

Why should I found my innovative, game-changing startup in litigious America? - dto1138

I'm a young American entrepreneur who has spent the last five years (full-time) researching and building the technology for our Lisp startup.<p>Set aside the details for now, because they don't really matter to my question. Just assume for the sake of argument that our startup has something quite a bit more interesting up its sleeve than some new photo-sharing app---and that we proceed to draw the anti-competitive ire of the established players. (If you're not comfortable with that assumption, instead fantasize about one of your own startup ideas. It's much easier to imagine that those are great.)<p>Cutting to the chase: the more I learn about the U.S. legal environment for software businesses, the less I want to actually start my business here. Among other things, the depressing history of DMCA jurisprudence; the new Nortel Cartel; and the profound dysfunction of the USPTO (and increasingly, the Library of Congress) have got me in a funk.<p>To sum up: as our project becomes more exciting, my gut feeling becomes stronger that I should take it outside the United States. As an American I am profoundly saddened by this.<p>So, can anyone on HN explain convincingly why I should bet on America?
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trussi
_Preface: This is not legal advice. Consult your attorney and CPA. Blah blah
blah_

This is a great question.

The short answer is to license the IP between several corporate entities.

Here's a structure that offers a huge amount of protection and risk reduction:

-You own 100% of Company A

-Company A owns all IP

-Company B licenses the IP from Company A

-Company B is an operational company (with a merchant account, employees, office, etc).

Any potential litigation will target Company B because it's exposed. However,
you structure the licensing agreement between Company A and Company B such
that:

-Company A is indemnified of all of Company B's transgressions

-Company A has very little value because most income is paid to Company B as the licensing fee. You want Company B to essentially be worthless, which means it's not a big target for lawsuits.

Company B would probably be a US-based company. However, Company A could be
based in another country, which would further reduce the likelihood of a
lawsuit touching the IP.

So you get to operate in the US, but still protect your IP from litigation.
The best of both worlds.

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poulsbohemian
Here's a simple reason why: can you get the visas needed to move yourself
anywhere else and can you find the resources you need in that country?

There are lots of places I would consider over the US, but in many countries
to come in and start a business it will take showing that you can properly
capitalize the business and provide for yourself until the business reaches
profitability. You may be in tens of thousands in moving costs and legal fees
before you even get yourself started in order to set up shop in a new place.

And, if your target audience is in the US, you may run into consumer
perception or other problems if you are based elsewhere.

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turbojerry
You do not have to move, all you need to do is split the company into
different parts and setup those parts in different countries that give you the
protection you seek. For example you could have a US company that does the
development and a company in a different country that does the sales. You
really need to talk to a lawyer about this so you can make informed choices
about how the companies relate and also potential investors so that not only
are you legally covered but that the arrangements do not spook future
potential investors.

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thucydides
Why the US? Legally: low taxes; generally no personal liability for corporate
bankruptcy or failed contracts. Culturally: businesspeople are respected; no
shame in having a failed business.

How would hardware patent trolling affect your software business? How would
the DMCA affect your software business? (Rhetorical.)

I don't like patent trolling or the DMCA, but that doesn't mean I need to move
to Oslo.

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nurik
Because of the size of the market. I had to experience it for myself: back in
1999 I founded the first flower and gift ecommerce store in Germany, at about
the same time similar stores launched in the US. Within the following years
the US Stores grew tenfold compared to us. We had the same products and
comparable set ups, but the stores in the US had the market advantage by far.

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brk
OK, so then what do you propose as a better location?

What country offers a non-litigious society, allows outsiders to start and own
a business, and has a tax basis that won't take all your money if you actually
become successful?

Personally, I'm not aware of too many better options for an American than
America, but I'd love to hear some viable alternatives.

~~~
a3camero
Canada?

No healthcare costs (might have to become permanent resident, not hard to do).
Low taxes for small business owners (tons of write-offs, lower tax rates).
Less litigation. Very generous rules for foreigners to operate businesses.
Close to US w/ easy travel. Short flights from major cities (re: Toronto,
Waterloo, Ottawa, Montreal).

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rubinelli
There are things you will find more easily in the US, like funding, mentors,
strategic partners, and decent payment. Depending on where you move to, you
have to contend with taxes and bureaucracy. All in all, you trade some money
and convenience to minimize your risk. Personally, I won't be surprised if
this becomes a trend.

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dto1138
The wording of the title is definitely tongue-in-cheek, but I think as a
hypothetical it's something many of you could form an opinion on.

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edelweiss
Try Vienna Austria, I have been based here for 5 years for the very same
reason.

~~~
trussi
What made you choice Vienna?

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akat
Any thoughts anyone on Australia?

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koren
Are you Jewish? make Aliyah!

