Wednesday, June 5, 2013

NY Times - Make Patent Trolls Pay in Court - A Comment

Today, in Make Patent Trolls Pay in Court, Federal Circuit Chief judge Randall Rader and law professors Colleen Chien and David Hricik note patent trolls have strategic advantages over companies since patent trolls (1) don't make anything so cannot be countersued; (2) have no concern with business reputation as litigation is their business; (3) can defer attorney fees unless they win due to contingency fee representation; and (4) total litigation costs can be low even when they lose. However, Professor Crouch notes in Fight Litigation Misconduct, But Not Through Hyperbole the typical costs of a patent troll that loses is not a court filing fee. Yet, these advantages often lead defendants to settle even when a patent is of doubtful validity.

While Congress is considering a set of new bills, such as End Anonymous Patents Act, Patent Quality Improvement Act of 2013, and SHIELD Act, to address patent trolls, the Chief judge Rader notes that courts already have certain laws to curtail the advantages of patent trolls. For example, judges can dismiss an unworthy patent case at the outset under Federal Rule of Civil Procedure Rule 11. Yet this rarely happens. For cases that go further, 35 USC 285 gives judges the authority to shift a defendant's attorney fees to the abusive patent troll for payment if the plaintiff knew the action is being brought in bad faith and the case is objectively baseless. Given attorney fees dwarf all other costs of litigation this would give patent trolls a reason to pause on the case with no merit.

Yet, judges rarely shift the defendant's attorney fees to the patent owner. Part of the problem is the Federal Circuit's "subjective bad faith and objectively baseless" standard. It is difficult. Another is the customary slack district court judges give trolls before they are willing to find a case "exceptional" as defined the Federal Circuit's interpretation of 35 USC 285 and shift the attorney fees. In fact in 2011, federal judges awarded fee shifts only 0.7% of the time (20 times out of 3,000 cases). Think about it, only 1 case in 100 is without merit? The media makes it sound like this is not the case.

Thus, the article suggests the solution is right in front of us. Just enforce the existing laws such as 35 USC 285 to curb abusive patent litigation rather than await passage of bills, which seem like hasty band-aids with obvious flaws.

Copyright © 2013 Robert Moll. All rights reserved.