In the past, we've criticized Judge Randall Rader, the chief judge of the court of appeals for the federal circuit (CAFC), which, among other things, handles all appeals on patent cases, for being completely out of touch with the ways in which our patent system is broken. His statements seemed to indicate a complete lack of recognition for how patent trolling and bogus patent lawsuits were causing all sorts of trouble for innovation. So it's encouraging -- but surprising -- to see Judge Rader team up with professors Colleen Chien and David Hricik -- who have studied problems with patents and patent trolls -- to write a NY Times op-ed piece about the problems of patent trolls. Yes, the chief judge of the court that handles patent cases is now openly calling them trolls and complaining that they're a problem. This is good.
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.”
What's interesting, is that the rest of the op-ed mainly focuses on the question of fee-shifting. As we've discussed, President Obama's patent plan includes plans to make it easier for those who bring bogus patent lawsuits to have to pay attorneys' fees, and there are already a few proposals in Congress that include similar provisions. But the op-ed points out that judges already have this power, and just don't use it very often. So, he's suggesting that judges "look more closely" at patent cases, to see if there's abuse by trolls, and if they ought to use
Section 285 of the Patent Act.
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.
While this is an interesting point, I'm not sure it's really that relevant. First of all, Section 285 reads (in its entirety):
The court in exceptional cases may award reasonable attorney fees to the prevailing party.
But that's the thing: these kinds of trolling efforts are not "exceptional." They're increasingly the norm, as was noted in the very same op-ed.
Also, you'd think that, as the chief judge on the court that handles all patent appeals, Judge Rader would have had a chance to not just do what he suggests judges should do... but to create a precedent for district courts to adhere to on that point, rather than just writing about it in the NY Times.
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