Claims of IP Infringement by Third Parties
In addition to exposing you to infringements of your own IP, launching a crowdfunding campaign can expose you to claims that you have infringed upon the IP of others.
Therefore, you should consider whether you are infringing on someone else’s IP before going to market. Due diligence checks should be undertaken to assess and address any third-party IP rights prior to launching a crowdfunding campaign.
An example of a start-up that has been sued for IP infringement as a result of its Kickstarter campaign is Formlabs, which had raised more than US$2.9 million for its high-definition 3-D printers. The success of this campaign prompted 3D Systems, a company that had several patents over 3-D printer technology, to sue Formlabs for patent infringement in the United States. The case ultimately settled, allowing Formlabs to continue to produce its 3-D printers. However, Formlabs was caught up in more than two years of litigation with all the costs and burdens associated with defending a lawsuit.
- designing around a patent or an industrial design before you launch your product; and
- weighing all the factors and deciding whether it makes sense to go into a particular area because of the IP issues you are likely going to encounter.