Supreme Court on Fee Shifting – A review of Oral Arguments in Octane Fitness and Highmark

By Dennis Crouch

Octane Fitness v. Icon Health & Fitness (SCOTUS 2014); Highmark v. Allcare Health Mgmt. (SCOTUS 2014) (Transcripts: HighmarkTranscriptOctaneTranscript)

Today, the Supreme Court heard oral arguments in the paired fee-shifting cases of Octane Fitness and Highmark that focus on the proper standard for an exceptional case finding by a district court under 35 U.S.C. § 285 and the proper standard of review on appeal. In Octane Fitness, petitioner asks the Court to lower the standard for proving an exceptional case. In Highmark, petitioner asks for deference to lower court exceptional case findings. In both cases, the Federal Circuit sided with the patentees who lost their infringement actions. In Octane Fitness, the Federal Circuit confirmed that the case was not “exceptional” while in Highmark, a divided Federal Circuit reversed an exceptional case finding based upon a de novo appellate review that gave no deference to the district court’s finding that the lawsuit was objectively baseless.

In the U.S., each party to litigation ordinarily pays its own attorney fees regardless of the case outcome. In the patent litigation context, this changes as 35 U.S.C. § 285 provides an avenue for awarding “reasonable attorney fees to the prevailing party” in “exceptional cases” at the discretion of the lower court. However, discretion only goes so far, and the Federal Circuit’s standard for classifying an “exceptional case” has been critiqued as too rigid, tough, and pro-patentee.

The first case heard today was Octane Fitness. Arguing on behalf of Octane, Rudy Telscher’s main focus was on moving the away from the “objectively baseless” standard to something that is easier for a successful defendant to prove. However, the debate quickly descended into a theoretical discussion of the proper adjective – moving between whether the case was “meritless;” “objectively meritless;” “without substantial merit;” “low likelihood of success;” “unreasonable;” “unreasonably weak;” “a little bit lower than [the Rule 11] standard” and “something more than frivolous.”

Justice Scalia helped cut through the problem somewhat by noting that really what Octane is seeking is a totality of the circumstances test:

JUSTICE SCALIA: Mr. Telscher, it occurs to me that you really cannot answer the question of what adjectives should be attached to “meritless.” And the reason you can’t is, since it is a totality of the circumstances test, that is only one factor and it doesn’t have to be an absolute degree of meritlessness. Even in a I assume you would say that even in a very close case, if there has been outrageous litigation abuse by the other side, the court would be able to say: My goodness, I’ve never seen lawyers behave like this. You’re going to pay the attorneys’ fees for the other side. Couldn’t the court do that?

MR. TELSCHER: That’s absolutely correct, your Honor.

JUSTICE SCALIA: So then how can we possibly define “meritless”? We can’t, because it goes up and down, even in a case where it’s a close case. It could still be exceptional.

MR. TELSCHER: It’s the degree of the unreasonable nature of the case as one factor.

And, in this sense, Octane agrees with the US Government that fees should be awardable whenever the totality of the circumstances indicates that fees are “necessary to prevent gross injustice.”

In a colloquy with Justice Kagan, Octane identified what it sees as a non-exhaustive list of factors to be considered, including (1) whether the case is meritless; (2) bad faith; (3) litigation misconduct; (4) other equitable considerations; (5) anything else that “bears on the gross injustice and uncommon nature of the case.” In addition, Octane argued that the fact that the patentee “never made a product under [the] patent” should be considered as well. Arguing for the U.S. Government, Roman Martinez added that advancement of “objectively unreasonable legal arguments” should also be considered as a factor and, in its own, sufficient for a finding of exceptional case. In his summary, Mr. Telscher did a nice job of summing this up as saying that the exceptional case question is really about “how extreme” the conduct needs to be before it is considered exceptional.

One difficulty is that the Justices had difficulty squaring this laundry list of potentially sufficient factors with the legislative history that the statute is designed to prevent “gross injustice.” In the eyes of the justices (or at least in their questions), gross injustice seems to suggest something more serious than these more mundane factors.  Although both parties and the US Government agree that the “exceptional case” standard should follow a gross injustice standard, Justice Scalia offered a predictable negative outlook on that standard since its establishment is largely based upon legislative history.

Ordinarily, the Supreme Court gives no deference to appellate court decisions. However, here Chief Justice Roberts jumped into the debate to consider the role of deference to the appellate panel in this case based upon the congressionally mandated role of the Federal Circuit in unifying patent law.

CHIEF JUSTICE ROBERTS: [W]hy shouldn’t we give some deference to the decision of the Court that was set up to develop patent law in a uniform way? They have a much better idea than we do about the consequences of these fee awards in particular cases. And since we’re just as Justice Kennedy pointed out dealing with adjectives, you know meritless, frivolous, exceptional why don’t give some deference to their judgment?

MR. TELSCHER: Well, I think we need to look at the basis of the judgment.

On that point, the Government responded favorably to the idea that the Federal Circuit could be given deference on some issues, but the internal inconsistencies on this particular issue mean that deference doesn’t make sense here:

MR. MARTINEZ: I think if the Federal Circuit had had a consistent view over its history or if the Federal Circuit were not internally divided on this issue, that may be a consideration. Deference might be more appropriate. But here there is no consistent history and the Federal Circuit, as we’ve seen in Kilopass, is divided.

Here, Chief Justice Roberts may be considering whether the Federal Circuit should be thought of more like an expert agency who would receive some amount of deference for its rulemaking (i.e., precedential decisions).

In the oral arguments, Justice Alito attempted to focus in on exceptionality and noted that, for most district court judges, all patent cases are unusual and – as such – may have no basis for determining whether a particular case is exceptional as compared with the ordinary patent case.

An important issue in the Octane fitness case that was only subtly discussed is also whether clear-and-convincing evidence is required to prove an exceptional case or is a preponderance of the evidence sufficient.

Carter Phillips argued on behalf of the respondent here; arguing that – absent other misconduct – that the case must have been “objectively baseless” in order to be deemed exceptional under Section 285.

One interesting aspect of the decision focused on the applicability of the Supreme Court’s decision in Prof’l Real Estate Investors v. Columbia Pictures Indus.,508 U.S. 49 (1993) and Noerr immunity.

MR. PHILLIPS: Well, I think you could argue that there is at least a First Amendment concern that’s in here;

CHIEF JUSTICE ROBERTS: First Amendment concern, what, to bring a patent case?

MR. PHILLIPS: Well, access to the courts, access to the courts. Any time you talk about imposing multimillion dollar fee awards at the end of the litigation, particularly if you do it on a fairly arbitrary basis.

JUSTICE SCALIA: Do you think Congress could not require the loser to pay in all cases?

MR. PHILLIPS: Well, I have no doubt that Congress could well, I’m not sure about in all cases.

JUSTICE SCALIA: I mean, if it can do that, there’s certainly no First Amendment problem.

MR. PHILLIPS: Well, I’m not sure I concede that in all cases. I do think in the run of the mill cases, but when you’re talking about a situation where the assertion is that the conduct of the litigation, the bringing of the litigation itself is inappropriate

JUSTICE SCALIA: That’s an English rule. It used to be our rule. I don’t see how you can possibly say that it’s unconstitutional to make the loser pay.

JUSTICE KENNEDY: This is not your best argument. (Laughter.)

MR. PHILLIPS: It is not my best argument, I appreciate that.

On the other hand, if you if you go back and look at Christiansburg. In that case the Court also didn’t treat it as a First Amendment issue, but it still recognizes an important policy of trying not to have too much interference with access to

When Justice Breyer entered the argument, he implicitly pushed Mr. Phillips to recognize that the USPTO has issued many bad patents but that the associated presumption of validity of the patents is a setup that makes it very hard to show a case is objectively baseless even when it is pretty clear that a patent is invalid. Philips responded simply that the filing of a frivolous claim should be seen as objectively baseless and that the present case was not such a case.

Phillips also gave his talk on how the “patent troll” debate is really nonsense and that there is nothing to see here:

MR. PHILLIPS: First of all, as I say, the plaintiff this you know, there’s a reason why you don’t see advertisements on television when Saiontz & Kirk says, If you think your patent has been infringed, call us. Why? Because there’s not a long line of people who can bring plaintiffs’ patent cases. They are expensive to litigate, and the ultimate effect and you have to get an expert, and at the end, you put your patent into validity [risk].

Apart from that, however, the court did not appear to focus on the “troll” issue in any depth.

= = = =

The Highmark argument came immediately following that of Octane Fitness. The second cases focuses on the standard of appellate review for the objectively baseless question and so, obviously depends upon the outcome in Octane Fitness. Certainly, if the court moves toward a “totality of the circumstances test” then more deference would be given to district court judges in their determination. That makes Highmark the trailing decision here and likely less important.

Neal Katyal argued on behalf of petitioner Highmark who is asking the court to give deference. Katyal is a former Acting Solicitor General of the US and also brother to Fordham Law School IP Professor Sonya Katyal. The basic argument that whether or not the party’s position is reasonable is a question of fact that, once decided, should be given deference on appeal. The US Solicitor’s office also supported Highmark here arguing for deference. Don Dunner argued on behalf of the respondent here

84 thoughts on “Supreme Court on Fee Shifting – A review of Oral Arguments in Octane Fitness and Highmark

  1. The summary provided by the SCOTUS Blog is a good read. link to scotusblog.com

    The court also was completely disinterested in any prior cases — none were controlling.

    I think they are going to say that the gross injustice requires a showing, absent other litigation abuse,” of objective baselessness. I think they will use of the first part of the Noerr-Pennington test:

    “The Supreme Court has articulated a two-part test to determine the existence of “sham” litigation. First, such suits must be “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.”

    On the standard of appeal, the court probably will side with the district court and allow the Feds to overturn only upon a showing of abuse of discretion.

    Whatever they decide here may also impact awards of attorneys fees for willful infringement.

  2. Ordinarily, the Supreme Court gives no deference to appellate court decisions. However, here Chief Justice Roberts jumped into the debate to consider the role of deference to the appellate panel in this case based upon the congressionally mandated role of the Federal Circuit in unifying patent law.

    I thought that the Chief’s remarks were the most interesting part of the argument, although this line of thinking was only briefly discussed. I have long thought that the same logic underlying Chevron deference (Congress has committed the determination of this or that standard to agency X, so X’s determination should control unless it is plainly at odds with the statutory text) applies with equal force to the CAFC. Congress has tasked the CAFC with the job of interpreting patent law, so the CAFC’s rulings should be given deference unless clearly inconsistent with the statutory text.

    Unfortunately, this would be a terrible case for the SCotUS to adopt this maxim. I wish they were thinking like this back when they were handling KSR, or Bilski, or Prometheus. As noted already, however, the CAFC is internally divided on § 285, so it does not make sense to “defer” to them on this point.

    1. I like your thoughts and share your concern that any such deference may in fact be ‘too late.’

      To see that this is true, one only has to ask Alice.

      1. Of course, they should not have two lines of authority on a point of law, but it has happened in the past. Think of the disparity between Scripps Clinic v. Genentech, 927 F.2d 1565 (Fed.Cir.1991) and Atlantic Thermoplastics v. Faytex Corp., 970 F.2d 834 (Fed.Cir.1992). It was not until Abbott Labs v. Sandoz, 566 F.3d 1282 (Fed. Cir. 2009) (en banc) that the “schism” was resolved. As Judge Rich noted (Atlantic Thermoplastics v. Faytex Corp., 974 F.2d 1279, 1281 (Fed. Cir. 1992)) “where there are conflicting precedents, the earlier precedent controls.”

        Here, though, it is even worse. Some judges in Kilopass are suggesting that there is a discrepancy in the caselaw, and others insist that there is none. Therefore, it is hard for a District Court judge to know even whether Judge Rich’s rule applies here. It would be all for the best if the Supreme Court would step in and bring clarity here, even if I like the Chief’s idea of deference to the CAFC as a general rule in other cases.

        1. where there are conflicting precedents, the earlier precedent controls.

          To wit: en banc Alappat – reconfirmed as controlling law in the very first decision on the topic by the CAFC post-Bilski

          But as Ned himself has pointed out, there is open revolt against the law led by the executive branch, academics and certain members of the judiciary.

        2. G, just as Judge Rich said, if there is a conflict, the earlier case controls.

          But that does not stop some Federal Circuit judges to continue to ignore earlier precedent and even to resist en banc clarification.

          There was a recent case involving inherency where Judge Rader ruled that a reference, mind you a reference, and not a public use, could be anticipatory, emphasize anticipatory, based upon inherency if people of ordinary skill in the art could say, based upon knowledge gained after the filing date of the patent in suit, that a process was necessarily practiced or a product was necessarily produced.

          There was an earlier case written by Judge Newman that had insisted that the knowledge be available at or before the time of the invention.

          When the discrepancy between two cases was argued to the Federal Circuit to take the case en banc, they did not take it en banc. Judge Lurie dissented, saying the second panel decision had to be wrong, because it was so contrary to prevailing case law that it simply could not be correct.

          But there you have it. A panel decision “overrules” a prior panel decision and Federal Circuit refuses to take it en banc. What is the law?

    2. GD,

      Ditto. First time I’ve heard any of these Justices from Our Judicial Mount Olympus acknowledge what Congress viewed as the Federal Circuit’s role in patent law jurisprudence when this court was created in 1982. Admittedly, you’re also correct that, with this bad split in the Federal Circuit on the standard for 35 USC 285, SCOTUS, unfortunately, has to resolve the split.

      1. Unfortunately, more than that is needed EG.

        The Court has created the mess at the level designated by Congress to provide clarity. It is now too little and too late to simply say “hmm, maybe we should not trash that court so much.”

        The damage has been done – look at how certain judges have lost their will and kowtow to what is in essence Supreme swill.

        No, more is needed. The Court needs to clean up the mess it created, and (unfortunately) that mess extends to more than just the issues the current case addresses – in other words, the mess cannot be completely cleaned up even if the Court somehow found the backbone to give up its addiction to implicitly (but nonetheless still) writing patent law.

        1. An example of the Supreme swill: phones are not machines enough to satisfy 101 anymore according to a particular judge.

          The stench of absurdity is nauseating.

          1. phones are not machines enough to satisfy 101

            It’s been that way for a long while.

            Nobody would ever be surprised if they were told that you can’t patent a non-obvious conversation. But somehow if you toss in a “limitation” regarding an old conventional phone you can overcome that hurdle? Why? What policy would support such a conclusion?

            The answer is there isn’t any. Not one that you’ll ever be able to articulate anyway.

            You guys need to try a lot harder. Also I notice Rand Paul in the news telling the teabaggers they need to learn to keep their traps shut if they want to “broaden their appeal.”

            The patent teabaggers might want to pay attention to that lesson as well.

            How are those impeachment proceedings going? Have you removed those traitorous judges from the system yet? LOL.

        2. anon,

          Don’t disagree at all with what you said. Our Judicial Mount Olympus with its Ivy Leaguers needs to get out of its Ivory Tower, and render order out of this utter chaos they’ve created, then back out and leave patent law jurisprudence to the court that Congress intended in the 1980′s, i.e., the Federal Circuit.

  3. In the companion 101 case blog post by Prof. Hricik concerning CYBERFONE SYSTEMS v. CNN INTERACTIVE GROUP, Cyberfone sued a large number of companies on a claim that collected information from a phone and distributed the information to a number of different locations based upon content. That essentially was it. The court held the claim invalid under 101? on the basis that collecting, categorizing and distributing information based upon content categories was notoriously old and adding in the limitations of generic phone equipment was not sufficient.

    This is the kind of claim wielded by trolls: broad, indefinite, functional and somewhat obvious, though not necessarily in this case invalid under 101. Prof. Hricik made a strong argument on this point.

    With the overruling of cases like In re Arbeit (a case that had held that the passage of section 112 (f) did not change the general rule that apparatus claims could not distinguish the prior art based upon function) by the Federal Circuit in the Donaldson case, the patent office has been issuing junk patents which are essentially functional in nature even if the specification might disclose some novel method or apparatus. These patents do not narrowly cover an invention, but cover whole industries because of their functional nature. This allows suits against dozens if not hundreds of companies at one time.

    On remand, would this case be a poster boy for an exceptional case because of the complete lack of merit of the patent regardless that the patent office issued it?

    Can we impose sanctions on the Federal Circuit for allowing indefinite, functional claims like the claims in this case? Can the Federal Circuit ever be persuaded that such broad, indefinite and functional claims are a problem in themselves that cannot be fixed by claim construction?

  4. The reason most posts are anonymous on this board is that most posts are made by Anon herself…

    I read the transcript and it seems that Scalia was with the libs this time, Alito and Thomas will likely be with the fed circuit, Kennedy when not the swing vote may just want to smack the fed circuit, and Roberts appeared generally disinterested which means he may be more likely vote for comity and a more united opinion when it comes out.

    I think 7-2 to remand and overturn the two part test. They may compromise on the standard of review and leave it denovo, but the points in favor of abuse of discretion were strong and in both arguments the preferences of the business community for more fee shifting rang through quite clearly, and in the end, I think that is what motivates this court the most on patent issues generally.

    We have high hopes that our case with IBM will be thorough a JML with good timing to be an early test of district court discretion on 285 should Octane break that way…

    1. Martin, my prediction: unanimous overruling of the Federal Circuit. They will adopt the position of the US government.

    2. LOL – speaking about worthless crusades: “The reason most posts are anonymous on this board is that most posts are made by Anon herself…

      Your undies are still in that bunch Marty.

      1. Here is a suggestion: learn a little about actual law.

        You should learn a little about actual law, anon. Take some time off, maybe, and finish high school.

        1. An empty suggestion from you Malcolm, given that you believe that any post here does not even have to have the bare minimum of intellectual honesty as this is just a blog and not a court.

          But please, show us a little learning on actual law and explain how the controlling law on the exceptions to the printed matter doctrine provide the legal bridge to differentiate mere words and software as a category of patent eligible subject matter being a man made manufacture and machine component.

          Step right up Malcolm.

          Malcolm….

          Now where do he run away to….

          1. Why do you want to ‘start another round” when you have not finished Malcolm?

            Please – continue to follow my post at 6.2.1.1

            Or are you…

            …afraid?

            LOL

    3. Marty,

      Here is a suggestion: learn a little about actual law. Or are you afraid that understanding actual law will get in the way of your software-related business and that you may actually have to stop stealing other peoples’ inventions and have to pay them?

      Law Marty – focus on what really matters.

      1. Law is what really matters? What a joke.

        Power is what really matters, and law is a tool of power, as are politics and business, and the law means what power says it means. Grow up.

        I don’t steal jack; the people who patent obvious ideas that I, inter alia, used before they did are the thieves, who compound their crime by stealing more in forcing me to litigate against them. I don’t need to steal anything to make money in the software business- nobody does because the bits and bytes are only a fraction of the business.

        On 101 and software patents: New Zealand’s economy was not destroyed when they outlawed (rightfully) software patents. They are doing quite well as a matter of fact. Imagine that.

        Software should be subject to copyright, like motion pictures and other expressions of ideas, because that’s what software is; written expression of ideas. When implemented with useful hardware to a physical result other than a different arrangement of information, the combination should certainly be patent-eligible.

        You can no more consistently determine the infringement of software then you can the copying of a book or movie; jurisprudence to determine how close is too close has been developed over the years for that purpose, and the scholastic application of jurisprudence developed for physical inventions as understood by the founders created the catastrophe we see today.

        The dual nature of software IP serves no purpose- software is not “discovered” by R&D, and any novelty contained purely within software is the sort of novelty found in a work of literature- or an instruction manual.

        Investments in software are not made based on some exclusivity- every software field has assumed automatic competition because its impossible to prevent near-enough software from doing the same economic activity one way or the other, unlike drugs, machinery, and other compositions of matter. 19 billion dollars for WhatApp: zero patents.

        Ink on a page is a literally a composition of matter; yet no patent, no problem….

        1. That’s a pretty script Marty, Did you pick that up at slashdot?

          Of course, you should realize that you have not addressed US law at all.

          But hey, feel free to relocate to New Zealand if you want to (just be aware that it is not the all-out flat anti-software zone you read from the script, as they have the euro-style per se wiggle room).

          1. you should realize that you have not addressed US law at all.

            Yes he did.

            Learn to read, Tr0llb0y.

            And by the way: Gene Quinn called. He wants his boots licked by you again. More yummy times for you! Isn’t that special?

            Fun games. You’ll start the next round, as usual?

        2. As to “I, inter alia, used before they did are the thieves, who compound their crime by stealing more in forcing me to litigate against them.

          Do you feel the same about any item in use (privately and not shared, like in an enabling publication) prior to a patent being granted to some other party who was willing to share by filing a patent application?

          Let me know how little you know of patent law with your answer there Marty.

          1. Well anon, if the item were on sale commercially prior to the filing and the patent was not filed by a university, I would probably have some rights to it, but since I’m in the software business and I don’t believe software per se should be patent-eligible, is this a moral question of what constitutes theft?

            And for kicks and shigles, what should the de minimus level of actual damages be to justify a patent lawsuit with all the trimmings? Five grand? 10?, 30? 100? Because below that threshold of enforceability, is it really “theft”?

            Does pressing a case against a company 1 / 25,000th your size for those kinds of potential damages imply litigation abuse? I sure as hell think so.

            Also I have said a dozen times I am not a lawyer, and whoop de do about that fact. The law can be manipulated and used like any other institution, and often is, by non-lawyers.

            1. and I don’t believe software per se should be patent-eligible

              Your belief is immaterial under the law.

              Or maybe no one ever explained to you that patent infringement is a strict liability offense?

              And where the heck are you getting this damages required sheepdip? No damage at all are required in order to enforce a patent right.

              Marty – you need to have a serious discussion with your attorney – he should have explained all of this to you.

            2. One irony here of Marty’s btchfest is that he whines about others bringing ‘frivolous’ lawsuits, but cannot be bothered himself to understand the law enough to recognize that everything he says is legally frivolous.

              Another ‘Anti’ who thinks that law should only apply to someone else.

            3. Always the strawman. I’m strongly pro-patent for what should be patent-eligible inventions, and are actually, you know, inventions.

              Why not answer the question anon? strict liability is another red herring; how small a level of damages is too small to try a patent case? 5 grand? 10? 20? Assume the patent is end-of-life and only past infringement is an issue, no injunction needed or sought- merely the calculation of back royalties.

            4. Marty, it is you with the strawman, given the fact that you have admitted to knowing didley about real law, your ‘opinion’ of “ I’m strongly pro-patent for what should be patent-eligible inventions, and are actually, you know, inventions means NOTHING.

              Your question on level of damages has been answered – your question is meaningless.

              Again, you need to have a talk with your attorney. You are a named party in an actual suit and for you to prance around with such a vacuum of understanding of law tells me that your attorney does not have informed consent from you as to how to legally proceed.

              You cannot remain ignorant, or worse yet, want to remain as clueless as to the law as you are.

            5. Yer all hat and no cattle anon, lots of insults, no substance (either?)

              You say I’m an “anti” and that has meaning. I say I’m “pro” and it has no meaning? Interesting algebra, that.

              So your opinion, as an expert in LAW, is that a case worth a dollar should and could be brought in federal court with no issues, because STRICT LIABILITY?

            6. You say I’m an “anti” and that has meaning. I say I’m “pro” and it has no meaning? Interesting algebra, that.

              This is all the “anon” dooshbag does here, Martin. You’ve seen how it works at IP Suckdog where “anon” sits on Gene’s lap and/or licks his boots day in and day out. Since Dennis is unlikely to ban you for expressing your reasonable opinions (unlike anon’s hero), “anon” is forced to simply troll this blog with insults. And he’s got a few like-minded comrades who you’ll surely run into. His comrades like to pretend they are really principled people but of course nobody with principles would ever sit by while “anon” foams at the mouth and spews his endless streams of horsesh*t at everyone who isn’t willing to unhinge their jaws and fellate 200 patents at a time, as anon so gleefully does.

              For years he did this while using dozens of sockpuppets a day and pretending that he was “doing battle” with a “vocal minority.” About 18 months ago was busted by Dennis so now he’s given that up and just engages in the same nonsense under this “anon” pseudonym. He has very well-worn script that you should be familiar with.

              First he’ll call you an idi0t because you don’t understand the “actual law” (that “understanding” is the unique domain of anon, aka Patent Jeebus — you must bow down and acknowledge it). Then he’ll accuse you of being “anti-patent.” Then he’ll accuse you of being a communist. If you’re really lucky he’ll accuse of being a racist, too, or maybe he’ll compare you to some Third Reich figure. But he’s a very serious person! Never forget that. He must be serious because Gene Quinn really seems to like him and we all know how serious Gene is.

            7. Yer all hat and no cattle anon, lots of insults, no substance (either?)

              Says the guy who openly admits he knows nothing about law….

              Marty, the insults you get are not only deserved, but if you pay attention, you might actually learn something – like the difference between hats and cattle, because, son – you don’t even know that difference.

  5. link to cnn.com

    Washington (CNN) — The Supreme Court was the scene of an unusual disturbance during its public session on Wednesday, when a man interrupted an oral argument.

    The incident occurred near the end of debate between the nine justices on the bench and counsel, in a case over attorney fees in patent disputes.

    A man in a suit and dark tie rose from near the back of the marbled courtroom, and began loudly talking.

    Witnesses said he spoke about the need to keep campaign finance reform laws in place to regulate election spending and contributions.

    “Money is not speech,” he reportedly said. “Overturn ‘Citizens United!’” referring to a 2010 high court decision loosening a century of federal restrictions on corporate spending by “independent” groups like businesses and unions.

    He was only able say a few words before police escorted him from the courtroom, and did not resist.

    Probably just a coincidence.

  6. Scalia is correct, can’t define “meritless”.

    He can’t define “abstract” either, but that doesn’t seem to trouble him.

  7. Why don’t we keep it simple: award attorneys fees to prevent a gross injustice if a troll files suit. It is assumed that his patent is not valid or not infringement as a matter of judicial notice.

    Now, how do we define troll?

    On a more serious note, is lack of merit subjective or objective? Can there be degrees.

    This was an interesting debate on that topic. Most judges will make a call on how they see it, whether the issue was close or not close. But is this right?

    1. In any call to keep things simple, the words of my dear friend Einstein come to mind:

      Everything should be made as simple as possible, but not simpler

    2. If being a NPE has bearing on whether the claim lacks merit, then infringers will be free to discuss this issue in court on an extended basis to case doubt on the patent owner’s case. Today, if such is argued by an infringer counsel, he or she is ordered to cease and desist. If the conduct continues, there are sanctions and eventually punitive damages for litigation misconduct. See, i4i.

      There is no doubt about where the infringer bar is going with this argument.

  8. Thanks for the nice write-up, Dennis. I note there are some formatting errors following some of the quoted sections, where your comments appear in italics (unintentionally, I believe).

    A couple comments. Re this:

    Phillips also gave his talk on how the “patent troll” debate is really nonsense and that there is nothing to see here:

    MR. PHILLIPS: First of all, as I say, the plaintiff this you know, there’s a reason why you don’t see advertisements on television when Saiontz & Kirk says, If you think your patent has been infringed, call us. Why? Because there’s not a long line of people who can bring plaintiffs’ patent cases. They are expensive to litigate, and the ultimate effect and you have to get an expert, and at the end, you put your patent into validity [risk].

    The risk of patent invalidation is a built-in part of the troll’s business model. The troll has no products to protect and nothing to produce during the discovery phase so the sorts of risks that would be presented to an entity who provides patented products/services are absent. The litigation will either end in a big pay off for the troll, a smaller payoff (settlement in the form of a license) or a dead patent. If the outcome is a dead patent, the troll just dusts himself off and finds another patent to sue people with.

    As for the lack of TV advertisements for bottom-feeding patent attorneys wishing to help you monetize your patent, that proves absolutely nothing about the “patent troll debate”. There aren’t any such advertisements on FM radio or in National Geographic Magazine either. So what?

    In particular, Octane argued that the fact that the patentee “never made a product under [the] patent” should be considered as well.

    Agreed. Hopefully that factor makes it into the Supreme Court’s opinion expressly.

    The exchange about the alleged “unconstitutionality” of a loser pays system was very amusing, although the patent teabaggers may not see it that way. The Supreme Court really does seem to understand that patents are merely government-provided entitlements, not some magical superproperty around which the universe revolves.

    1. For what should be well known and obvious reasons, Malcolm’s cheerleading here is a misapplication of law:

      The rest of the “never made a product” statement: “that’s a factor that bears on the equities of this case and the uncommon nature and is one that doesn’t fall neatly within those categories.

      I am sure that the Court itself is aware of its own decision (albeit from 1908, still controlling) that there is no ‘use’ requirement for items covered under patents, and since there is no use requirement, there can be no equitable penalty for non-use of items covered under patents.

      Likewise, I am sure the Court is aware that many improvement patents cannot be used by the patent holder on their own, that someone else’s rights on the underlying item may still be covered by a separate patent.

      So Malcolm’s comment of “Hopefully that factor makes it into the Supreme Court’s opinion expressly.” can rightfully come into play only with another FAIL for Malcolm’s lawless and fact-less policy pounding.

      1. Anon – You are right on the use requirement. However, here the court wouldn’t be creating a use requirement but would only be more severely punishing a non-user who unsuccessfully wields a patent.

        1. …and the basis in law or equity for the distinction of “more severely punishing” on a factor that is not required in law – and is in fact impossible under law in the specific case I mentioned is….

          Serious question – I am at a loss as to how a court would follow this line of thought.

            1. The failure-to-practice argument has rhetorical appeal to many

              That’s not a good thing. See my suggestion below as to the award -winning historical research and the Founding Fathers and one of the foundations of our patent system.

            2. Dennis: the parties did not hook the rhetoric to a viable doctrine.

              Viable doctrine? The doctrine is equitable recognition of the fact that a party who is manufacturing or providing a patented service is in a different position than a party who merely bottom-feeds for patents with which to sue productive entitities. The public has a greater interest in encouraging the activity of the former than the latter, a fact that the Supreme Court will agree with unanimously.

              The failure-to-practice argument has rhetorical appeal to many.

              The argument has more than “rhetorical appeal”, Dennis, as you surely are aware.

            3. the Founding Fathers

              Talk about “rhetorical appeals.”

              Maybe the teabaggers should hire Ted Nugent to start promoting their “More Patents, Easier to Enforce, All The Time” campaign. I think they’d enjoy each other’s company a great deal.

            4. The viable doctrine, Malcolm – in case you missed it – was the foundation of the patent system and the notion of fully alienable property.

              That’s rather important. You might want to rest your lawless, fact-less policy pounding and try to come up with some actual support (other than the RQ/HD Malcolm says kind).

              If you have the law, pound the law.
              If you have the facts (especially historical facts that tie to the system’s foundation), pound the facts.

              If you have neither, pound the table.

            5. The viable doctrine, Malcolm – in case you missed it – was the foundation of the patent system and the notion of fully alienable property.

              Gobbledygook.

            6. Malcolm, read my post at 2.1.1.1

              You cannot base equity on something not only NOT required by law, but that in many cases is PREVENTED by law.

              There is no ‘use’ requirement – in part – because there cannot be a ‘use’ requirement when improvement patents and base patents can be owned by different parties.

              This country does not believe (yet) in such conscriptions of personal property (what patents legally are) that would be required of the owners of the base patents to allow improvement patent owners to ‘use’ the underlying items covered by the base patent in any attempt to “equitably” force a ‘use’ requirement on the improvement patent owners.

              Since you cannot force improvement patent owners to ‘use,’ you cannot create out of thin air any “equity” that you so gleefully fabricate.

              Your policy lacks the foundation necessary to trump the foundational aspect of alienability of personal property. Maybe – just maybe – if you get on your knees and pray with Jane, we will change our government and our laws to support such a policy.

            7. Malcolm’s handwaiving of “Gobbledygook.” translates merely to his typical Vinnie Barbarino “Huh? What?”

              If you really cannot follow these basic principles, you have no business in patent law. Or law of any kind.

            8. Since you cannot force improvement patent owners to ‘use,’ you cannot create out of thin air any “equity” that you so gleefully fabricate.

              Nothing is being created out of “thin air”. The reason that the patentee’s use of the patent can be a consideration in this area of the law and in other areas of the law (e.g., injunctions) are based in common sensical reasons that you’ve already been provided with.

              Moreover, patent owners aren’t being “forced to use” anything, as Dennis already informed you.

              You do understand that is just another case out of many more to come in which your precious patent rights will be effectively diminished. That’s because your “arguments”, in general, really do stink quite badly. They aren’t arguments at all but merely desperate pleas for every critic of the system to shut up because “1908 supreme court case” or “award-winning article” or similar nonsense that makes your patent-fluffin’ nuttiness palpable to even the casual reader.

              As I’ve said before, this is going to be a rough year for you. You might want to take a vacation. Or you can weather out the storm by hiding over at Big Gene’s place and pretending that the pendulum is going to “swing back” in a few years.

              Sure it is.

            9. “You cannot base equity on something not only NOT required by law, but that in many cases is PREVENTED by law.”

              That’s interesting, perhaps you should inform the court of equity in olden times.

            10. 6,

              You are so deep into the weeds, that you may never make it out.

              The call for equity by the one party (that generates the misapplication above by Malcolm) starts with “anything that bears on the gross injustice and the uncommon nature of the case.

              Clearly, equity will not – and cannot – come into play for this party just because the patent holder does not practice the patent.

              There simply is no legal, nor equitable basis for this.

              There is no gross injustice, as the Supreme Court has made it clear that not practicing a patent has NOTHING to do with enforcing the patent. There is no cause in law nor equity to change this.

              BY DESIGN of the patent system with the intent of the Founding Fathers, patents are personal property and fully alienable. This means that there can be no legal nor equitable cause to believe that the practice is one of an uncommon nature.

              Here, Malcolm not only lacks any table of law to pound on, not only lacks only table of fact to pound on, he lacks any table of policy to pound on.

              There simply is no basis in patent law or policy connected to patent law (your olden times link) to support Malcolm’s fantasy.

            11. TB: Clearly, equity will not – and cannot – come into play for this party just because the patent holder does not practice the patent.

              Nobody is suggesting that the mere fact that the patentee is a troll will suffice to find gross injustice and shift fees.

              There simply is no legal, nor equitable basis for this.

              Again, the equitable basis stems from the procedural advantages held by the non-practicing patent troll, advantages which are prone to abuse. All things being equal, the fact that a patentee is a non-practicing troll should make it more likely that it will pay fees in cases that it loses in dramatic fashion. It levels the playing field.

              You can pound the table and cry about “personal property” until the cows come home. You lost your battle already in the eBay v. Merc Exchange case (another case that will never, ever be overturned). The NPE nature of the patentee is an equitable consideration in patent law (among others). There is no prohibition against such a consideration.

            12. Malcolm, you continue to bark up the wrong tree with “Again, the equitable basis stems from the procedural advantages held by the non-practicing patent troll, advantages which are prone to abuse.

              You continue to try to limit – unjustifiably, and in direct contradiction what the Supreme Court has already decided – what someone holding personal property (a patent) must ALSO do (practice that patent) in order to proscribe basic rights. The problem is that you have shown no reason for doing so that can be universally applied to the situation that you want to apply them to.

              The ends still do not justify the means.

              “Prone to” is not enough. You may dance a bit with a false sense of ‘all things being equal (but then not have things being equal). But that fools no one. As has been often told you: existing rules against bad behavior already exist to take care of bad behavior. Your attempt to wield the “Troll” hysteria witch hunt techniques to further your agenda are seen through.

              ANY ‘procedural advantage’ that you deem so offensive as to violate equity must actually violate equity, and all that you have done so far is only your usual RQ/HD routine of proclaiming that “Trolls” are evi1 because “they are enforcing patents they do not practice.” BZZZZZT – you are stuck on a meaningless distinction.

              You now compound your error of applying law by attempting to misrepresent what eBay means. Since you have not shown even a basic understanding of patent law, the foundations of that law, or what law and equity mean, it is not surprising that you misapply eBay as well. eBay has to do with the level of remedy – not with the process of enforcing, or penalties for bad behavior in trying to enforce.

              But after all, is anyone surprised given that you still think that intellectual honesty is not required because this is merely a blog and not a court? Until you decide to post with that minimal level of integrity, your habits of twisting and dissembling leave your posts with that zero level of credibility.

            13. “Malcolm, you continue to bark up the wrong tree with …”

              Jesus you are dmb. And also profoundly lack an understanding of what equity is and how equitable considerations factor into legal proceedings.

              As MM mentioned, you lost the battle in ebay brosefus. Sorry. It’s time to come to grips with that and what the implications are. Be a big boy. You can do it!

            14. 6, I know that you like to live in the “subjective-in-the-mind-make-up-anything” universe, but in this reality equity is not equivalent to “just because the judge feels like it.”

              You really do need to have a viable reason. As I have shown, that is simply lacking in the arguments presented to the Court.

            15. in this reality equity is not equivalent to “just because the judge feels like it.”

              Nice strawman. Who are quoting anyway? What a t 0 0 l.

              This is why you lose all the time, Tr0llb0y. You’re just not very intelligent. Nobody is persuaded except for that tiny minority of people who are even dumber than you. Stick to your echo chamber. You kinda shine over at Gene’s place.

            16. Malcolm misses by a mile with “Nobody is persuaded

              Says the guy who thinks he is ‘persuasive’ and yet thinks that intellectual honesty is not required in blog posts because this is not a court.

              Hint: when you profess your lack of honesty, you lose all your persuasiveness too.

    2. Thanks for the edits.

      The NPE issue is interesting here since the patentee here ICON is an operating company but sued on a patent that it is not particularly practicing. If “non-practicing” becomes an element then there will be lots of parsing to do on what that really means.

      1. then there will be lots of parsing to do on what that really means.

        Or perhaps more in line with the “Troll” hysteria witch hunt does, there will be lots of conflating and obscuring on what that really means…

        Especially since no basis in law exists for treating the patent right differently based on owner or such ‘use/non-use’ factors.

        Perhaps a refresher post on that award winning historical article that detailed what our Founding Fathers wanted in the patent system, particularly the unfettered aspect of alienability of property would be in order…

        Oh wait, that was a different blog that featured that award-winning historical research and this blog never did carry a story on what is clearly a critical view of why we have the patent system in the first place.

        Hmmm, maybe a first story on that subject can be written…

        1. Where is this “award winning historical article”? I’d like to read it.

          If I recall, there was zero (or almost zero) debate or discussion on the intellectual property clause at the Constitutional Convention.

          1. 6 and I have traded quips on the article, being as it was his former mancrush Dudas that was involved in exhibiting it.

            Patentdocs (without taking sides) presented it as a basis to defuse some of the “Troll” hysteria – this time by Leahy. Dudas (and Kappos) used information related to research done by Kline, Khan, Lamareaux and Sokoloff.

            See link to patentdocs.org

            1. By all means, Dennis, please give the blogtroll more attention and dedicate a post to the “award-winning” article its been mewling about in every other thread for the past six months.

            2. Of course the “pro-patent” Prof. Crouch should “give more attention” to something of foundational importance to this nation’s patent system.

              Do you really have a problem with that?

              Why?

            3. his former mancrush Dudas

              That reminds me. The recent news from Texas and Arizona and elsewhere should remind the patent teabaggers that times can change very quickly and the Supreme Court is happy to toss its own very recent decisions in the trash (e.g., Bowers v. Hardwick) when it becomes clear that the decisions were short-sighted, silly, and disconnected from modern realities.

              The public doesn’t approve of certain behavior by certain patentees and there’s nothing illegally or ethically discriminatory about that disapproval. You can expect that disapproval to begin registering at the highest levels, particularly if the behavior in question continues.

            4. Of course the “pro-patent” Prof. Crouch should “give more attention” to something of foundational importance to this nation’s patent system.

              LOL. Better do what the blogtroll says, Dennis. Next thing you know its going to issue one of its weird threatening comments about the “consequences” of your repeated failure to acknowledge its super dooper important points.

            5. Malcolm kicks up some serious dust with “The public doesn’t approve of certain behavior by certain patentees and there’s nothing illegally or ethically discriminatory about that disapproval

              Nice strawman.

              If “the public” disapproves of certain fully legal behavior, then “the public” through the appropriate legal channels and in the appropriate contexts can change the law.

              As has been pointed out to you on other thread, this means through the legislative process and should entail corporations law and the Federal Rules of Civil Procedure.

              This is not appropriate by executive fiat.

              You should have paid attention to the advice I gave you: Don’t like what corporations can legally do? Call your Congressman.

              Your gossamer “the public” script is stale and old. Mao wants it back.

              .

              (as to your 2.2.1.2.1.4 post, do you really want to draw more attention to your continued lack of shame concerning your offensive post?)

            6. Don’t like what corporations can legally do? Call your Congressman.

              LOL!!!!

              I’ve made plenty of phone calls, Tr0llb0y. I also vote. And I’ve also done a pretty great job of demonstrating to the world what a self-interested, greedy, patent fluffin’ pack o’ tools you and your fellow teabaggers are. It wasn’t terribly difficult, of course, given the laughable incompetence of footsoldiers such as yourself.

              How are you and Eric doing with your impeachment proceedings, by the way?

            7. Malcolm, your crop of AOOTWMDs are in full bloom.

              It’s so pretty – especially in that special place in your mind next to the cliff and the field of rye where you play out your Holden Caulfield fantasies.

              But back in this reality, it really is Congress that writes the laws that ‘the people’ want. It does not take an offensively religious connotation to recognize that, as a third grade civics class would do.

            8. your crop of AOOTWMDs are in full bloom

              Your crop of IFMMWABS dwarfs everyone else’s.

              the cliff and the field of rye where you play out your Holden Caulfield fantasies

              JD Salinger called. He says you’re an idi0t.

            9. No surprise Malcolm, but your mirror attempts are lame.

              Time for you to retreat back to that warm and safe place in your mind and leave the real world of facts and law to the grown-ups.

      2. Dennis, Microsoft kept calling i4i an NPE. The court kept telling them to stop. They didn’t. In the end, MS was sanctioned by including a substantial increase in the “punitive damages” award.

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