The debate regarding what to do about “Patent Trolls” has lately been gaining steam and has been brought to the public attention in various ways. The term “Patent Trolls” usually refers to a person or company that attempts to enforce patent rights against accused infringers, despite the fact that the person or company being labeled a “Patent Troll” does not practice the invention by manufacturing products or supplying services. Thus, many “Patent Trolls” are considered non-practicing entities.
Many complaints regarding “Patent Trolls” focus in on the practice of “Patent Trolls” filing lawsuits in an attempt to pressure a settlement and/or a licensing deal because the accused infringer has to face the prospect of incurring significant legal fees to defend the lawsuit, even though the basis for the lawsuit may be weak or even lacking merit. Such lawsuits are often filed in the Eastern District of Texas, which is known for its expertise in patent suits. This can cause additional expenses, such as contesting the venue of the lawsuit and/or travel time. Further, if the “Patent Troll” is a non-practicing entity, then it will be difficult in most cases for an accused infringer to file a counter-claim for patent infringement against the “Patent Troll,” because the “Patent Troll” does not practice the invention.
It appears that the debate regarding “Patent Trolls” has even made its way to the movie screen and will be addressed in an upcoming Independent film. In addition, some states, such as Florida, have proposed legislation to address “Patent Trolls.” In Florida, the Patent Troll Prevention Act has been passed. This legislation is codified in Florida Statutes §§ 501.991-997. We have previously addressed the issue of this legislation in a prior blog article as well as Patent Trolls and the Innovation Act of 2015.
Regardless of what side of this issue you fall, the debate regarding “Patent Trolls” does not appear to be going away in the near future.
Please contact our office if you have any questions regarding the information in this article.
Daniel Devine, Esq.
Santucci Priore, P.L.
We live in a very litigious society. Each year more and more patent infringement suits are filed. Some say that the over use or abuse of filing patent lawsuits clogs patent process. There are entities that profit from the threat of infringement litigation. Patent trolls are entities or individuals that buy certain patents only to pressure those accused of infringement into settling out of court for fear of tremendous litigation costs. A child of capitalism, patent trolls, do what they can to squeeze every cent out of acquired patents through licensing and assignments. In 2014, MIT professor Catherine Tucker, released finding that patent trolls actually negatively affect innovation. The litigation produced by patent trolls reduces what investors are willing to contribute to innovators.
To deter the abuse of patent litigation the proposed innovation act will make parities involved in a patent infringement suit disclose the ultimate parent company, it also puts limits on pre-suit demand letter in proving willfulness in a willful infringement case, the act increase in the pleading requirements in the form of required infringement charts that point out the limitation of each claim found in the accused device and attorney fees will be awarded to the prevailing party (unless the judge determines …”the non-prevailing party was reasonably justified in law and fact mak[ing] the award unjust). The 2015 innovation act also proposes codifying the present obviousness-type double patenting system, placing limits on discovery in litigation until after a ruling on claim construction, the USPTO would be required to construe claims by the standard ” in accordance with the ordinary customary meaning of such claim as understood by one of ordinary skill in the art and stop the canceling of US IP licenses in foreign bankruptcies. Under the innovation act patent trolls are discouraged through transparency of ownership and the general sentiment is the act will promote the filing of legitimate patent infringement cases. Yet, some small innovators may be discouraged from filling suit against industry giants under the act because of the same transparency. Ultimately, the acts changes to: the presumption of attorneys fees, discovery limits, claim construction, willful infringement, transparency of ownership, increased pleading requirements, prevention of foreign bankruptcy from canceling US IP licenses, and stay of customer lawsuits should make abusive litigation more apparent and serve as deterrence to future abuse3.
The proposed changes the innovation act will implement brings to life the words of MIT’s Professor Tucker about the framework to control abusive patent trolls:
It is cheap to send a demand letter. But very expensive to respond to a demand letter in terms of discovery costs and hiring legal counsel. It may be appropriate to allow some fee-shifting which would require the closing party in a patent infringement lawsuit to pay the costs incurred by the prevailing party. That would then place the onus on the plaintiff rather than courts to determine if they think the patent has merits.2
Andre B. Dandridge
Santucci Priore, P.L.