Fight Litigation Misconduct, But Not Through Hyperbole

By Dennis Crouch

In a recent NYTimes op-ed, Chief Judge Randall Rader joined professors David Hricik and Colleen Chien in calling for judicial action in awarding attorney fees under Section 285 of the Patent Act as well as Rule 11 of the Federal Rules of Civil Procedure. See “Make Patent Trolls Pay in Court.” The Op-Ed’s focus is on the problem of nuisance suits brought by patent licensing companies against a large number of entities – many of which include small companies.

In addition to being more aggressive in awarding attorney fees under the rules, the authors suggest particular factors that may lead to awards against patent trolls:

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.

One of the bases for the article is that the patent trolls face very low risk in filing lawsuits since they can’t be countersued for infringement (they don’t make anything) and, unlike a university, they typically have no ancillary reputation that can be tarnished by the suit. Moreover, the cost of discovery for trolls is typically very low and they typically work through contingency fee litigators. The result here is “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.”

It is often true that the marginal cost of filing a thirty first lawsuit on the same patent can be quite small – especially when the new defendant is using the invention in the same way that other defendants are using the invention. However, the Op-Ed fails to mention the great risk of preclusion associated with each lawsuit. Under the law, each and every defendant has the opportunity to fully challenge the patent before either a judge or jury and, if the patent is ever found invalid then that ruling will preclude the patentee from ever enforcing the same patent rights again against any party. Even apart from preclusion, the organization of a patent enforcement campaign is not a simple endeavor, but rather an expensive process that involves extensive analysis of potential patent rights, an exhaustive search for financial backing and litigation counsel, and a one-business-at-a-time analysis to ensure that the patentee has a reasonable basis to believe that any accused infringers actually is infringing. In a typical case, the would-be troll follows thousands of dead leads and failed negotiations before ever filing a single infringement lawsuit. The point here is one that every patent litigator understands – enforcing patents is an expensive proposition and the notion that a patentee only risks $350 to file a lawsuit is ridiculous. Now, we can debate whether all this expense is a waste of resources that should be avoided as a matter of public policy. On that point I will only note the reality that the rise of patent enforcement and patent licensing companies has revived the market for buying and selling of patents from small companies and individuals in a way that allows those entities to actually monetize their innovations.

All this is a bit of an aside because I agree completely that courts should exercise their discretion to deal harshly with litigation misconduct both through Rule 11 and Section 285.

152 thoughts on “Fight Litigation Misconduct, But Not Through Hyperbole

  1. How are district court judges expected to be confident enough to award fees and sanctions for purported frivolous cases when they know, more likely than not, their claim construction and/or summary judgment order will be reversed by a federal circuit divided amongst itself?

  2. I typically get my breaking news from Hal Wegner, and have read the matter by the time the issue appears here.

    That’s why my posts are so accurate.

  3. Thanks Ned.

    Although it would have been more delicious if Malcolm would have supplied the link – for obvious reasons.

    LOL.

  4. I didn’t address cDNA which was out of laziness. But, their holding on DNA is actually just iron age thinking. They can’t say that cDNA is ineligible as it is new (unless as the SCOTUS says it there are no introns in the DNA.)

    Iron age all the way…..but note I even picked out Funk Brothers. I knew they would cite that prominently.

  5. This is what I posted —-

    If had to bet, I’d say they are going to hold it ineligible. I think that anon’s analysis is basically right. They have gone into a something more mode and discount information such as in Funk brothers. They want something from the iron age–not the information age as counting as new.

    So, they are going to say that what is isolated is just what is already there in the DNA and all the techniques to isolate it are old. The sequences are there in DNA. So, what have you got in iron age thinking? Nothing. You have something outside of the DNA that looks just like the DNA in its important parts and the parts that don’t are old. Ineligible. All the predictive power won’t count–information age. All the finding the sequence in the DNA won’t count–information.

    Going to be ugly. That’s my predication. 6-3 decision.

  6. You are correct that I did not provide a count – mea culpa.

    But look at the legal rational… – I guess the Supremes understand exactly what I have been posting.

    Hey Francis, Robert, Keeping It Real and Malcolm, get in line to ‘bow,’ no pushing and shoving.

    LOL, wait, there will be no pushing and shoving, because all of those svckies are the same person.

    Maybe that person will stop polluting the public and just stay in his room (happended before – for a few months after his Diehrbots will be destroyed Bilski miss.

  7. Yup. Not hard to figure out they would come up with this. I missed that it was going to be unanimous, though, but note that you did not respond to my challenge for a count.

    Iron age thinking….feel it. Live it.

  8. Held: A naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but cDNA is patent eligible because it is not naturally occurring. Pp. 10–18.

    Who is your (English as a second language) Daddy?

    More gloating and I-told-you-so’s to follow.

    Much more.

  9. Can you define “success” as an intrusion on the legal alienability of property?

    You know, limit rights of a property by the “who” of ownership as opposed to the “what” of the property itself?

    It would be a ‘neat’ trick in the crusade to denigrate patents…

  10. Rader’s letter implies that patent holding companies both have very low litigation costs because they use contingent fee firms, and their claims have a slim chance of success. I was trying to say that contingent fee firms won’t take cases they can’t win, so Rader’s assumptions aren’t right.

    The usual complaint about trolls is that their claims have a slim chance of success on the merits. If they go to trial and get a jury verdict and appeal to the Federal Circuit.

    Lawyers who take cases on contingency care about their chances of getting money out of the case. Which, and this is the point I’m trying to make, is not always the same thing as the chance of success on the merits. You can have a very weak case on the merits, but a class of defendants who can’t afford to defend a lawsuit and have their execs tied up in depositions, and therefore a high chance of the only kind of “success” that matters to a contingency lawyer.

    So, no, there’s nothing inherently contradictory about contingency lawyers being thrilled to take certain cases that have a “slim chance of success”.

  11. @IANAE: not sure what point you are trying to make. I agree that a large settlement, whether from one defendant or from 100 defendants, would constitute success.

    Rader’s letter implies that patent holding companies both have very low litigation costs because they use contingent fee firms, and their claims have a slim chance of success. I was trying to say that contingent fee firms won’t take cases they can’t win, so Rader’s assumptions aren’t right.

    Note for example that Project Paperless has sent thousands of C&D letters, but has only ever filed one lawsuit. They avoid litigation altogether, so they don’t need to convince a law firm to take their case.

  12. Thank you for a well thought out response. Patents are worthless if they can not be enforced yes some patents shouldn’t be granted and some people ask for settlements that are less than the cost of defending the patent so people don’t defend, but people deciding not to defend is an issue with those people and the patent office granting patents that should not be granted is an issue with the patent office. The possibility of countersuits should not be what keeps people from enforcing their rights. If the patent is valid it should be enforced. A small company with a patent for an item with a small market value probably won’t be able to defend its patent. But a company that buys up a lot of small market value patents can, thus more incentive to spend the money to solve problems with small market value (like diseases that only a few people get).

  13. contingent-fee firms won’t take cases with a “slim chance” of success.

    Depends how you define “success”. Getting lots of defendants to settle and pay up without the expense of a trial sounds like success to me, at least as a contingency-fee firm would understand the concept.

  14. Rader’s editorial also fails to recognize that contingent-fee firms won’t take cases with a “slim chance” of success.

  15. Yeah, read Haliburton. The justification for “abstract” used in that case no longer applies. The use of the word abstract is nothing short of an unconstitutional grab of power by the judiciary.

    J. Lourie destroyed his many years of service. He is now no better than the felons in prison.

    Abstract is supposed to be a judicial exception applied as narrowly as possible. J. Lourie has written it into the statute. He is a criminal.

    The concept of abstract as an exception makes sense if rightly applied. You don’t want to let people patent the concept of being frugal when applying any method, but the current use of abstract is so bloated as to be unrecognizable. It is clearly a grab of power by the judiciary that exceeds their authority.

    J. Lourie should be impeached.

  16. MM: “”every patent creates a job”

    I believe what you meant to write is that every patent issued to a new entrepreneur creates at least one new job. That fact has never been refuted on this blog.

    MM: “small businesses can’t compete without patents”

    i think what you meant to say is that small businesses, particularly start ups, can’t prevent big corps from stealing their inventions, without patent protection. But of course you would have to actually care about small businesses and the jobs they create for this to even matter.

  17. 6: “Sounds like they preempt the abstract idea of using one button to scan and email directly.”

    How would you ever know if that “idea” was pre-empted?

    :: silence::

  18. NWPA: (which the Lourie court has incorrectly determined is abstract rather than broad)

    Night you have hit up on an important point. Scope is not a 101 issue but an issue of 112, 102, and 103. An inventor may think of an original concept and is allowed to patent as many applied embodiments of that concept as the prior art allows and that can fully enabled and described.

    This is why I do not get Judge Louries reasoning that a process that can be applied on any computer is invalid under 101 as abstract.

  19. All of which makes for poor blogging quality.

    But Malcolm will only [shrug], stand by and continue in his ways.

    C’est La Vie

  20. What is kind of funny about you MM is that you couldn’t have picked a worst example. Saying that face recognition is old and been done is like saying that cancer research is old and has been done and that any patent that has anything to do with cancer should be rejected outright.

    But, then you are handicapped by your willful ignorance, intellectually dishonesty, and –let’s face reality–lack of integrity and malice.

  21. And, by the way, MM (the little-brained troll), think about just how ignorant you are. How to process the information in face recognition is the problem. How can we build a machine that can recognize faces is the problem. And, how does our brain and animal brains recognize things such as faces. That is another problem.

    You see this how to process the information to perform a function is without question the greatest scientific problem being solved today. But, tiny brained trolls like you seem to think that you just instruct a magical computer brain and talk to it about how you feel something should be done it will magically get done. I guess that is fine until you wake up.

    Your ignorance rises to the level of offense. Just like Lemley claiming computer programs have no structure. There is a clearly malice involved and darkened hearts. Bad actors.

  22. And, my little troll king, MM, face recognition has been the subject of intense research now for 50 years. And, with some success, but not really any real success.

    So, just think here we have a problem that is useful, would bring great wealth for providing a solution, and people with IQs of 170+ have been trying to solve the problem for 50 years. And, our little troll without a clue or integrity tells us that it is old and known and easy.

  23. So, using 102, 103, and TSM makes no sense? OK, MM.

    “Brain” : what part of the computer is the brain?

    It’s old to recognize a face? Not well. And, in fact, face recognition is perhaps one of the great open problems of “information processing.”

    It sounds like you have been watching Disney again with your description of the computer being a brain that you describe to it how to do things and it does them. That isn’t how it works. You have to write INSTRUCTIONS to tell the computer exactly what to do. Just think people figured out how to tell Judge Lourie’s (the man without a clue) calculator how to drive a car.

    So, to sum up: face recognition is a great open problem and perhaps one of the most interesting problems not only information processing but in cognitive science. And, our little MM (the king of trolls) is telling us that it is old and done. OK. Sure. Please just tell your computer brain to get it done and I am sure it will.

  24. Maybe the 3:25 admission of “Because like many patent attorneys who’ve been around the block, I’ve “monetized” really, really bad patents on behalf of “innovators” without great difficulty.

    is also a (gasp) 1ie.

    LOL (perhaps on Malcolm’s world)

  25. Fixed for accuracy. Please try a little harder.

    LOL.

    Really Malcolm? Please apply this very same rigor to all of your anti-republican rants, OK pumpkin?

    The word for you (still): hypocrite

  26. NWPA The computer doesn’t do anything automatically. That is why all that software is inventive.

    “All that software”? LOL. There’s no “software” in the claim. There’s just a description of some plainly obvious functionality for a POWERFUL COMPUTER BRAIN.

    If you could write a program that would recognize a face in pictures

    First, that’s old. Second, just about anybody could describe in the abstract (i.e., as recited in a typical computer-implemented junk claim) how such software would work. How do I know that? Because just about anybody with a modest proficiency in the English language can describe how they go about determining whether a picture includes a face or not. Third, the rest of our comment makes less sense than the first half. Stop wasting my time.

  27. I haven’t looked at the patent. You slipped in “automatically” in there didn’t you? The computer doesn’t do anything automatically. That is why all that software is inventive.

    Also, let’s have a reality check here for a moment. If you could write a program that would recognize a face in pictures (or even better pornography), then you would be very rich. The fact is that information processing methods to do this well have yet to be invented (and there is no powerful computer brain to turn to to invent it for us.)

    The reality: the subject matter the claim is directed to is extremely difficult and if solved would be worth a great deal of money. But, perhaps their methods of solving the problem are not too inventive, but then don’t we have 102 and 103 for that? And a great test TSM that should be used?

    Or, do you like the brandy in the hand and nah test better?

  28. bja What in the world does [the fact that the Republican "base" includes millions of proud mouth-breathing science deniers] have to do with the patent law

    I think it’s pretty obvious. As noted elsewhere, many of the same Republicans who embrace the patent system and claim to champion “innovation” in America are simultaneously the least informed about science and the most inclined to put an end to public science education (pretty sure you fall into this category based on some of your previous spewage). It’s standard double-speak, which Republicans excel at (see also the term “freedom”, which typically means “the freedom to discriminate against you because our ancient scrolls say it’s okay.”)

    the Democrats and Republicans selling legislation to Cisco, IBM, Microsoft, Google et a

    Fixed for accuracy. Please try a little harder.

  29. You write powerful computer brain when in fact you should write “incredibly simple but fast machine.”

    LOL. Indeed, I recommend that the softie woftie patent prosecutors who file this junk on Apple’s behalf start using the term “incredibly simple but fast machine” instead of “computer”. It shouldn’t make any difference whatsoever on the silly playground where their pathetic “innovations” are conceived and prosecuted.

    What’s really funny is that they limit the “technology” to “faces”. Why not use broader terms like “composition feature” and “color tones known to correspond to said composition feature”? That’s a rhetorical question. Everybody knows why they don’t do that, except possibly for the reetardo Examiners in the computer-implemented junk unit who rubber stamp at least some stuff this bad every week.

    Who’s the alleged “inventor” of claim 1? Ah, yes, LOL, it took TWO guys to come up with this cr-p: Russell Reid and Nikhil Bhatt. You’re telling me that these two people have a good faith belief that they invented the idea of looking closer at something that might be a face, seeing if has skin tones, and then saying “huh, it’s a pretty good chance it is actually a face”? Or do they think that using an “incredibly simple and fast machine” to do that automatically is inventive?

    This is very typical computer-implemented junk. Just how much Silliclown Valley “Look, mommy, I’m changing the world!” crack do you have to smoke to look someone in the eye and claim that you invented what appears in claim 1 and therefore deserve a patent?

  30. Alan, the first recording statute required the recording of assignments within 3 months. Justice Story had a field day with that one. As a result, Congress amended the statute to cut off BPF status if the assignment was not recorded.

    Regardless, I think the proponents want to find out who owns the companies that actually own the patents, pierce the veil and all that. I would suggest that we are not going to go done that route.

  31. Paul, I am not sure the Supreme Court would sanction awarding attorney fees to losing patent defendants solely because the plaintiff was an NPE. Access to the courts is a fundamental right.

    Judges can toss cases that have no merit in fact.

  32. McCracken, you might want to consider that Republicans took over the house for the first time in 40 some years in the mid 90′s. They were looking for payback for what Dems did to tricky Dick.

  33. Read more into what?

    No one has put any flesh on the intimation that something is not ‘kosher’ with David Hricik.

    Without more, even the fact that he is a professor who is only clerking for a year is quite meaningless. I see nothing to spark ‘irony’ or any ‘endeavor as a patent-marking troll’ that posters have alluded to. I hardly think that ‘Facebook friends with Alun Palmer’ is even remotely scandalous or otherwise of interest in regards to this article.

    I am just not seeing any ‘smoke.’ Not even a whisp.

  34. Except he is not.

    Did you miss his admission? He has done what he QQ’s about.

    He might run around in tights, but that is as close to the Daredevil character that Malcolm will ever get to.

  35. Anon, MM is like the Daredevil character – the attorney by day – who only represents innocent clients – and then vigilante at night.

  36. You have to understand that David Hricik is a law professor who is only clerking for Rader for a year. I think that makes a difference.

    For full disclosure, we are friends on Facebook. But then, so are Dennis Crouch and yours truly, so don’t read more into that than there really is.

  37. I think you are right anon. And, it even goes deeper I think. Because what they try to do is act as if the computer is a person that has been given the method to perform. So, it is as if the method was given to a person for obviousness purposes.
    Acting as if the computer has some innate ability to solve problems is what they use to try and negate Allapat.

    And, then paradoxly they call the computer just an adding machine when they want to disparage the computer in general and all methods using a computer.

    Pretty fancy little dance they have there.

  38. The word you are looking for NWPA is anthropomorphication.

    Machines do not – in fact – think. It’s a great word to clear away all of the dust kicking with the attempt to tie in the ‘mental steps’ ploy.

    Notice the Ned Heller has never addressed this concept?

    LOL – maybe it is a ‘platitude’ that he cannot ‘engage.’

  39. But, then that is the irony MM. You write powerful computer brain when in fact you should write “incredibly simple but fast machine.”

    There is no brain. That is what you have. Everything has to be build from scratch. The “computer” offers nothings but the ability to perform a few simple operations. Driving a car, detecting cancer, answering help lines all has to built up from nothing.

  40. And so is your discredited philosophy.

    Learn your history, so that you do not have to repeat it. Tear down your walls of ignorance.

  41. Let’s see if he takes any action on these applications other than QQ’ing here.

    (will not be holding my breath)

  42. Price of oil in China?

    What in the world does this have to do with the patent law and the Democrats selling legislation to Cisco, IBM, Microsoft, Google et al.?

  43. More unbelievable Apple junk:

    U.S. Patent Application No. 20130129209

    This is a method for detecting whether a digitized image is a digitized image of a face:

    Try to believe that this was filed in good faith:

    A program storage device, on which are stored instructions comprising instructions for causing a POWERFUL COMPUTER BRAIN to:

    select a sample portion of an image that may depict a human face, comprising a plurality of pixels;

    indicate a likelihood that the image does not depict a human face if the pixels in the sample portion are substantially neutral;

    and indicate a likelihood that the image depicts a human face if the pixels in the sample portion correspond to skin tone colors.”

    When companies are spending money to file and pursue claims this junky, it’s a good sign that our patent system is just a bloated corpse, washed ashore and waiting for the crabs and seagulls to take their lunch. Heckuva job.

  44. Pure junk filed by Apple:

    U.S. Patent Application No. 20130137462

    “A non-transitory computer-readable medium having instructions stored thereon, which, when executed by a processor, cause the processor to perform operations comprising:

    receiving a message and geographic location data from a device; processing the message to determine if the message is associated with geographic location data; and presenting the message in a graphical object having a graphical element indicating that the message is associated with the geographic location data, if the message is associated with the geographic location data; obtaining input to the graphical element; and presenting a map display with the geographic location of the device identified, in response to the input to the graphical element.”

    Because nobody ever used a computer to send “geographic location data”, which is like completely different from image data, audio data, face data, birthday data, romance novel data, travel itinerary data, nearest restroom data, breaking news data, best Blu-Ray player sales data, weather data, Hollywood movie data, Polish movie data, or (perhaps the most difficult data of all) copyrighted Polish p0rn movie data.

  45. Your counterarguments on preclusion and other factors are pretty weak, but the bigger problem is trying to identify bad actors while ignoring that the patent procurement process is deeply flawed. Examination is limited and really is not commensurate with the potential economic value of the presumption of validity. The PTO tries, but it’s dealing with a fundamental problem. Most patents are worthless, even if they are inventive, but there’s no way to know if a patent is valuable at the time of filing. How do you make sure the stuff that ends up being valuable is properly vetted without driving up the cost of every patent and creating a massive barrier for filing any applications at all and not protecting inventive activity? Seems to me we need to work on the presumption of validity more than trying to figure out who is acting in bad faith.

  46. To each their own – both sides have their wackos.

    Both sides are politicians – the ultimate in hypocrisy is to think that ‘your side’s’ wackos are any better than the other side’s wackos.

  47. to pretend to write and/or use software

    Oh, the dilemma of which shiny hat to wear. Does Malcolm wear the shiny hat that says “GREAT COMPUTER BRAIN” that implies that the ‘software’ is only pretend, or does he wear the shiny hat that implies the inventions are very much real and they actually DO facilitate the great taking of privacy….(by politicians, btw, from BOTH sides of the aisle)?

    Decisions, decisions…

  48. Imagine that. People actually give up owning lots of shiny things because they are asked to do something repugnant. And then they try to do something to ‘make it right.’

    LOL – yes, Hypocrite, imagine that.

    Imagine that rather than as you do – turn your brain into rot with the cognitive dissonance of staying in a field that you do not believe in, and trying to ‘make it right’ by burning down the system with your QQ’ing on various patent blogs.

    Hold onto those thirty pieces of silver, even as the irony escapes you.

  49. It’s a real mystery why this elite cult

    Ah, the kernel of truth – Malcolm wants the patent world to be returned to its “golden age” when patents were the sport of kings, and ‘but for’ ruled the reason why patents were handed out. Back then it truly was an elite cult. Nowadays, most anyone has a shot at getting a patent.

    How dare they.

    Don’t they know that they need to be a genius? Or at least have a flash of genius?

    /off sarcasm

  50. And those bad actors include some of the leading academics at some of our finer Left institutions (can you say “Agency Capture?”

  51. The answer to each in turn is: Much to the chagrin to every thinking human involved with patents.

    LOL – Jane Fonda would be so proud of you.

  52. 6, the analogy with Wall Street is that the bad actors learned to exploit the system with greater effect and that lead to our financial crisis. NPEs have done the same thing. They have learned to sue many people and use the economies of these lawsuits to cause new problems. Some basic adjustments to the civil procedures would fix most of these problems.

  53. ” As has been pointed out elsewhere, what are all those NSA employees supposed to do? ”

    I thought they sent in FBI agents and SWAT teams.

  54. “This was an inevitable outcome of the so-called Patriot Act and the creation of the gigantic post-9/11 Security Theatre that achieves nothing *except* facilitate the invasion of privacy. ”

    I kno rite?

  55. What’s the percentage of winners amongst all the small companies and individuals that make a deal with trolls? And for every troll seed that makes money, perhaps hundreds of non-infringing companies are extorted.

    Yes, DC, but ordinary people must learn to understand that being threatened by patent trolls is just a cost of doing business in this great country. The worst thing ever would be for some guy who could afford to buy or obtain a patent to fail to recoup the money he spent obtaining the patent. After all, that patent represents innovation and if we try to put any constraints on that guy’s ability to “monetize” his patent, why, we might as well all just go back to the stone age or move to communist China. So just think about this way: every time you get a threatening letter advising you to take a patent license or be sued in court, just pay the license and think of it as a donation towards future American innovation, or at least a donation towards a real nice vacation home for a deserving patent attorney.

  56. his belief in the patent religion was total

    More patents + more trolling of those patents = JOBS FOR EVERYONE (not to mention the totally cool progress in shampoo bottle designs).

    It’s a real mystery why this elite cult has yet to be fully embraced by the masses. Perhaps the answer is more mass mailing of threatening letters.

  57. “There were some technical reasons for that.”

    Right. Just like the “technical reason” that nobody in the history of the world had ever purchased something with one motion before Amazon “invented” the concept.

  58. Seriously though, it shouldn’t take something like this to blow the lid on intelligence matters.

    This was an inevitable outcome of the so-called Patriot Act and the creation of the gigantic post-9/11 Security Theatre that achieves nothing *except* facilitate the invasion of privacy. As has been pointed out elsewhere, what are all those NSA employees supposed to do?

    We have choices. We can, e.g., repair sewers, bridges and other infrastructures, build some trains, and improve the lives of hundreds of millions of average people. Or we can give up our privacy and pay some silly people in Virginia and DC to pretend to write and/or use software that analyzes everyone’s behavior and “identifies” the “likely terrorists”.

  59. Hope he likes Hong Kong. Seriously though, it shouldn’t take something like this to blow the lid on intelligence matters. Why we would even have secret police able, at all, to spy on americans is absurd in the extreme.

  60. “Farney’s defense of MPHJ’s behavior was wholehearted, and his belief in the patent religion was total.”

    The patent religion. Lulz.

  61. ““Every patent lawyer in the country deals with engineers who tend to think that things aren’t patentable. But that isn’t the law. The first one to invent does get a patent.””

    In other words, most modern engineers cannot imagine that we’d have such a hopelessly backward s ar se patent system as we do. Go figure.

  62. ““No one had a system where you did these things—where a scanner, a LAN, a PC, and the application software [were linked] with automatic or one-button scan,” said Farney. “There were some technical reasons for that.””

    In other words, it wasn’t enabled.

  63. “That’s why I encourage people to go to a lawyer.”

    What they need to do is encourage them to go to their congressman.

  64. link to cnn.com

    Snowden is a former technical assistant for the CIA and has been working at the National Security Agency, the U.S. electronic intelligence service, for the past four years, the newspaper reported. He said he walked away from a six-figure job in Hawaii for the computer consulting firm Booz Allen Hamilton and has holed up in a hotel in Hong Kong in preparation for the expected fallout from his disclosures.

    “I’m willing to sacrifice all of that because I can’t in good conscience allow the U.S. government to destroy privacy, Internet freedom and basic liberties for people

    Imagine that. People actually give up owning lots of shiny things because they are asked to do something repugnant. And then they try to do something to “make it right.”

    I wonder … if someone at one of these tr-ll patent firms had a piece of paper or a recording of a meeting where the tr-lls discussed their money-grubbing scheme, could that be used as evidence of “bad faith” in, say, a Vermont state court?

  65. “If you said you hooked it up to the Internet, and in one button, you can scan and e-mail directly out—yes, you have violated the patent that we own,”

    Sounds like they preempt the abstract idea of using one button to scan and email directly. For the love of go d, someone take them to court and get that sht invalidated.

  66. NWPA, take a moment to look over what you wrote there. You seem to believe that what is really going on is trolls exploiting things that can easily be fixed, like the things you mentioned, but which have been problems for decades and have not been solved. You can’t cast blame on those kinds of problems and then throw your hands up and say that we shouldn’t blame the people exploiting them for exploiting them since those kinds of problems are obviously either not going to get fixed, or cannot be so simply fixed.

  67. “I agree about the shell companies. But, then that is part of the general abuse our corporations permit people. This is not an isolated problem.”

    Tell me NWPA, do you know why this hasn’t been solved long ago?

  68. “Do they (patent holders, ANY patent holders), or do they not own valid property (until adjudicated otherwise)?

    Is, or is not, property still fully alienable in this country?

    Is, or is not, licensing negotiations (WITH the inherent possible threat of lawsuit) still a fully recognized, and legal right of property holders?”

    The answer to each in turn is: Much to the chagrin to every thinking human involved with patents.

    “And lastly, in the mindset of ‘free beer,’ ”

    I’m not sure what outlandish “mindset” you are referring to or its characteristics.

    “You are simply wrong in your protests here.”

    I have never protested to have an “unregulated” market. How you have managed to delude yourself otherwise is impressive, as feats of insanity go.

  69. It’s called property.

    Oh noes! – What would Jane do?

    As for the rest of your shiny hat rants…
    /eyeroll

  70. Just try to believe it: the same folks who rally behind such mythological nonsense as “every patent creates a job” and “small businesses can’t compete without patents” will gleefully line up to defend some rich, greedy patent attorneys as they try to shake down hundreds or thousands of domestic businesses, including small businesses, on behalf of some anonymous non-practicing client who may not even reside in the country. It seems shocking only if we forget that these same self-styled champions of “innovation” would also destroy the public school system and shut down public universities if they thought they could get away with it.

  71. link to web.archive.org

    (Jay Rust) Mac is an active member in the Texas Bar Association and the Lawyer-Pilots Bar Association. He also serves on … the Board of Directors for the Douglas MacArthur Academy of Freedom at Howard Payne University.

    Academy of Freedom? More like The Academy of Brainwashing for Future GOP Brownshirts.

  72. The way you blame us

    First the good news McCracken: there is no ‘us.’

    Now the bad news: both sides of the political aisle are every bit as guilty as the other. Hypocrisy is pretending otherwise.

  73. And yes, the ‘whiny’ is too late for Malcolm’s QQ fest (only about what, seven years now, Malcolm?)

  74. That would be pretty funny – if such were done haphazardly (Vermont anyone?)

    Perhaps some good advice would be to actually read some of the case law on the subject and make sure that you do have a case before you go all whiny (too late for DC).

    Paul Morgan had a very lovely post.

  75. Greg,

    If you do open one, you might consider calling it MM’s QQ Fest – and invite Malcolm.

    He needs a friend.

  76. had an interesting conversation with an in-house attorney (let’s call him “Bob”)

    LOL – Why not Robert, Francis or even Keeping It Real?

    How about Left Hand or Right Hand?

    Maybe a combination?

    Clean up when you are done.

    (btw, is throwing away mail like that any better than a screen? Do you use a spam filter with your email? – LOL)

  77. Leave it to Malcolm…

    1) consider the source (arstechnica – ’nuff said).
    2) EVEN considering the source, tell me Mr. Shiny Hat, do you really think the Dems/Liberals are the least bit different? They are politicians.

    Pull your head out.

  78. Nobody could have predicted that the bottom-feedingest patent trolls would be hardcore Repukkke types (or sleeping with them):

    link to arstechnica.com

    you might be interested to know that Farney is married to Marsha Farney, Republican former member of the infamous Texas State Board of Education and (if I remember right) apparent source of this 2010 Republican primary ad denouncing fellow a fellow GOPer for his confirmation votes of judges who had later “voted to legalize homosexual conduct.”

    Marsha has since become a member of the Texas House where, in addition to fighting to elevate the official status of pecan pie, she is a coauthor of the bill that would make it a crime for you to take pictures of polluting businesses with your remote-control helicopter, on which Popular Science and other publications in Ars’s sphere have reported.

    It’s the “big tent” of the modern Republican party: gun nuts, creationists/dominionist, anti-gays/racists, and for some time now we can certainly add patent t–b-ggers (including the trolls and defenders thereof) to the list. Sure, some of these folks will call themselves “libertarian” but they all line up and vote GOP when the dog whistle blows.

  79. How about the irony of Rader encouraging patent attorneys to request that their fellow patent attorneys be sanctioned? Why, the reputation of the entire profession of patent attorney could be tarnished by the forthcoming “plague” of requests for sanctions!

  80. I had an interesting conversation with an in-house attorney (let’s call him “Bob”) last night. He’s not a patent attorney by training, rather a corporate securities type. At some point the conversation turned to patent law and, lo and behold, he revealed that he’d gotten a letter from everyone’s favorite cowboy-hatted bottom-feeders (Farney/Rust et al) alerting him to the patent lawsuit that was coming his way. I asked him what he did with letter. He said he laughed and he chucked the letter in the tr-sh. I laughed, too. He asked me if that was my “legal advice.” I told him my “legal advice” was to throw the letter in the tr-sh and then send a F-calgram (TM) to Farney Daniels.

    Perhaps Rader read this article and finally got a whiff of “reality”, as peddled by his beloved patent lawyers:

    link to arstechnica.com

    “Do you know that if you had bought a notebook—or whatever, the Samsung version of the iPad — you know they could have come and taken those away from you? Actually made you give them all back? Do you know that?” says Rust. “So I mean—it’s interesting how patent law works. They could have actually stopped everybody from using them. Even though you paid your thousand bucks for the thing, they could have taken them away, under patent law.”

    LOL. How about you personally come to my business, Jay, wave your mysterious client’s patent around, and stop me from my using my scanner? And please, please please: wear your cowboy hat. That’s sort of critical for the video I’ll be posting to YouTube immediately afterwards.

  81. Greg: Judge Rader should not have been a co-author of this op-ed piece – it undermines the integrity of the CAFC.

    No more or less than some of the CAFC’s opinions themselves. In re Lowry comes immediately to mind (Rader). So does Ultramercial (Rader wrote it). And Prometheus, of course (Rader signing onto Lourie’s shallow, dissembling nonsense).

    given that judges isolate themselves from public discourse

    When are you going to start a blog with an open comments section, Greg?

  82. But, then that is part of the general abuse our corporations permit people. This is not an isolated problem

    That’s exactly right – step back and think for a moment: this is not “Troll” problem.

    This is everyday stuff being used to advance a particular agenda.

  83. The justification is simple: just like in a real property dispute the defendant could say let’s wait for the results of a survey to know whether or not I really built my building on their land. Don’t make me spend time challenging their title or arguing fraud before we know if I actually am on their property.

  84. A lot of the problem is the judges. They are arrogant and act as if the defendant and plaintiff are arguing children. The judges have tin ears when it comes to simple procedural economies that they could use. And why? Does anyone know besides me???? The reason is that the judges don’t care about the defendant. They only care about their time and not the expense of the defendant. The judges don’t mind piling on expenses to the defendant as long as it cuts down on their time.

    The way to solve these problems are minor adjustments in the way a plaintiff has to bring their case. Just a little bit of thought should make anyone realize that the current system is insane. Why? Does anyone else know besides me???? It is the claim construction. Right now it is total insanity. The plaintiff can play games with claim construction for years. The defendant often doesn’t know what the claim terms mean or are going to be construes as until they are $3 million into the lawsuit.

    You see all we have is “trolls” exploiting problems in the system that can be fixed. For example, if they do have one of these so-call broad claims (which the Lourie court has incorrectly determined is abstract rather than broad), then a claim construction upfront would make invalidity fairly straightforward. Yes, you infringe but here is the meaning of those terms.

    So, my little brained pond buddies–again your little brains have focused on the wrong problem and you seem intent on burning us all down out of selfishness (the commit Posner), greed (the academic integrity violater Lemley), ignorance (IANAE), and spite (Stern.)

  85. I agree about the shell companies. But, then that is part of the general abuse our corporations permit people. This is not an isolated problem.

    As to your other points, if a major element was missing, then two things: (1) why was it so hard to get this to the attention of the judge? From what I’ve seen judges get pretty angry when a plaintiff is pushing a case and wasting the judge’s time; and (2)why was it that it cost the defendant more than the plaintiff prior to judgement?

    What I think is that minor adjustments to the system –for example a good set of local rules– should make it so that the economics are in the right place so that it is not cheaper to pursue a weak claim of infringement than it is to defend against the weak claim. The plaintiff should need to the judgement to get the pay off. The problem I’ve seen is that the plaintiff reuses their documents from previous lawsuits. But, even this, can be dealt with I think with some clever adjustments to local rules.

    One thing that makes defending so expensive is local rules that make all the invalidity and unenforceability claims be made up front. I think the defendant should get a little control of the lawsuit to say —hang on– I don’t infringe and I don’t want to have to prove that the patent is invalid or have to make all the invalidity arguments.

    So, maybe split this into different parts. And, let the defendant pick which part goes first. Infringement or invalidity. That would solve a lot of the imbalance of expense. You know that would be particularly interesting in that it would force the Markman hearing up front for invalidity purposes, and also it would make it hard for plaintiffs to try and use different claim constructions.

    Another point that should be integrated with my thoughts above. Another key to an adjustment rather than a burning down: get the claim construction right and upfront. The claim construction is where all the money is going. The ambiguity in how a claim may be construed creates most of the litigation expense. For example, when making the invalidity contentions it is about 10x (no idea of actual number but I do think it is about an order of magnitude) more expensive to write briefs when the claims can be construed in so many different ways.

    So, I know this is kind of vague, but the key is to adjust the system and not burn it down. Claim construction is the key along with allowing the defendant to split the trial between infringment and invalidity and chose which come first.

    I think from my experience this could make it about 1/4 to 1/8 the cost of defending, and make it so that it would be at least as expensive to prosecute a claim as to defend against a claim.

    And, be real, the problem is claim construction. When you are dealing with 10 terms that each of 2 or 3 different possible meaning that the court may adopt then it makes it so time consuming to make invalidity contentions.

    Typical problem in the U.S. a few practical problems don’t get solved and then everyone trys to exploit the problems created by them (the trolls and the antis) and we end up with a mess (just like in 2008.)

  86. Anon:
    My bias should be showing. It like a bias you might have against bank robbers that does not apply to account holders making legitimate withdrawals.

    Rightly aggrieved patentees make the calculus Dennis suggests: they ensure that they have a reasonable basis to believe that accused infringers actually infringe. If the patentee sues on the lesser calculus, merely ensuring that they have a reasonable basis to believe that the defender will cave, without a reasonable basis to to believe in infringement, then he is a troll, not a rightly aggrieved patentee. So, my bias against trolls should be showing. It is not like I hid my bias.

    Also, rightly aggrieved parties do not just buy a mailing list and sue everyone on the list. One of my clients was sued under just such a program. That was the “extensive analysis” that Dennis was referring to.

    I just finished a case where the accused device was clearly missing a big giant element. The patentee knew it, and so did his attorneys. But they also knew that sanctions were very unlikely, and that the defendant would not be able to afford to defend. The patentee was not “rightly aggrieved.” Luckily, the case was resolved on a motion to dismiss for failure to state a claim (many factors aligned just right to allow this result, and I doubt it will every happen again).

    An NPE is not necessarily a troll, and even practicing entities can engage in trollish behavior. Troll of trollish, I have a bias against it.

    Would be interested in any facts that suggest that trolls or trollish behavior are beneficial. I already accept that litigation by rightly aggrieved patentees is beneficial (isn’t that the underlying assumption of the patent system?).

    Regarding sanctions, you are correct that the obstacles to sanctions apply to legitimate and illegitimate patent plaintiffs. But an aspect of troll behavior is the shell company, which allows the false presentation of the troll as a little company being cheated, an isolated the principals from any responsibility. When an NPE is part of a cluster of 1100 shell companies (part of the “burden” born by plaintiffs!), and has no assets, and no way to pay sanctions, that is another sign that it is not a rightly aggrieved patentee.

  87. II,

    That’s the second hint that something is ‘up’ with Hricik…

    Can you fill out the picture with any details?

  88. 6,

    Do they (patent holders, ANY patent holders), or do they not own valid property (until adjudicated otherwise)?

    Is, or is not, property still fully alienable in this country?

    Is, or is not, licensing negotiations (WITH the inherent possible threat of lawsuit) still a fully recognized, and legal right of property holders?

    And lastly, in the mindset of ‘free beer,’ the market does in fact include the legal structures under which the market is governed. “Free market” has NEVER meant unregulated market in this country – there has always been a rule of law that markets have been subject to and market value is evaluated under. You are simply wrong in your protests here.

  89. Greg,

    I hear you, but consider what I posted on the other thread: Rader is taking Chien’s B$ as a worst case scenario, and then saying that even with the worst case, no new laws need to be written for this ‘menace.’

    Anyone,

    Who coined the term “troll,” and more importantly, why?

  90. DC,

    Your bias is showing.

    Replace the word ‘troll‘ with ‘rightly aggrieved patentee,’ and all that you said still applies.

    Your argument is not against ‘trolls.’

  91. “However, the Op-Ed fails to mention the great risk of preclusion associated with each lawsuit.”
    Dennis, do you have any idea how expensive it is to prove invalidity? It’s just silly to hypothesize a great risk of preclusion.

    “the organization of a patent enforcement campaign is not a simple endeavor, but rather an expensive process that involves extensive analysis of potential patent rights, an exhaustive search for financial backing and litigation counsel”
    Dennis, do you have any idea how cheaply you can buy a mailing list from IEEE, then sue everyone on the list? Extensive analysis of potential patent rights? Who cares: the plan is, litigation will never get that far, so who cares if all of the accused devices are missing elements of the claims. Even if some 200k per year “vice president” spends a few days assessing this risk of getting caught and getting sanctioned, it’s chump change.

    ” ensure that the patentee has a reasonable basis to believe that any accused infringers actually is infringing”
    Dennis, have you ever defended a patent case? All trolls need is a reasonable basis to believe that an accused defender will cave. If you have ever sought sanctions for an unreasonable assertion, or for inequitable conduct, you would realize that, for even simple technologies, the chance of getting sanctioned is tiny. For more complex technologies, it is nearly impossible.

    “the reality that the rise of patent enforcement and patent licensing companies has revived the market for buying and selling of patents from small companies and individuals in a way that allows those entities to actually monetize their innovations”
    Dennis, have you met an individual or small entity that has made money in these schemes? NPR reported that IP Ventures could not identify a single independent inventor that has made money through IP Ventures. What’s the percentage of winners amongst all the small companies and individuals that make a deal with trolls? And for every troll seed that makes money, perhaps hundreds of non-infringing companies are extorted.

    An exhaustive search for litigation counsel? Seriously?

    “courts should exercise their discretion to deal harshly with litigation misconduct both through Rule 11 and Section 285″
    Dennis, do you have any idea how hard it is to get a judge issue sanctions. Rule 11 and Section 285 are only applied when you piss off the judge. Lie through your teeth, submit perjured declarations, hide evidence that someone other than the inventor invented the patented invention, and you are pretty much immunized from sanctions so long as you are polite to the judge. As long as you lie with civility, you are safe. For the typical defendant, Rule 11 and Section 285 are unavailable. They are available until you win, which can cost millions, and they aren’t available unless you ask, which can cost tens of thousands of dollars. And even if a shell company is sanctioned, what assets does it have? (I wonder if any attorneys have ever been sanctioned?).

    As you can tell, I think you are to conciliatory regarding the risks and costs assumed by trolls and the benefits they provide. Defend against a couple, and you will quickly learn otherwise.

  92. “Hyperbole” is another word for “sensationalism”, and Judge Rader’s op-ed piece is filled with unsubstantiated, sensational opinions, such as saying trolls cost tens of billions of costs each year, a fictional number that Bessen invented to be …. sensational … to be hyperbolic, as you say.

    So apparently Judge Rader forgot Canon 4 of the federal judicial code of ethics that says that federal judges should avoid public displays of sensationalism, or hyperbole. Judge Rader should not have been a co-author of this op-ed piece – it undermines the integrity of the CAFC.

    The op-ed piece is reasonable hard evidence for a patent owner before the CAFC to ask that Judge Rader recuse himself, in light of his published sensational biases.

    Consultant law professors can fill the op-ed columns which such arguments little supported by reality. But federal judge should be such a co-author, especially when it conflicts with their canon of ethics.

    And given that judges isolate themselves from public discourse (anyone know Judge Rader’s email address so I can interact with him about his op-ed piece? Of course not), they should not make use of the little editorial space devoted to public discourse. That is, I have no interest in Judge Rader’s opinion (other than as evidence in a recusal motion) if he has no interest in my opinion, or any of your opinions.

  93. “What I don’t understand is: the editorial says that trolls are trying to extract fees beyond what the invention is worth — BUT those fees help DEFINE what the invention is worth! ”

    Kip you’ve fallen into the old “but but but the extortion part of the price of the patent on society is part of the VALUE” thinking. Sorry bro. Doesn’t work that way.

    “The editorial authors write as if there are two measures of value: the market price, and some other, vague, more accurate measurement. ”

    There are.

    “And the problem, they say, is that the market value is too high, in comparison to this other measurement value.”

    You’re starting to catch on, maybe one day you’ll grow up a bit :)

    “But that makes no sense. ”

    It’s because you’re underdeveloped bro.

    ” There is only one market, which provides the only consistent and precise measure of value (to my knowledge).”

    That’s why I’m telling you your knowledge is rather lacking.

    “When Congress changes the laws, so that the market rewards inventions more, or less, then those inventions become more or less valuable.”

    What is funny is that you actually believe that changes in the law somehow make inventions more or less valuable is lolable brosef. Ability to extort money is not “value”.

    ” But, while the laws are fixed, there is no separate measure of value beyond what the patentee can extract in licensing and litigation, etc. ”

    Really? Think that over in your head again bro.

    “If the troll can go around suing people, and getting lots of money, that means that the patent really *is* valuable.”

    No, it means that their ability to extort people is high.

    ” I don’t know of any other reliable, scientific way of measuring value to prove that this value is “too high” and should be lower. ”

    Your “way” of measuring “value” is not scientific at all brosef :(

    “strikes me are fundamentally confused about economics and price mechanisms.”

    Trust me, between you and them they are massively less confused.

  94. 1) Create patent troll shell company. Sell it patent rights. Set up founders of company as employees.

    2(a) Upon winning a lawsuit, pay all proceeds (after contingency attorneys’ fees) to employees under employment contracts. Generally, hold the assets of the shell company to nearly zero.

    2(b) Upon losing a lawsuit and suffering a order to pay defendants’ legal expenses, declare bankruptcy and close up shop.

    2(c) Because “greater court latitude to award attorneys’ fees” cuts both ways, thus threatening defendants with an award of plaintiff’s attorneys’ fees (while said plaintiffs are largely immunized as a result of 2(b)), recognize that the risks of litigation for defendants are now even larger. Consequently, raise value of licensing demands from defendants, relying on the increased financial pressure to settle.

    3) Profit.

  95. The information asymmetry aspect arises in the context of the buying and not simply the assertion of patents. This means that certain NPEs and those they benefit (such as investors) are able to remove the threat posed by certain patents at a lower cost than if they themselves had to negotiate with the patent owner. Perhaps what we should really be pushing for is simply fuller disclosure of ownership and beneficiaries on the buying side, and lower cost options for challenging validity on the assertion side.

    Readers might be interested in a previous Patently-O posting on this topic.

    link to patentlyo.com

  96. Upon review, I fail to see the “somewhat hypocritical” aspect, Paul.

    The discussion quite frankly does a nice job pointing out the law (the patent law) involved.

    Perhaps Leopold will not shoot arrows in your direction (you lack that critical ‘anon said’ factor), but he might want to contemplate the (patent) law involved as discussed.

  97. I’ve “monetized” really, really bad patents on behalf of “innovators” without great difficulty.

    …so, you have done something that you think shouldn’t have been done, that you thought was perhaps (knowingly) invalid…? LOL – and you have the audacity to QQ – for the very conduct you admit to?

    Get into a line of work you can believe in.

    This cancerous rot that infests you, poisons everything about you. Attacking the system to apparently ‘atone’ for your own deeds is simply wrong beyond the pale.

  98. Dead leads – yes. I’ve analyzed thousands of highly technical software products to find infringement on a few hundred of them. That is easily thousands of hours of work.

    Many of the products morph, merge into other products or are acquired by another company, and that restarts the work, so the hundreds that are identified are worked over again and again.

    I’ve also analyzed thousands of documents in an attempt to find prior art.

    Of course, you have to identify what you are going to analyze before it can be analyzed. Identification requires hundreds or thousands of hours of searching and going down multiple rat holes before finding the right information.

    Most NPE’s hire a technical expert and burn a lot of cash before they ever launch a suit… unless, of course, they have an obsessed and indefatigable inventor who does it for them. In most cases, they don’t.

  99. LOL – gibberish…?

    Seems you are forgetting who posted the very thoughts repeated by the good Chief Judge there, Malcolm.

    Come and visit this planet again real soon, OK, pumpkin?

    Attaboy.

  100. Maybe that wasn’t the point of the article.

    Sometimes articles DO focus on a particular point to the exclusion of others.

  101. From the King of QQ and insults, “for the same reasons given by LB up thread” is so ironic, that it would pass for for humor, except you were attempting to be serious.

    How do you stand to be such a putz, Malcolm?

  102. From the Op-Ed by Judge Rader et al.

    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.

    Funny, Judge Rader doesn’t seem terribly concerned about pre-emption. I wonder why?

    Dang, this coffee tastes good.

  103. Gotta respect those Texas juries, though. Seriously, if you don’t respect them, they might shoot you and it would probably be legal.

  104. Spammy McFilter: “(2) asymmetries between its business model and that of its target(s)”

    That’s a feature, not a bug.

    No doubt it’s a “feature” from the perspective of, e.g., Superskummy Patent Trolls from Texas, with whom you seem to identify or, at least, worship from your mom’s basement. It’s highly doubtful that the small businesses who get caught in the troll’s nets feel the same way you do, though. But who cares about them? If they aren’t playing at the Patent Casino, they aren’t “actual entrepeneurs” anyway.

    That is precisly the mechanism to destroy patent thickets and the “nuclear” option.

    Please continue with your gibberish spewing, Dumpty. You’ll get no further responses from me, for the same reasons given by LB upthread.

  105. (2) asymmetries between its business model and that of its target(s)

    That’s a feature, not a bug. That is precisly the mechanism to destroy patent thickets and the “nuclear” option.

    Those are good things – unless you are from the Right (or are dissembling from the Left).

  106. Exactly. At that point, the patent may as well be a piece of paper with nothing more than a seven-digit number on it.

  107. I was bothered more by Chief Judge Rader’s public NYT Opinion Page criticism of D.C. judges for very rarely awarding troll suit defendants their attorney fee costs under 35 U.S.C. 285,* as preventing a fix for the bad trolls problem. I think that is somewhat hypocritical because the Fed. Cir. itself has made that more difficult to do and be sustained. E.g.,:
    Requiring proof that the litigation was “objectively baseless” and that the “infringement allegations [were] such that no reasonable litigant could reasonably expect success on the merits” Checkpoint Systems Inc. v. All-Tag Security S.A., Case No. 12-1085 (Fed. Cir., Mar. 25, 2013). Plus proof that “the litigation [was] brought in subjective bad faith” per the legal framework recently articulated by the Court in Highmark v. Allcare Health Mgmt.
    —-
    *“35 U.S.C. 285 – Attorney fees
    The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

  108. That entire concept, which forms a basis for the entire editorial, strikes me are fundamentally confused about economics and price mechanisms.

    Spoken like a proud graduate of Richard Epstein’s Econ 101 class. The irony couldn’t be richer.

    If the troll can go around suing people, and getting lots of money, that means that the patent really *is* valuable.

    No doubt it’s “valuable” to the troll. The point is that, by maximally exploiting (1) existing weaknesses in the system and (2) asymmetries between its business model and that of its target(s), the patent assertion entity extracts money from its victims that is vastly disproportionate to the alleged “contribution” to “progress” represented by the patent.

    Big Texas Bubba can buy an AK887 fake handgun from Amazon for five dollars. That’s the “market price”. That price doesn’t change just because Big Texas Bubba goes to Vermont and uses the gun to rob some people of a few thousand dollars (believing, of course, that the money was stolen from him).

  109. note the pharma plug…

    …where have we seen such selective views before?

    Anyone seen Francis around?

  110. That’s insane. You think companies willing to go to the mattresses don’t do a thorough pre-filing investigation? That’s nutty.

  111. “Under the law, each and every defendant has the opportunity to fully challenge the patent before either a judge or jury and, if the patent is ever found invalid then that ruling will preclude the patentee from ever enforcing the same patent rights again against any party.”

    But there’s a huge cost to following through with that threat. It makes economic sense for most to just settle for a nuisance amount than it is to challenge the validity of the patent. That’s the crux of the problem.

    The maximum exposure a NPE would ever face is its sunk costs and its own time.

    “expensive process that involves extensive analysis of potential patent rights, an exhaustive search for financial backing and litigation counsel, and a one-business-at-a-time analysis to ensure that the patentee has a reasonable basis to believe that any accused infringers actually is infringing. ”

    That’s not really the way the game is played. That’s the way the good guys play the game. Why go through that analysis at all? Sanctions are so incredibly unlikely, settlement is cheaper, and the worst patents are the broad-reading and likely invalid patents. That means infringement is trivial.

    What’s more, the pleading standard is so low that it doesn’t even require the pleading of a product that allegedly infringes.

  112. And the price of tea in China is….

    The patent right is a negative right, Leopold, not an item that can drive market capture as you are implying. You are again being too clever by half. The fantasy is yours.

    But please, before you ‘not answer me again,’ are you sure you don’t want to respond to my actual request at 3:46? You rather avoided that.

    Call you names? Well, let’s see if you act like a d1ck again. If you don’t, then you have nothing to worry about, do you?

  113. Gee, look who’s here.

    I already gave you one important example of market failure – it can cost hundreds of thousands of dollars, or more, just to resolve the question of whether a patent is valid. That’s true even if you’re fairly certain that it’s invalid. If you don’t like me calling that an information failure, then fine. But it’s certainly a market failure. Another problem with Kip’s market-based theory of pricing is that patent rights are, by definition, a monopoly right to exclude. All of this means that Kip’s notion that there are classic market-clearing prices for patent rights is a fantasy.

    In the hopes that you won’t destroy this thread, as you have done with countless others, I won’t be responding to any further posts from you on this topic. So have at it. Perhaps you’d like to call me a name or two?

  114. I think the problem is that the costs of litigation can by sufficiently high that businesses are willing to license patents at far above their actual worth instead of getting sued. Its the same calculus that has businesses take out license on patents that are later found obvious or otherwise void in court – discovery and related fees exceed the cost of the license, regardless of the actual value of the patent.

    Consider the patent for putting a scanner on a network – a NPE is sending demand letters to small businesses for asking for $1000 per user for having such. No one thinks the patent is actually worth that, but the cost of defending against the accusation will be far greater than that (for a small company), so it makes economic sense to pay up.

  115. Exactly how is it information failure when patents are public knowledge?

    Oh wait, you need to know who in particular owns a certain patent…

    Tell me again why.

    You are reaching WAY beyond the pale with this market imperfection ivory tower CRP, Leopold.

  116. Faced with that information failure, the rational actor pays a settlement.

    To finish my thought, this means that the revenues extracted by the troll need not bear any relationship to the value of the “invention.” They are more closely related to the costs of litigation.

  117. That entire concept, which forms a basis for the entire editorial, strikes me are fundamentally confused about economics and price mechanisms.

    Your comment, Kip, seems to ignore the existence of market imperfections. Sure, in a market where there are no information failures or information asymmetries, what you say is absolutely true. But the whole basis of the troll industry is a massive information failure – it can cost upwards of a million dollars to resolve the question of whether the patent is worth zero or something more than zero. Faced with that information failure, the rational actor pays a settlement.

  118. What I don’t understand is: the editorial says that trolls are trying to extract fees beyond what the invention is worth — BUT those fees help DEFINE what the invention is worth! It’s just completely circular logic. The editorial authors write as if there are two measures of value: the market price, and some other, vague, more accurate measurement. And the problem, they say, is that the market value is too high, in comparison to this other measurement value. But that makes no sense. There is only one market, which provides the only consistent and precise measure of value (to my knowledge). When Congress changes the laws, so that the market rewards inventions more, or less, then those inventions become more or less valuable. But, while the laws are fixed, there is no separate measure of value beyond what the patentee can extract in licensing and litigation, etc. If the troll can go around suing people, and getting lots of money, that means that the patent really *is* valuable. I don’t know of any other reliable, scientific way of measuring value to prove that this value is “too high” and should be lower. That entire concept, which forms a basis for the entire editorial, strikes me are fundamentally confused about economics and price mechanisms.

  119. Dennis: the Op-Ed fails to mention the great risk of preclusion associated with each lawsuit. Under the law, each and every defendant has the opportunity to fully challenge the patent before either a judge or jury and, if the patent is ever found invalid then that ruling will preclude the patentee from ever enforcing the same patent rights again against any party.

    While we’re at it, let’s mention (1) the presumption of validity and the burdens that presumption puts on the defendant; and (2) the fact that “under the law” a troll can rely on any licenses that were taken as evidence of non-obviousness (absurd, but true).

    enforcing patents is an expensive proposition and the notion that a patentee only risks $350 to file a lawsuit is ridiculous.

    In fact, acquiring (e.g., applying for) and maintaining patents is an absurdly “expensive proposition” for nearly every person in this country. But certainly rich people can afford to do this. You know, rich people like an experienced patent attorney or, better yet, a whole team of them. People in the top 5% or 1% income bracket, pooling their wealth and maybe even taking some money from “investors” gambling that their scheme to milk money from Chrissie’s Cupcake and a few hundred or thousand other small businesses is going to succeed.

    A NPE has three options: (1) do nothing with the patent and let other people infringe to their heart’s content; (2) seek licenses for the patent; and (3) litigate the patent. Patent trolls exist to assert patents so option (1) never applies. And unless you believe that trolls are irrational actors, the “risk” of losing the patent (which is otherwise worthless to the troll) during “enforcement” was presumably taken into account when the patent was acquired.

    the rise of patent enforcement and patent licensing companies has revived the market for buying and selling of patents from small companies and individuals in a way that allows those entities to actually monetize their innovations.

    Talk about hyperbole. Seriously? Are you suggesting that prior to the rise of trolls, small companies and individuals inventors were unable to “monetize their innovations”? Sounds like it. That seems odd given the many many many thousands of applications filed and obtained by such entities prior to the rise of patent trolls. What were those innovators doing with all those patents, Dennis? Here’s a fact for you: if you have a valid patent, you can “monetize” it without great difficulty. How do I know that? Because like many patent attorneys who’ve been around the block, I’ve “monetized” really, really bad patents on behalf of “innovators” without great difficulty. Does it cost serious money to “monetize” a really bad patent? Of course it does, if you want serious “monetization”. And that’s what the typical (read: “every”) non-practicing exploiter of the system wants in exchange for all that “hard work” of insulting PTO Examiners.

    Rather than “actually monetize”, what you probably meant to say was something very trivial and obvious: the rise of patent trolls has made it easier for the lowest quality “innovators” to monetize their “inventions”. And that’s important when the lowest quality “innovations” are being patented in higher numbers than ever before in the history of this country.

    We can quibble all day, if you like, about low-quality “innovations” and how to assess them. But you might want to just walk to the nearest small business and ask the owners and the customers there what they think about broad patents on methods of, say, sending data to an email account, “making a pattern on a screen with your finger”, or “identifying availability of [insert name of some item sold by the business] using a computer” and how they would feel about being threatened with a lawsuit for doing such things. That’s where we’re at.

    courts should exercise their discretion to deal harshly with litigation misconduct both through Rule 11 and Section 285

    Sure, courts should do that. Are concerned targets (including pretty much anybody using a computer) supposed to wait for that to actually happen to such a degree that the patent trolls feel the chill? Because my suspicion is that these characters are pretty hot to “monetize” their j–k by any means possible and they aren’t going to cool down anytime soon.

  120. Few litigating NPEs ever contact their targets prior to filing suit–they can’t afford to be DJ’d.

    I also disagree with Dennis’ belief that anyone* (NPE, big corporations, or otherwise) conducts much due diligence before filing suit. Unless you count 15 minutes reading the claims and a quick scan of a target’s web page.

    * pharma excluded perhaps

  121. I agree completely, Robert. There are NPEs enforcing their patents and there are trolls. These are overlapping groups. Judge Rader is talking about the latter.

  122. Rader’s on a roll between this recognition of the distinction between bad actors and assertion entities and his “what in the world are you guys thinking” opinion in CLS Bank.

  123. “In a typical case, the would-be troll follows thousands of dead leads and failed negotiations before ever filing a single infringement lawsuit. ”

    I’m sorry, is there a basis for this?

    Thousands of dead leads and failed negotiations, per single suit filed?

    Really?

  124. I give the judge their due for beginning to try and distinguish between the bad actors and assertion entities operating on behalf of patentees who can’t afford to enforce their rights themselves.

    I find the bit about patent holders who stretch and twist the meaning of the claims beyond all reasonable scope to be compelling. There’s a distinct difference between shoehorning an obvious design around attempt into the language of the claims and taking a vague claim to its limits to assert against someone doing something that’s clearly outside the scope of what was contemplated. That second group should be deterred, but not the detriment of the assertion entities providing a valuable service to those unable to assert their patent rights themseleves.

  125. “Op-Ed fails to mention the great risk of preclusion associated with each lawsuit. Under the law, each and every defendant has the opportunity to fully challenge the patent before either a judge or jury and, if the patent is ever found invalid then that ruling will preclude the patentee from ever enforcing the same patent rights again against any party. ”

    Hey, that’s why you sue 472 Mom-Pop shops. None of them carries a realistic risk of (let alone “the great risk of”) fully challenging the validity in court.

    And if one of them does stand up and fight, and the plaintiff dismisses with prejudice?

  126. Undoubtedly, reputable companies conduct all the expensive preparatory work you describe. However, not all companies are reputable. A blanket defence of all patent infringement and licensing companies which fails to adequately recognise the disreputable companies giving the sector a bad name is less than credible – and relegating acknowledgement of litigation misconduct to a cursory final paragraph is not really adequate recognition.

    The disreputable actors aren’t deterred by the possibility of preclusion because they pick targets who can’t afford to challenge the patent in court, or offer to settle for significantly less than the likely cost of a court case. Even if they do lose a court case eventually, they get to keep all the settlement fees previously collected on that patent, so can still end up with a net profit.

  127. Just curious, mostly. Didn’t Judge Rader refer to the good Mr. Hricik’s one-time endeavor as being a patent-marking troll?

  128. The preclusion issue isn’t cut and dry — an NPE’s early claim construction against a small, less savvy defendant might be valuable in later larger cases.

    For some, this might counter-balance the Blonder-Tongue validity preclusion issue.

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