GlobeSherpa CEO Nat Parker.
GlobeSherpa CEO Nat Parker.

Being sued for patent infringement is no fun — and especially if you’re a fast-growing young startup. But that’s exactly what happened to GlobeSherpa, the Portland-based startup that built TriMet’s successful public transit mobile ticketing app.

Shortly after GlobeSherpa won a crucial $3.2 million contract in September with Virginia Railway Express (VRE), Bytemark — a similar ticketing startup based in New York — sent a letter to GlobeSherpa CEO Nat Parker that accused his company of infringing on a Bytemark patent related to a visually validated mobile ticketing system.

Parker wrote back to Bytemark, which finished second in the bidding for the VRE contract, noting that he believed there was no infringement at play. Four months later, Bytemark filed a lawsuit in the U.S. Court for the Eastern District of Virginia.

“We believed sincerely that we did not infringe on their patent,” Parker told GeekWire. “We also felt that this was a tactic to derail the fact that we won a contract that they wanted to win.”

globesherpaGlobeSherpa then went out and raised $790,000 to prepare for a legal battle and actually countersued Bytemark for tortious interference and defamation.

While this was going on, VRE decided it wanted to stay out and put a hold on the new deal with Globesherpa. That left Parker and his team in an extremely difficult spot — either fight Bytemark in court and spend lots of money, or settle the case and preserve the $3.2 million contract with VRE.

The startup ended up settling and today announced that it has entered a cross-licensing agreement with Bytemark while also hiring the company as a subcontractor on the VRE project. The deal brings an end to a stressful few months for Parker, but he says that his company is better for it.

At the end of the day, Globesherpa retained its big contract with VRE and is moving on.

“On a certain level I think this early challenge in our company’s life cycle validated our integrity and staying power,” he said. “It shows that we can withstand brutal circumstances that most startups at this maturity and size do not face. I feel like we came out winning.”

Parker has also learned a few lessons in intellectual property. He plans on having an expansive patent portfolio to prevent something like this from happening again.

“Even if you’re a startup, you need to be thinking about IP very, very early,” he said, explaining that even companies that feel they did everything right, as GlobeSherpa believes it did, can be subject to these types of legal attacks.

GlobeSherpa is a graduate of the Portland Seed Fund and has raised a $2.1 million to date. The company is also working with other major transit agencies like Valley Metro and LADOT on mobile ticketing apps, and recently passed the 1 million ticket purchase mark with the TriMet app in Portland.

Update, 5/21: Bytemark has provided a statement in response to this post from CEO Micah Bergdale:

As a technology company, IP is the core of Bytemark’s business. Bytemark was first to market with our visually validated ticketing solution, and was issued patent 8,494,967 in July 2013. This lawsuit was solely focused on protecting that patent, which we believed GlobeSherpa was infringing on through its TriMet app. We are pleased to have entered a licensing agreement that both protects our IP and expands the availability of our mobile ticketing solution to transit agencies across the U.S.

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