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Replies to post #82147 on e.Digital Corporation (fka EDIG)
In the United States, a patent provides its proprietor with the right to exclude others from utilizing the invention claimed in that patent. Should a person utilize that invention, without the permission of the patent proprietor, they may infringe that patent. More specifically, an infringement may occur where the defendant has made, used, sold, offered to sell, or imported an infringing invention or its equivalent.[1]
Make Patent Trolls Pay in Court
By RANDALL R. RADER, COLLEEN V. CHIEN and DAVID HRICIK
Published: June 4, 2013
FROM an early age we are taught the importance of fighting fairly. But as the vast number of frivolous patent lawsuits have shown, too many people are rewarded for doing just the opposite.
The onslaught of litigation brought by “patent trolls” — who typically buy up a slew of patents, then sue anyone and everyone who might be using or selling the claimed inventions — has slowed the development of new products, increased costs for businesses and consumers, and clogged our judicial system.
Their business plan is simple: trolls (intellectual-property lawyers use less evocative terms like “non-practicing entities” and “patent-assertion entities”) make money by threatening companies with expensive lawsuits and then using that cudgel, rather than the merits of a case, to extract a financial settlement. In the apt summary of President Obama, who on Tuesday announced a plan to stave off frivolous patent litigation, trolls just want to “hijack somebody else’s idea and see if they can extort some money.”
So far, legislative action against the practice has been meager. In May, Gov. Peter Shumlin, Democrat of Vermont, signed legislation — the first of its kind — that amends the state’s consumer protection laws to empower its attorney general and others to sue patent holders who assert infringement claims against a Vermont business or resident in bad faith. But lawmakers in the remaining 49 states and in Congress, where no less than four bills now sit in various committees, have yet to legislate specifically against patent trolling.
Mr. Obama’s latest proposals echo those in several bills, including making it harder for patent litigants to set up shell companies to hide their activities.
In the meantime, vexatious patent litigation continues to grind through our already crowded courts, costing defendants and taxpayers tens of billions of dollars each year and delaying justice for those who legitimately need a fair hearing of their claims. Trolls, in fact, filed the majority of the roughly 4,700 patent suits in 2012 — and many of those were against small companies and start-ups that often can’t afford to fight back.
The problem stems largely from the fact that, in our judicial system, trolls have an important strategic advantage over their adversaries: they don’t make anything. So in a patent lawsuit, they have far fewer documents to produce, fewer witnesses and a much smaller legal bill than a company that does make and sell something.
Because they don’t manufacture products, they need not fear a counterclaim for infringing some other patent. They need not be concerned with reputation in the marketplace or with their employees being distracted from business, since litigation is their business.
Trolls, moreover, often use lawyers to represent them on a contingent-fee basis (lawyers get paid only when they win), allowing trolls to defer significant legal costs that manufacturers, who generally must pay high hourly fees, cannot.
With huge advantages in cost and risk, trolls can afford to file patent-infringement lawsuits that have just a slim chance of success. When they lose a case, after all, they are typically out little more than their own court-filing fees. Defendants, on the other hand, have much more to lose from a protracted legal fight and so they often end up settling.
Lost in the debate, however, is that judges already have the authority to curtail these practices: they can make trolls pay for abusive litigation.
Section 285 of the Patent Act, as well as Rule 11 of the Federal Rules of Civil Procedure, give judges the authority they need to shift the cost burden of litigation abuse from the defendant to the troll. But remarkably, judges don’t do so very often: by our count, fees were shifted under Section 285 in only 20 out of nearly 3,000 patent cases filed in 2011.
Our judicial system’s bias against shifting fees partly explains that reluctance, but Section 285 is flexible enough to help defend against trolls. And even though many cases settle, the prospect of paying fees will discourage aggressive suits and frivolous demands.
To make sure Section 285 is implemented with appropriate vigor, judges must look more closely for signs that a patent lawsuit was pursued primarily to take improper advantage of a defendant — that is, using the threat of litigation cost, rather than the merits of a claim, to bully a defendant into settling.
One sign of potential abuse is when a single patent holder sues hundreds or thousands of users of a technology (who know little about the patent) rather than those who make it — or when a patent holder sues a slew of companies with a demand for a quick settlement at a fraction of the cost of defense, or refuses to stop pursuing settlements from product users even after a court has ruled against the patentee.
Other indications of potential bullying include litigants who assert a patent claim when the rights to it have already been granted through license, or distort a patent claim far beyond its plain meaning and precedent for the apparent purpose of raising the legal costs of the defense.
Judges know the routine all too well, and the law gives them the authority to stop it. We urge them to do so.
Randall R. Rader is chief judge of the United States Court of Appeals for the Federal Circuit. Colleen V. Chien is an assistant professor of law at Santa Clara University. David Hricik is a professor of law at Mercer University.
Congress vs. the 'patent trolls'
The best defense is to stop granting bad patents. But consumers need protection too.
By The Times editorial board
July 1, 2013, 5:00 a.m.
Less than two years after Congress enacted a long-awaited overhaul of patent law, President Obama is pushing lawmakers to address more problems in the patent system. This time the target is "patent trolls," companies that exist solely to buy obscure patents and then collect money from manufacturers, retailers and even consumers for allegedly infringing them. The challenge is how to stop the trolls without leaving small inventors at the mercy of big manufacturers.
The U.S. patent system is almost as old as the republic, dating back to 1790. But the Patent and Trademark Office was ill-equipped for the digital revolution of the late 20th century, when patent applications skyrocketed — including those for software programs and "business methods," which some critics say should not be eligible for protection. Complaints multiplied too, as tech manufacturers in particular argued that patents were being used to stifle innovation, not to promote it.
Most of the complaints about the system stem from one central problem: The overworked patent office awards too many patents for "inventions" that aren't really novel, or whose claims cover far more ground than the invention itself does. To that end, Congress enacted the America Invents Act in 2011 to give patent examiners more resources and make it easier to challenge bad patents administratively. Meanwhile, several court rulings have raised the standard for winning a patent and made it harder to use patents to keep competing products off the market.
The new law offered little help, though, to those squaring off against patent trolls already armed with overly broad or dubious patents. Of particular concern are the litigious patent holders who are suing not the manufacturers of products that allegedly infringe their patents but the purchasers and users of those products. For example, a company holding patents related to Wi-Fi routers has sued scores of coffee shops, retailers and hotels that have Wi-Fi hot spots, and several companies claiming to hold patents related to distributed computing have been threatening to sue small businesses that had purchased Internet-connected scanners.
That's abusive, and Congress should make sure that businesses and consumers don't get sucked into fights between patent holders and manufacturers that incorporate disputed technologies into their products. If using a product as designed infringes a patent, the liability should rest with the manufacturer that put it on the market, not the consumer who bought it off the shelf.
Obama's latest patent reform initiative also calls for lawmakers to protect technology buyers, among other steps. And to discourage nuisance patent challenges, it urges Congress to give judges more power to require patent holders who lose an infringement lawsuit to pay their target's legal fees. But "loser pays" provisions should be applied equally to both sides and only when there's clear evidence of bad faith. Otherwise, small inventors could have trouble enforcing legitimate claims in court.
Policymakers shouldn't assume that every non-manufacturing company that buys patents is a troll. Patent aggregators can play a vital role in protecting the interests of legitimate small inventors. That's because they have more wherewithal to assert claims over patents that manufacturers really do violate.
Nor are patent aggregators the only ones using patents as a weapon to stop new products and services. Just look at how giant tech companies have been fighting to persuade the courts and the International Trade Commission to impose huge fines and injunctions on one another. Several of those battles revolve around technologies that patent holders have agreed to classify as "industry standards," making them available for all to use in exchange for a reasonable licensing fee. When disputes over these technologies arise, patent holders should be entitled to royalties but not injunctions that keep offending products off the market.
Again, the best defense against patent trolls is to stop the patent office from granting bad patents. That's a work in progress. In the meantime, Congress should do more to protect consumers from getting caught in the middle of disputes between manufacturers and patent holders, and to deter competitors from using the courts and the International Trade Commission to prevail in fights that belong in the marketplace.
AI
