Expensify Sues Abacus for Patent Infringement

David Barrett —  June 2, 2017

Innovation is a tricky thing in that it makes the impossible seem boring.  I think it’s amazing that my 2.5 year old daughter will never really understand why it’s called “rolling up the window”, that google wasn’t always a verb, or that rocket ships were actually thrown away like garbage into the ocean after each use.  People innovate to change the world, but once changed, we forget it wasn’t always that way.

When I started Expensify, BlackBerry ruled the business world — with a camera so bad it literally couldn’t focus on anything closer than 5 feet away.  Apps were brand new and used exclusively for video games, Web 2.0 and HTML5 were the future of business, and hilariously, the state of the art in expense management was faxing in your receipts with a cover sheet.

Since then we’ve become accustomed to disposable pocket-sized supercomputers with crystal clear auto-focus cameras, cheap and ubiquitous always-on internet connections, and vast server farms powering the dawn of an AI-enabled future.  The world we live in today was the science fiction of then, and nobody in our industry was betting hard on that future coming true.

Nobody, that is, except Expensify.  We were the very first expense reporting mobile app, and the first to add mobile receipt capture with automatic transcription and matching to credit card feeds.  We were the first (and still only) to build a disruptive business model that encourages employees to download an enterprise mobile app without asking their boss, then scan receipts to be transcribed by AI and reimbursed in realtime.  It seems obvious in retrospect, but it was anything but at the time:  “Employees are worthless, you need CFOs.”  “Enterprises will fire any employee that tries to use this.” “Mobile cameras will never be good enough for scanning.” “AI has been a decade away for the past 5 decades.”  The list of “obvious” reasons why we’d fail was endless.

Thankfully, all that turned out to be wrong, and in 9 years we went from nothing to being the 2nd largest and fastest growing expense management system in the world.  We got here through sustained conviction that an employee-focused product leveraging mobile receipt capture and AI was the winning formula, and our major commitment to raising the bar through innovation has never stopped.

Now, one fantastic aspect of technology is that it’s easier than ever to copy.  But creation is still very expensive, time consuming, and risky.  This “second mover advantage” obtained by copying the innovation of others is well known, and is the general basis for patent law.  And despite the enormous cost in both time and money (at a time when both were scarce), we chose to invest in both this technology and the patents to protect them.  The rest is history, and this innovation is a large part of our success today.

Don’t get me wrong — innovation is built on the shoulders of those who came before, and we all know that imitation is the greatest form of flattery.  But flattery doesn’t pay the bills, and our ability to invest in new innovation is a direct result of our ability to capture the full value of the innovations past.

Yes, patents are a burden, as are paying taxes, integrating with ancient accounting systems, or being woken up in the middle of the night to fix a server.  But I do them all because innovation in a vacuum is useless: you can only change the world by delivering innovation to the masses, and the only sustainable delivery vehicle is a successful underlying business.  And as a still quite small startup ourselves, that means using every legal tool at our disposal to compete as forcefully as we can.

As such, it’s with no joy that I announce our lawsuit against Abacus Labs, Inc. for infringement of two of our most core patents surrounding receipt scanning and, most importantly, the automatic matching of the scanned receipt to a credit card feed.  You can check out the court filings for all the gory details, and I’ll share here any public details we can share on the case as it proceeds.  Until then, I appreciate your understanding and support, and will make every effort to ensure this is minimally distracting to all involved. Thank you.

-david

Founder and CEO of Expensify

 

David Barrett

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Founder of Expensify, destroyer of expense reports, and savior to frustrated employees worldwide.