The founder of San Francisco-based Expensify is asking his users how forcefully he should protect his intellectual property after settling a lawsuit with a Toronto-based competitor.
David Barrett, CEO of Expensify, says that his company has settled its lawsuit with Nexonia Inc., a company founded in 2002 by Neil Wainwright and Pascal Paradis-Théberge. Both companies offer expense-tracking software, and the nature of the dispute was centred around a mobile app that could log expenses with the aid of a smartphone’s camera. Expensify released its SmartScan feature in 2010. Nexonia released its own receipt capturing technology, also dubbed SmartScan, in December 2014 – Nexonia will now refer to that feature as Nexonia OCR.
Both companies have since put out press releases (Expensify, Nexonia) about settling the legal dispute that was filed Nov. 11. Nexonia took immediate steps to remove references to SmartScan from its website and apologizes for its use of the term, and agrees that Expensify had prior use of the term. Nexonia will also be licencing Expensify’s current and future patents covering receipt scanning technologies.
Current patents cover everything that involves taking a picture of a receipt from a mobile phone and using an external source to improve the optical character recognition (OCR), Barrett tells ITBusiness.ca.
“That process of providing human-augmented OCR is the fundamental domain of our patent,” he says. “We’ve licenced the patent to them so they can continue to develop their receipt scanning technology without any problems with us.”
The patent dispute was the result of a misunderstanding, according to Neil Wainwright, CEO and founder, Nexonia Inc. He tells ITBusiness.ca that Nexonia wasn’t aware Expensify held a patent on the SmartScan term.
“It’s a very widely-used term, including OCR invoices and I think receipt data as well,” Wainwright says. “They didn’t list it as a registered trademark on their website. We treated it more as a general term.”
Nexonia started cooperating with Expensify as soon as it received the lawsuit, he says. Changing the product name was an easy way to address the issue.
Barrett is pleased with how Nexonia responded, he says. “Everything was resolved very quickly and cordially. We’ve been really happy working with them.”
But now the Silicon Valley entrepreneur is looking to have a more philosophical discussion about patents and the power they hold. Barrett is soliciting advice on the right way to proceed if a patent violation issue should ever present itself again.
“We have these powerful patents that can be used in a variety of ways,” he says. “We have important and valuable property we spent a lot of time and resources to build… but it’s possible to go overboard and be too aggressive with these things. We want to be happy citizens of a friendly eco-system of competitors, but at the same time we want to win.”
Barrett will take advice from anyone willing to give it, but emphasizes that he’s not looking for legal advice on how to protect patents. Instead, it’s more of a moral question about how to handle the broad patent portfolio the company is building – which covers more than just receipt scanning.
When asked for what advice he’d give, Wainwright offered this:
“We watch a lot of big companies fight large patent wars for many years. Rarely is a large monetary award given,” he said. “From my perspective, it’s more important to work hard to make our customers as happy as they can possibly be.”