceived an app called Jump Rope. It would give users the opportunity to pay some fee to get to the front of a line — at a club, a restaurant, a museum or any place where a premium for entry could be charged.
Mr. Braxton, who at the time worked at Credit Suisse in Chicago, raised about $250,000 from friends and family to make his idea come to life, with more promised as the company grew. He hired code writers and two employees.
The app started in November 2011. In December, Mr. Braxton received a phone call from Geoff Baker, a lawyer for a company, also based in Chicago, called Smart Options.
“He said, ‘We have reason to believe you’re infringing on our patent, and we’d like to find a reasonable solution that involves some kind of license agreement,’ ” Mr. Braxton recalled. “I said, ‘Slow down.’ ”
Mr. Braxton hired a lawyer, who told him that Jump Rope did not infringe what is officially known as Patent No. 7,313,539, a k a a “method and system for reserving future purchases of goods or services.” When Mr. Braxton declined to pay a license fee, and rebuffed a variety of other arrangements, Smart Options sued.
Mr. Braxton returned all the money he’d raised — “Nobody wants to buy a lawsuit,” he explained — and paid for the case out of his own pocket. The ensuing dispute, by the standards of patent brawls, was brief and lopsided. Judge Amy J. St. Eve of Federal District Court in the Northern District of Illinois found for Jump Rope on summary judgment, which is another way of saying that the judge didn’t think the matter even worthy of a trial.
Judge St. Eve also ordered Smart Options to pay Jump Rope’s legal fees. She called the lawsuit “frivolous.”
This might have seemed like an obvious moment for Smart Options to cease hostilities. Instead, it reloaded. In addition to filing an appeal, in May, Mr. Braxton says Mr. Baker told him that Smart Options would sue Jump Rope using a different patent in its portfolio.
Mr. Baker, in an interview, said the judge got it wrong.
LAST month, when Mr. Braxton told me about his predicament by telephone, he sounded cornered. He was out of money, so he couldn’t afford to fight an appeal. At 35, Mr. Braxton was considering a return to the military, as a reservist. (He had already served in both Iraq and Afghanistan.)
“I have about the same amount of money in my bank account as I did when I was 15 years old,” he said in June. “I’m practically bankrupt. If you’re a start-up, you have no chance with this kind of litigation.”
What should he do? I asked Mr. Spangenberg if he would be willing to share ideas. I hoped only that the conversation would yield intriguing fodder for a profile of Mr. Spangenberg.
That night, Mr. Spangenberg read the rulings in the case and he decided that he liked what he saw. Loved it, in fact. So much, that by the time he and Mr. Braxton were chatting the next day, via speakerphone, he wanted to make a deal.
“If we came in and helped you on this, would you start your business back up?” he asked.
“One hundred million percent yes,” Mr. Braxton said.
