Image: Ingo Fast, Getty Images
For a guy who feels his business is being cramped by bogus lawsuits, Igor Shoifot comes across as an irrepressible optimist. The 42-year-old Russian immigrant, who runs the photo-sharing site Fotki.com out of a nondescript office building near San Francisco's Fisherman's Wharf, laughs loudly and often at his predicament.
Still, Shoifot knows he's in a serious bind. His business is at risk of paying heavy penalties -- and possibly being shut down -- because it relies on "metadata" technology that enables functions like tagging and commenting. FotoMedia Technologies, a patent-holding company with offices in New Hampshire and North Carolina, claims patents it owns give it exclusive control over certain uses of such features, and has asked a federal judge to shut down Fotki.com and 62 other photo-sharing services unless they pay unspecified licensing fees.
"My first reaction was that it was a joke," Shoifot says. One reason he felt that way: None of the patents-in-suit -- U.S. Patents 6,542,936, 6,018,774 and 6,871,231 -- were issued until 2000, two years after Fotki.com began operations. "We had this business running in 1998. Not a concept, not an idea, not a 'wouldn't-it-be-cool to do that,' but an actual business in 1998."
At a time when some of those lobbying Congress as part of the current patent-reform debate argue that strong patent protections are necessary to save jobs, some software entrepreneurs, including Shoifot, are ready to flee the U.S. because for them, patents are too strong already.
AN IMMIGRANT'S STORY
Shoifot was born in Siberia and raised in Moscow. He immigrated to New York in 1996, driven, he says, by the corruption and lack of freedom in Russia. "I always felt like I was American, not Russian," he says. He became a U.S. citizen in 2001.
Once in New York, he wrote for a Russian-language newspaper, Russkaya Reklama. It was while working for the paper that Shoifot met Dimitri Don, a programmer and photographer who had launched Fotki.com in 1998. When Shoifot joined the site, it had less than 20 users.
Fotki was hardly the first site of its kind. Both Netscape and Kodak already had "online image" Web sites -- the term "photo-sharing" was not yet in vogue -- and other pioneering photo sites like Intel's gatherround.com cropped up about the same time as Fotki. Because photo-sharing was such an obvious idea, at least in concept, the creators behind many of these sites, including the Fotki founders, never thought to get patents.
As time passed, Fotki continued to grow in popularity, and after a few years Don was able to turn it into more than a hobby. Shoifot, who got an MBA from Boston University in 1998, helped his friend with the site while launching other startups related to digital video and VoIP technology. In 2004, Shoifot put aside his other projects to join Fotki full-time as the chief operating officer. Later that year, Don returned to his native Estonia, where he was able to recruit workers from the tech-savvy but inexpensive labor force. Today Fotki has about 20 employees in Estonia, and 5 in the United States, most of them programmers.
FOR SOME, A PICTURE PERFECT FIT
The industry that FotoMedia has sued is a diverse one, and smaller sites strive hard to differentiate themselves from another. Fotki accomplishes this by making itself a perfect fit for photographers who want to tap their inner micromanager.
Fotki users can control everything down to the smallest detail of how their photos are presented online. Users who pay the $30 annual basic membership get unlimited storage, and can create as many albums as they want, each with its own specific settings for privacy, color, size and presentation. Each account also offers more than 100 options for customization. It's not a site for everyone, and doesn't try to be.
"Honestly, it's a site for geeks," says Shoifot. "Some people hate it," he adds, shrugging cheerfully.
Fotki places a strong emphasis on community, moderating discussion forums and hosting contests. Community-building requires a lot of work, but it keeps the site fun for users and generates a lot of passion, says Shoifot. Today, Fotki has 1.4 million users. Several thousand of those are subscribers who pay $30 annually to have unlimited photo storage and use Fotki without seeing advertisements. Fotki also makes money from selling printing services and photo-stamped swag like mugs and T-shirts.
The search features that help Fotki users interact with each other are as maniacally detailed as the site's photo-display options. If a Fotki user wants to meet, say, female Icelandic photographers in their 40s, the site responds with a drop-down list of provinces and cities to narrow the search. Shoifot says the social connections created by Fotki users have led to countless friendships -- and even a few marriages.
He demonstrates one of the site's newer features, which allows users to put colorful "frames" around their photos. "This is really cool," says Shoifot, throwing up a flowery-themed frame around one of his own photos. "I bet someday someone will patent this and take us to court," he says. Then he laughs again, irrepressible.
CAUGHT IN INFRINGEMENT CROSSHAIRS
Now that he's confronting FotoMedia's patents, Shoifot, like his fellow defendants, is having a hard time understanding exactly what those patents are supposed to cover. In general terms, they describe the addition of "metadata" to, and the distribution of, digital images.
The metadata in question -- tagging and keywords are two examples -- represents just the latest iteration of what humans have always done with images, Shoifot notes. Any description of a photograph could be considered "metadata" in one sense, he says: "Tagging is like taking a photo of a cat, pointing to it and saying 'cat!'"
FotoMedia first started filing lawsuits in 2007, and launched a second round of litigation, against Fotki and dozens of other defendants, in May 2008. Then, in May, Fotki was sued for infringement a second time, in this instance by patent-holding company EasyWeb Technologies.
The FotoMedia litigation has already cost the company tens of thousands of dollars in legal fees, and has put Shoifot's plans for new U.S. hires on hold. If one of the suits end badly for Fotki, the company might choose to leave the U.S. entirely, since most of its employees are already based abroad.
"Quite frankly, one of the feelings my partner and I have is, screw it," says Shoifot. Since most of their operations are already in Estonia, if a court rules against Fotki, they might just move their U.S. operations to Canada.
A McKool Smith lawyer responded to an inquiry about TPA's earlier FotoMedia story but declined to discuss the company's infringement claims in detail. The firm has not responded to follow-up interview requests. FotoMedia is also represented by the Ward & Olivo patent litigation firm.
Fotki is represented by Joseph Zito of Washington D.C. Zito also represents one other defendant, New Jersey-based Phanfare.com.
For Shoifot, being hit with a patent lawsuit from a company with no business beyond patent enforcement seems sinister, and he uses harsh language to describe his feelings about it.
"This is a typical Russian situation," he says. "In Russia, to do business, you have to bribe, you have to pay to the cops, you have to know the mafia. If somebody had told me that's how things are in America, I would have laughed. I would have said, 'No way, not in America.' It's a free country, it's based on freedom of ideas, and entrepreneurship. Or at least I thought so."
When it is suggested that some of the features that differentiate Fotki from other photo-sharing sites could probably be patented, Shoifot agrees -- but his smile drops away. "We wouldn't do that, no way," he says. "That's evil."
The patent office is one American institution -- venerated by many -- that Shoifot has a fair amount of scorn for.
"To me, the whole idea of America is people come here, and invent something really awesome, and then they do it -- they don't just put it on paper and get their lawyers to submit it to the patent office."
The suit pending against Fotki is FotoMedia Technologies, LLC v. American Greetings, Corp., et al, 08-cv-00202, E.D. Texas (Marshall).
