Who is to Blame for High Litigation Costs: Plaintiffs for filing the lawsuits or Defendants for refusing to deal and instead fighting?

The recent WSJ op-ed by John Chambers (CEO Cisco) and Myron Ullman (CEO JCPenny) is interesting, but largely not compelling. What the article does do is indicate (1) that patent litigation is the monetization avenue being used by non-practicing patent holders and (2) that it is pretty clear that manufacturers and retailers would be better off (at least in the short term) without being charged with patent infringement.

The core of their argument is here:

A 2012 study by Boston University researchers estimated that companies spent upward of $29 billion a year defending patent lawsuits, and the problem has not let up. According to RPX Corp., more than 3,600 companies and named defendants were sued by so-called patent-assertion entities in 2014, triple the number in 2006. Patent-assertion entities—aka nonpracticing entities, or as some would call them, trolls—that own patents but do not make products or sell services based on them file more than 60% of patent litigation in the U.S.

A civil lawsuit generally comes about based upon a failure of the parties to negotiate a just solution.  Of course, for any given lawsuit, we don’t know beforehand whether it is the plaintiff or the defendant who is being more unreasonable.

The op-ed suggests that the plaintiffs are to blame for filing the lawsuits, but there is also a strongly compelling case for arguing that the defendants are to blame for refusing to deal and instead fighting every lawsuit tooth-and-nail. When reach a point where out-of-litigation resolutions are rare, we should recognize that it is a systemic problem.  And, at this point – where the primary complaint is high litigation costs – the solution is not to favor one side or the other, but instead to look for systemic changes that substantially decrease the cost of resolution.

Gene Quinn provides his take on the op-ed at IP Watchdog.

185 thoughts on “Who is to Blame for High Litigation Costs: Plaintiffs for filing the lawsuits or Defendants for refusing to deal and instead fighting?

  1. 27

    As both and inventor and a patent attorney, I believe eager Democrats and scared Republicans killed the patent system for the independent inventor. Little guy is frozen out of the system.

    Solution?: Set up a royalty board, if a fair royalty is 10% and there are 100 claimants, then rank them and give them each a pro rata share of that 10%.

    Washington Post says “Federal agencies will try to boost entrepreneurship.” What a crock. We are back to the 50’s with payola and interests in copyrights.

  2. 26

    Who is complaining? Not lawyers. While trolls like Lemelson and Refac have been around for generations, patent litigation has grown from a niche practice area for boutiques to huge profit centers for international firms. Attorneys for plaintiffs and defendants are often best friends.

    Manufacturers and retailers may complain when they are accused of infringement, but retailers are generally indemnified by contract or the UCC, and manufacturers often factor a patentee’s projected litigation costs into license or settlement negotiations. Moreover, they don’t seem to complain when they attempt to eliminate competition with patents that may be held invalid or non infringed, or fail to satisfy domestic industry requirements in ITC proceedings.

    Universities and research institutions aren’t complaining since licensing revenue is a growing source of funding for basic scientific and technological research, especially in the wake of declining grants from governmental agencies and other sources.

    Rather than devote proper resources to patent examination and issue certificates of validity, Congress has shifted the PTO’s burden to the courts and private parties by limiting review of patent applications to a presumption of validity and providing statutory defenses for challenge after issue.

    The Supreme Court doesn’t seem to care as it ignores Congressional intent and bickers with the Federal Circuit over fundamental issues of patent law, creating uncertainty and confusion that leads to increased litigation.

    The system is broken. Long live the system.

    1. 26.2

      It’s a good post Jai Rho. The only thing I’d say, though, is that we are probably in a different situation than in previous years. Now we face an unending onslaught of money from big corporations like Google that are trying to burn down the patent system. The patent system has been remarkably resilient to the likes of Lemley, Stern, etc., but there are cracks that should cause anyone to worry. And the onslaught is not going to end. The corporations will just keep paying for the next round …

  3. 24

    “When reach a point where out-of-litigation resolutions are rare, we should recognize that it is a systemic problem.”

    Why do you think that “out-of-litigation resolutions are rare?” How could you possibly know, without some registry of licensing activity?

    It may be true that, once suit is filed, it is less likely to settle than it has been in the past, while it may also be true that more patent disputes are resolved with licenses or out-of-litigation resolutions. Do you know of any way of determining if your assertion of rarity is correct?

  4. 23

    “The op-ed suggests that the plaintiffs are to blame for filing the lawsuits, but there is also a strongly compelling case for arguing that the defendants are to blame for refusing to deal and instead fighting every lawsuit tooth-and-nail.”

    And addressing a recent spate of school yard fights, a grammer school op-ed suggests that bullies are to blame for stealing lunch money from nerds, but there is also a strongly compelling case for arguing that the nerds are to blame for refusing to cough up their lunch money instead of putting up a fight.

    I have only defended about a dozen patent lawsuits, but all of them were brought by plaintiffs that had a clear understanding that the accused devices did not infringe, or that the patent was blatantly invalid. In one case, the judge quite explicit: the facts do not matter, and we were stupid to insist on litigating to the correct result.

    1. 23.1

      You want to talk about bias…:

      clear understanding that the accused devices did not infringe, or that the patent was blatantly invalid

      Basically, inequitable conduct and “clear” violation of attorney ethics in bringing “frivolous” suits is the universal experience of this particular person…

      I am reminded – as I often am – of another line from the Shawshank Redemption: “we (the accused infringer) are all innocent in here”

  5. 22

    Being cynical here, but having read hundreds of articles on this subject from all types of people, it has become clear that guys like Dennis support NPE suits, trolls, love patents, etc., because it makes them important professionally. If patent lawsuits go way down and aren’t perceived as such a big problem to the general public, guys like Dennis don’t get invited to speak places, don’t get invited to submit comments to Congress, don’t get quoted in hundreds of articles–overall their viewpoint is less sought-after and they become much less visible. Their professional status sinks. Anyone who has clerked at the Federal Circuit can tell you this is true; those judges love their junkets and have seen their own notoriety increase as the “patent problem” has increased. You don’t get invited to speak at high priced law school events, or get invited to do OpEd pieces for big newspapers, if there isn’t some “troll problem” that causes the patent problem to be on people’s minds. So that’s why almost every significant patent “reform” initiative in the past seven years (with the exception of damages reform) has come from Congress or the Supreme Court, not the Federal Circuit. This is because guys like Rader knew that he wouldn’t get invited to do all of these cool things if the patent system had the quiet obscurity it enjoyed the 1980s and 1990s.

    So with that, it’s hard to read articles like this from Dennis, suggesting that it is defendants who are to blame for patent lawsuits. They should be shelling out the cash for settlements, be happy to do so, Dennis says, because they’re entering into “reasonable” resolutions. Merits be damned.

    I have represented companies in hundreds of these suits, since the beginning of the E.D. Texas rise in about 2004, and in the early days, defendants did exactly what Dennis says they should do — they shelled out the cash. Most of them reasoned that settlements were a good business solution because the cost of defending was more than taking a license, even if the patent was invalid or the infringement read was borderline frivolous. Most companies share that thinking today. But most of the bigger companies found that settlements begat more suits, in a vicious cycle (brought by the same lawyers as the earlier suits), so they have now started fighting these suits.

    It is wholly irresponsible to suggest that defendants are to blame, Dennis, without taking into account the merits of the suits. Are you suggesting that defendants should be happily shelling out money to license patents they don’t infringe? You’ll probably find that the rate at which plaintiffs are losing cases at trial is a lot higher than it used to be, because most defendants are now putting in the resources to mount a proper defense. Even plaintiffs in Texas are losing cases in large numbers, usually because the cases are meritless and the defendants are now put in the resource to test the cases on the merits.

    1. 22.1

      Pacing Technologies LLC v. Garmin International Inc. (Fed Cir 2015)

      Yes, folks, it’s a metronome “on the web.”

      A repetitive motion pacing system comprising:

      a web site adapted to allowing the user to preselect from a set of user-selectable activity they wish to perform and entering one or more target tempo or target pace values corresponding to the activity;

      a data storage and playback device; and

      a communications device adapted to transferring data related to the pre-selected activity or the target tempo or the target pace values between the web site and the data storage and playback device.

      From the spec: features of the present invention are accomplished, as embodied and fully described herein, by a repetitive motion pacing system that includes . . . a data storage and playback device adapted to producing
      the sensible tempo.”
      .

      Ignoring the fact that this claim is a quintessential example of an invalid or ineligible “do it on the Internets” claim that should never have issued, this Pacer Tech LLC operation somehow decided it was entitled to money from a company which markets a system that provides data (<— data=information) about the rate of exercise (e.g., displaying the user's exercise pace to the user) but which does not include a "playback device" that providing a pace-setting tempo (although the use of old technology for setting a pace for any activity has been in the public domain since just about forever and will certainly remain there indefinitely).

      Sanctions coming? It would be nice. But patent law is sooooooo complicated, especially when it involves super dooper rocket sciencey stuff like making a repetive beeping noise.

    2. 22.2

      Since you are discussing E.D. Texas patent suit statistics, here is a December blog report for the actual 2014 statistics from a leading local counsel there of those cases that made it to final decisions in 2014 in that leading district for patent suits. It seems to support your view that defendants are doing a better job. [Perhaps in part by using more attorneys with conduct more appropriate for small town Texas judges and jurors?]:
      “..over the last two years the Eastern District of Texas was tied at ten plaintiff verdicts and ten defense verdicts, with each side also having one win in the two invalidity-only trials. Then last week Uniloc broke the tie in plaintiff’s favor last with a verdict in the plaintiff’s favor. But yesterday a Marshall jury in Judge Roy Payne’s court rendered a verdict in favor of defendant Samsung in MTC v. Samsung, bringing us even again. (Plaintiff was seeking $132 million). The verdict is of interest for another reason. This was the second MTC case to go to trial in Marshall – last month MTC prevailed against defendant Apple on nine of the twelve asserted claims, winning damages of $23.575 million.
      So we end the year with the verdicts evenly split between plaintiff and defendant in infringement cases, in invalidity-only cases – and even in cases involving the same patents by the same plaintiff in the same court with the same judge – but involving products by two different defendants.”

  6. 21

    What everyone who cares about a fair patent system should be doing is pushing hard against the broadly accepted definition of troll. A troll should be defined solely as a litigation abuser, NOT as an NPE.

    Defining trolls as NPE’s is utterly counterproductive because it rests on a misperception of people who don’t understand the patent system; namely that production of anything makes a difference to IP rights. It does not and it should not.

    The entire iceberg of the patent problem is per se software patents. If they were all eliminated immediately and never allowed again, virtually every serious problem in the patent system would go away.

    That hardly means patents on mobile systems, networking, etc. etc. etc. would be impossible- it simply means that if the output of a system or method is information alone, it should not patent eligible. If the system or method includes new real-world structure, like a switch or a cell transmitter or a display or a battery, etc. etc. etc. it should be eligible. A self-driving car needs sensors and CPU’s etc. and there would be patents around those systems. Watson should get copyright protection, unless there is dedicated new hardware involved.

    We don’t patent art and literature because reasonable minds can always disagree about their meanings and reasonable minds can create myriad different expressions of similar ideas. That’s why software patent litigation more resembles scholasticism rather than any rational process leading to some agreeable truth.

    Until the NEW MACHINE fanatics get over their misapprehension of what software really is, and the public gets over their misapprehension of what a patent really means (e.g. makes no difference if you “use” the invention or not to your rights), major, MAJOR injustice and economic crime will continue unabated, and it hurts all of us.

    1. 21.1

      Strongly agree AND strongly disagree with you at the same time Mr. Snyder.

      Agree: “Defining trolls as NPE’s is utterly counterproductive because it rests on a misperception of people who don’t understand the patent system; namely that production of anything makes a difference to IP rights. It does not and it should not.

      Disagree: “The entire iceberg of the patent problem is per se software patents. If they were all eliminated immediately and never allowed again, virtually every serious problem in the patent system would go away.

      I suggest that you look into the history of innovation and see the exact same pattern of anti-innovation repeated again and again.

      And once again, please leave out the Canard of comparisons to non-useful arts. Such is simply a non-starter, and wrecks – instead of builds – your credibility.

      1. 21.1.1

        >“The entire iceberg of the patent problem is per se software patents. If they were all eliminated immediately and never allowed again, virtually every serious problem in the patent system would go away.”

        This completely ignores the reality of technology. And, it –in effect–is saying that we can’t get the PTO to do its job.

        I will remind everyone that our fearless leader Obama picked as the next director a person that has close to zero experience prosecuting patent applications and is being put in charge of 8,000 patent examiners and what about 1,000 other people that do other jobs. So, she has NO experience in what we need improved. Google bucks at work.

        1. 21.1.1.1

          Both of President Obama’s PTO Director appointments, including the second one that took too long to get appointed, have had VASTLY more patent law experience than the zero patent experience “duds” appointed by his Republican predecessors. So that is obviously not the source of the patent troll litigation problem and the consequent Republican House rush to new anti-patent legislation, merely a bigot-try.

          1. 21.1.1.1.1

            curmudgeon: my statements are not political. You cast them as political. This is not a choose one political party complaint. My statements are directed toward the current failure to appoint a person that is qualified to be the director. Chen is NOT. And, if you haven’t notice a huge part of the on-going justification for new legislation is that there are many low-quality patents. A person with no prosecution experience is not in a position to help that situation. (I know the arrogance of the litigators and transactional attorneys that think they are better than prosecutors, but in reality neither litigators nor transactional attorneys understand the problems of prosecution.)

            Sheesh. Bizarre response to my statements.

            1. 21.1.1.1.1.1

              if you haven’t notice a huge part of the on-going justification for new legislation is that there are many low-quality patents.

              I’ll grant you that Chen is ultimately responsible for some of the recent ones but there is little she can she do about the many thousands that were granted under the watch of her predecessors *except* to make sure that the re-exams and IPRs are conducted competently. As far as I can tell, the PTO is doing a decent job in that regard.

              I’m pretty sure that even if Chen took the most reasonable steps in the world to keep the worst computer-implemented patents from ever issuing that would only further agitate her professioal critics.

            2. 21.1.1.1.1.2

              Do youse guys really mean Lee? Chen, the Judge, is not to be confused with Chien, the CTO advisor.

        2. 21.1.1.2

          NWPA “The entire iceberg of the patent problem is per se software patents. If they were all eliminated immediately and never allowed again, virtually every serious problem in the patent system would go away.”

          This completely ignores the reality of technology. And, it –in effect–is saying that we can’t get the PTO to do its job.

          Don’t forget that neither the PTO nor the patent system was set-up to evaluate the patent-worthiness of information or information processing logic.

          It’s not even clear whether or how such an evaluation could be fairly and consistently achieved at the level of functional claiming where software patenting proponents insist they belong, much less why anyone should bother with designing a workable evaluation system from scratch.

          Certainly there’s no coherent statute or case law telling the PTO how to compare “new” patent-worthy logic or “new” patent-worthy information to the vast, geometrically expanding amount of useful information and logical paradigms in the prior art. On the contrary, every time the CAFC is faced with an opportunity to provide something meaningful we get nonsense. Why is that? Because they are being asked to make absurd judgments against a patchwork quilt of incredibly poorly reasoned, ad hoc case law based on “facts” argued by parties who, in most cases, are both deeply invested in keeping as much aburdity in the system as possible.

          Go ahead and listen to the surreal oral “arguments” in Eon Corp IP Holdings versus Companies Who Actually Do Stuff (Feb 2, 2015) where everyone pretends to try to answer the question about how much disclosure of fake structure is required to qualify as sufficiently “solid” to satisfy 112P6 (while remaining completely fake). That’s where we’re at after decades of silliness.

          1. 21.1.1.2.2

            And, your “logic” and “information” comments are as usual absurd. Information processing machines have structure, take time to operate, use power, and space.

            In fact, the only distinguishing feature between a mechanical machine that you harken back to and an information processing machine is all the bizzarro misinformation you post on this blog everyday.

              1. 21.1.1.2.2.1.1

                All software is essentially a special purpose chip for an information processing machine.

                1. In the real world Martin, a man named von Neumann figured out that rather than building special purpose machines for each information processing task that instructions could be stored in memory like a Turing machine.

                  Real computer scientist know that software is equivalent to a special purpose computer and that software is a merely a convenience to make it easier for humans to build machines at the expense of a great deal of time loss.

                  That is the real world.

        3. 21.1.1.3

          Interesting. So instead of addressing the root issue – high quality initial patent issuance – the strategy is to continue thehigh flow of junk patents – and, therefore, the need for patent reform – the goal of which is to toss the good and the bad patents out. A Cloward–Piven strategy for breaking the US patent system.

      2. 21.1.2

        anon: I suggest that you look into the history of innovation and see the exact same pattern of anti-innovation repeated again and again.

        There is nothing in the long history of our patent system that remotely resembles what was has been going on for the past twenty years.

        leave out the Canard of comparisons to non-useful arts

        Nobody’s ever going to stop comparing information and logic in the computational context to information and logic in the non-computational context. Nice try, though.

        1. 21.1.2.1

          Being “proud” of being wrong – and being steadfast in being wrong – makes you no less wrong.

          Sorry Malcolm, but the utility aspect of what is defined to be software simply IS something that is meant to be covered by patent law.

          “And yet it moves”

          1. 21.1.2.1.1

            “anon”: the utility aspect of what is defined to be software simply IS something that is meant to be covered by patent law.

            Even if “utility” under 101 includes “capable of providing any iota of information” (a highly dubious proposition), there is much, much more to 101 than “utility”.

            As a gentle reminder: it’s 2015.

            Judge Rich’s State Street Bank fell over the cliff years ago. Nothing’s left except a few logs bobbing out in the deep sea. Flipper is canceled. Maybe Moby D ck will rescue you?

            1. 21.1.2.1.1.1

              Sorry Malcolm, squint as hard as I can, I see no legal point in your rhetoric here.

              Can you try again?

              Perhaps try to be a little more direct (since you don’t like “when I put words into your mouth”)

      3. 21.1.3

        anon, what could be a more indefinite term than “useful arts” ? Who is to say what is useful from what is not useful? What is the antonym of useful? Useless? Do people spend valuable life energy engaging in useless arts?

        Night, since you are a technologist, why don’t you define software for us? I define software as sets of instructions written by authors telling machines how to execute various procedures. How do you define it?

        1. 21.1.3.1

          Do people spend valuable life energy engaging in useless arts?

          Most definitely yes.

          The fine arts are full of such dedicated people.

          Your problem Mr. Snyder, is simply one of a lack of appreciation for what patent law is meant to cover.

          Your continued ig nor ance in this respect is disturbing. Not only on the gen er al level of your contributions to the discussions simply lacking that basic understanding, but as I have often pointed out, your counsel is charged with representing you with informed consent, and your views exhibit an alarming lack of being informed. Your statements then may in fact do you more harm than anything that IBM alone could do.

          1. 21.1.3.1.1

            Very well, so the fine arts are the antonym of the useful arts.

            Where do video games fall? They are not a recognized fine art, nor are they useful. How about training films? Useful, but fine arts?

            Its YOUR appreciation for what patents are supposed to cover that is warped, not mine.

            Legitimate law at some level of abstraction must be a democratic construct. Most people think patents are for “inventions” of “things”. Most people don’t know if software per se is a “thing” or not, but lots and lots of people suspect that it’s not a thing, including apparently the Supreme Court of the United States.

            Certainly when the Constitution was adopted software was not considered a “thing”, and yes there was software at the time. Looms and music boxes and certain other “things” were controlled by coded instructions, and those instructions were not considered parts of the item per se.

            I can assure you that IBM is jacking me a lot harder than my misc. debates and useless opinions on patent blogs ever will. In fact, in one sense I can thank them for opening my eyes to a world which I would have otherwise never seen, and what I see is deeply disturbing. I hate injustice and rent-seeking everywhere it occurs, and this world is a most fecund environment.

        2. 21.1.3.2

          Martin,
          The arts traditionally were divided into 3 categories: liberal arts (logic, grammar, rhetoric, arithmetics, etc.), fine arts (architecture, painting, dance, etc.), and useful arts (carpentry, masonry, banking, etc.).

            1. 21.1.3.2.1.1

              You must be one of those software engineers that doesn’t really understand what they are doing.

    2. 21.2

      martin: We don’t patent art and literature because reasonable minds can always disagree about their meanings and reasonable minds can create myriad different expressions of similar ideas. That’s why software patent litigation more resembles scholasticism

      Yes.

      1. 21.2.1

        Yes

        No.

        Mr. Snyder is not an attorney. You, on the other hand, may or may not be an attorney (in real life), but you seek to portray yourself as one on these boards. In that role, you are NOT ethically free to dissemble in your advocacy and mistepresent material points of law and fact.

        Fact: software is defined to be a manufacture and machine component, equivalent (and let’s not purposefully conflate “exactly the same as” and equivalence) to hardware and to firmware.

        Law: the exceptions to the judicial doctrine of printed matter, which by the way is not limited to software innovation (see the hat band case, see the glass measuring cup case), explicates the proper understanding of the law.

        I have explained this to you in simple Set theory, as well as you have volunteered admissions as to your knowing and understanding this controlling law.

        And yet you insist on dissembling on these points in your advocacy on this modern social media platform, misguiding those who do not know (and refuse to know) the law.

        Congratulations (I guess) on reaching the ninth anniversary of such machinations.

        Nine years and running of being something other than America’s leading source of patent law.

        1. 21.2.1.1

          Anon,

          The functional equivalence between the categories of software and hardware, as recognized by computer scientists, merely indicates that the same data transformations can be accomplished in either approach.

          Would you mind explaining the process by which you extend the patent eligibility of computer hardware so as to also include software, seeing as how you just admitted they are different things?

          Thanks in advance.

        2. 21.2.1.2

          Fact: software is defined to be a manufacture and machine component, equivalent (and let’s not purposefully conflate “exactly the same as” and equivalence) to hardware and to firmware.

          Nothing but self-serving, meaningless hooey.

          You gave a very similar speech over and over again when you were so sure that “the law” prevented people from comparing claims to the prior art to determine if the claims protected ineligible subject matter. That turned out miserably for you (nobody could have predicted!).

          the exceptions to the judicial doctrine of printed matter, which by the way is not limited to software innovation (see the hat band case, see the glass measuring cup case), explicates the proper understanding of the law.

          I’m sure glad to know that the viability of software patents rests in part on a pre-Prometheus pre-Alice pre-Bilski case from 1969 written by Judge Rich, a guy who was, at best, completely clueless about the important role that meaningful subject matter eligibility restrictions play in a sane patent system.

  7. 20

    “Loser Pays” will increase litigation expenses:

    Parkinson’s cousin’s law that says: “the litigation effort expands to a significant percentage of the amount available (in dispute)”.

    We are told that to assure winning under “loser pays”, the risk is too high to spare any expense.

    Consequently under “loser pays”: “the litigation effort can now be increased to multiples of the amount in dispute … which we are assured that “someone else” will surely be paying”. ;)

  8. 19

    This article seems inherently contradictory. On one hand it reports that a disproportionate share of suits are due to trolls, then decries the fact that defendants are fighting “tooth and nail.”

    Huh?

    1. 19.1

      Perhaps the unspoken premise of the author is that IP rights, individual rights in intangible property (or perhaps property as such) are invalid. Why fight over something which “should” not exist?

      Of course trying to explain, with reasons, someone else’s unreason is probably a fruitless exercise.

  9. 18

    Did anyone in WSJ see the irony in the article and ask John Chambers to address Arista Patent Lawsuit?

    Cisco sued Arista, citing violations of 14 patents, plus copying of Cisco’s so-called “command line interface,” link to bits.blogs.nytimes.com

    What John wants to say is “if you steal our technology we should be able to Sue you”!

    BUT

    if “we steal YOUR technology then you are a patent troll and getting in the way of our innovation!”

    John is asking US Congress to enact a Law saying any multinational company who have a Billion dollar can Sue! Because they have lobbyist and they can give to the congressional campaign.

    John Chamber is also saying: If you are an ordinary American / small startup / a University Professor with a good idea and you patent it and eventually USPTO grants you a Patent. And then if you have the audacity to tell the Billion dollar multinational company (that does not pay any taxes in America) that you are infringing on this USPTO patent.

    Then US congress should enact a law that helps this Billion dollar multinational company to label your university/small-startup as a Patent Troll in the media!
    And then get your patent invalidated in PTAB with multiple proceedings in an Article 1 Tribunal court.

    Because US congress and John Chamber knows that the Jury (ordinary Americans / who they think are too stu**d) will not buy your 49 invalidation theories put forth by your So called Expert-Opinion, the expert that John Chambers /Google bought by paying a $500,000 to.

    1. 18.2

      US congress should enact a law that helps this Billion dollar multinational company to label your university/small-startup as a Patent Troll in the media!

      It’s simultanously sad and also very, very funny that people seem to believe that the coining of the term “patent troll” is somehow itself responsible for the public’s allergic reaction to NPE’s wielding junky patents that, in nearly every case, should never have been granted in the first place.

      It’s the other way around, folks. The reason the term “patent troll” has legs is because it’s an incredibly apt description of the behavior of a certain class of patent attorneys.

      The term isn’t going away.

      In the meantime, have fun convincing the public that the “Royal Nine” are “out of control” and “anti-patent” because they gave methods of thinking about data or storing it on a computer back to the public. Seriously: knock yourself out. Maybe think about hiring Big Bird or Taylor Swift to help you sell your message to the public. And if that fails you can always start that impeachment campaign, starting of course with those judges who use the term “monopoly” in their patent decisions.

      1. 18.2.1

        MM ,

        Not sure who pays your salary Google, Cisco or One of the PR firms that they hired.

        If you cant see the other side of the Coin, there is no reason to engage with you.

        Few Bad patents does not mean ALL patents are bad. Tell me why NO One is the whole Patent Reform debate wants to define the term “Patent Troll” who are we talking about ? A university ? small startup ? individual inventor ?

        Refusing to acknowledge the PR and Lobbying effort of Google& Cisco is also disingenuous at best.

        I can tell by your tone : you have never designed a software system or architecture for NEW information processing.

        You are one of those people who “after they are told how to do something” tell everyone it was obvious .. and if they are given a blank sheet of paper .. they have nothing to say.

        BTW: before you ask me ..I have been in the Software /coding/ and networking industry for 20+ years. And I have met a few folks like you. Always on a high horse and always copying from others … and never acknowledging other people’s contribution.

        1. 18.2.1.1

          Not sure who pays your salary Google, Cisco or One of the PR firms that they hired.

          None of them. I don’t like any of those companies and I would never work for a PR firm. So right there is a huge strike against you and your ability to reason. Congrats!

          If you cant see the other side of the Coin, there is no reason to engage with you.

          I’ve been on all sides of “the Coin” and I’m also a member of “the innovation community.”

          Tell me why NO One is the whole Patent Reform debate wants to define the term “Patent Troll” who are we talking about ?

          I can’t tell you why because your statement is false. I’ve defined the term in the past. A patent troll is an entity whose profts derive solely from patent assertion, where the patent being asserted is — in nearly every instance — related to information processing or computer technology and where the patent is functionally claimed.

          Refusing to acknowledge the PR and Lobbying effort of Google& Cisco

          Oh noes! Somebody is lobbying! But the patent maximalists have never, ever lobbied for anything or refused to acknowledge some fundamental logical argument that a 7th grader could follow! Seriously: your hypocricy was transparent back in 2005. It’s ten times more transparent in 2015 when everybody knows how the maximalists reacted to KSR, eBay, Nuitjen, Prometheus and Alice. How do we all know that? In part, because of THESE BLOG COMMENTS which were inundated with patent-worshipping sockpuppets going apeshirt in real time while the vast majority of the saneand reasonable public golf claps and moves on.

          can tell by your tone : you have never designed a software system or architecture for NEW information processing.

          And I can tell that you have no idea what you’re talking about.

          I have met a few folks like you. Always on a high horse and always copying from others

          Because only a lazy “copyist” could possibly believe that the thoughtless granting of information processing patents for 20+ years has terribly corroded the patent system. Yes, that makes sense. Sure it does. And I’m being paid by Google. Sure I am.

              1. 18.2.1.1.1.1.1

                MM,

                As you should be able to tell from my comments, I largely agree with you. Especially that there are a large (ok, huge) number of junk patents currently in existence and in the pipeline.

                That said, I am somewhat troubled by the incredible expense of asserting a patent.

                Of course, what a lot of people here fail to see is that the two are very much related. If the USPTO only granted high quality patents, things like IPR, CBM and a lot of litigation nonsense would be completely unnecessary.

                So, those of you that think it should be less expensive to assert a patent, we should all be in favor of eliminating the worst of the worst patents. Once that happens, the entire ecosystem can evolve.

          1. 18.2.1.1.2

            “related to information processing or computer technology and where the patent is functionally claimed”

            So If I understood you correctly, according to MM NO patents should be granted for “Information Processing or Computer Technology”? That pretty much covers everything in the IT sector!

            So MM according to you

            NO patents for Networking, Database, Wireless, Mobile, Operating Systems, Memory, Search, Protocols, and 100 other computer technology areas … because it is all bits (information) going from one end to the other for processing ?

            Is that what you are advocating?

            As for your comment “A patent troll is an entity whose profts derive solely from patent assertion”

            Have you heard of startups that were too early to the market in a technology area, they built the product but failed, After 5 years and 5 million dollars later the only thing a failed startup has is some really good IP.

            Now the market has caught on and everyone wants to do the same thing, that they pioneered 5 years earlier. What happens to the investors who invested in that first startup? Should they just give the IP to everyone for free and not try to recoup the investment they made?

            1. 18.2.1.1.2.1

              Have you heard of startups that were too early to the market in a technology area, they built the product but failed, After 5 years and 5 million dollars later the only thing a failed startup has is some really good IP.

              I am trying not to laugh.

          2. 18.2.1.1.3

            > “A patent troll is an entity whose profts derive solely from patent
            > assertion, where the patent being asserted is — in nearly every
            > instance — related to information processing or computer
            > technology and where the patent is functionally claimed”

            Not sure I agree with the last part of this definition, because I think “trolling” is more related to the business model of the entity than the types of patents they assert. Information processing happens to be the area where so many of these “troll suits” come from, but if there were large numbers of available patents in other areas like medical devices, the “trolls” would be asserting those too.

            But it’s annoying to see all of this 2008-era thinking about debating the definition of a “patent troll,” an inquiry that is perpetuated by NPE proponents to try to point out some kind of hypocrisy in the way the term is applied by proponents of reform. NPE proponents and patent cheerleaders like to pretend it’s really hard to define a “troll” with any precision, because that makes it look like there’s not really a problem here.

            But in the end, MM is right — it’s actually very easy to identify the entities that people regard as trolls. Does the entity derive most or substantially all of its revenue and operating capital from asserting patents in litigation? If the answer is “yes,” that entity is probably one that every reasonable person would agree is a “troll,” and it would exclude universities, true research institutions (not fake ones like IV), and legitimate individual inventors.

            That’s why troll is a much better term for these problem entities than “non-practicing entity,” because lots of entities that are not trolls, like universities and big companies, may not technically be practicing their patents anymore for various reasons (research, product evolution, etc.), but most would agree shouldn’t be branded with the troll/NPE label.

        2. 18.2.1.2

          Brian, I’ve been on this blog for 10 years as has MM. During that 10 years MM’s rhetoric has matched the judicial activist and anti-patent movement point by point.

          He spends about 40 hours a week blogging on this blog and others.

  10. 17

    Think piece:

    311(b) SCOPE.—A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.

    Are patent applications printed publications or patents?

    1. 17.1

      Applications are of course printed publications when they are published. But I suspect your real question is as to using the filing date benefit of published applications for prior art purposes, not the effect of their publication date?

      1. 17.1.1

        Paul, you got it.

        The phraseology of the statute seems to require that applications be treated as publications. I daresay that the drafters did not intend this, but the statutory language is mandatory in its nature.

        I wonder if anyone has raised this issue in an appropriate case?

        1. 17.1.1.1

          You don’t think “only on a ground that could be raised under section 102 or 103” implies the applications would be used as of their priority date (even if the applications are considered “printed publications”)? To me, it seems like a tough argument to make.

          1. 17.1.1.1.1

            PatentBob, if an application qualifies only as a printed publication, then it is good only as of its publication date.

            I was just listening to the oral argument in Suprema v. ITC — it concerns an ambiguity in 337 that speaks to “articles that infringe.” But, under 271, it is not articles that infringe, but acts of people that infringe.

            Here the statute on its face is clear. Can there nevertheless be an ambiguity?

            ONLY patents and printed publications seems very clear.

            1. 17.1.1.1.1.1

              Ned, that same language has been in the ex parte* reexamination statute since 1980, in Section 301, and it seems strange that in the entire subsequent time period since most U.S. applications have been published that no one has ever sought to question the effective prior art date of a published patent application in a reexamination as being limited to its publication date? Those 18 months could be critical for fast moving technology.
              *[Different language was provided for inter partes reexaminations.]

              1. 17.1.1.1.1.1.1

                BTW Ned, I think a simple way to deal with this is to simply say that a printed patent application is a unique form of printed publication for which its effective prior art date has been legally defined in 102 as its filing date rather that just its publication date.

  11. 16

    Parties are more inclined to settle a lawsuit when they are in roughly equivalent positions (e.g., competitors in a particular market) and there are opportunities to “log roll” and discover mutually beneficial outcomes that avoid future lawsuits.

    When a plaintiff has invested nothing except money and/or legal fees to obtain its patents (because no other skill is required) and when the sole purpose for existing is to file lawsuits on those patents, the people targeted by that plaintiff are not going to be inclined to cooperate.

    This should be incredibly easy for everyone to understand. People who dont understand it generally suffer from an warped sense of entitlement and an even more warped view of their importance in the “promotion of progress.” More specifically, people who don’t undertstnd this are typically patent lawyers directly invested in the status quo and directly invested in any changes to the system that make it easier — always easier — to obtain and enforce patents, regardless of how that impacts the patent system generally or the public at large. Call the grifters, call them bottom-feeders, call them trolls. They aren’t going away but if you don’t point them out when you see them, they will do whatever they can to get money out of your pocket and into theirs.

      1. 16.1.1

        Ned: Sole purpose is to file lawsuits?

        Oh, excuse me. I forgot “threaten to file lawsuits”.

        That’s two purposes. And there’s a huuuuge distinction between the two of them, as everybody knows. Really, really huge.

        1. 16.1.1.1

          MM, regardless of file or threaten, the implication is to price a settlement below the cost of the suit so that infringement and validity never get tested.

          I assume such firms exist. I once represented someone in a criminal case. Small time, I got them off. But they received dunning notices from an out-of-state law firm pretending to represent the victim demanding settlement of a purported civil action to be filed if so and so payment were not made by a specified date.

          I did not bring the matter to the attention of the authorities, but I guess I should have because those who where not represented by attorneys may have just sent these scam artists a check — somewhat like scam one hears about when so and so person from Nigeria needs you to send them ten grand in order for you to receive ten million in lost or abandoned funds.

    1. 16.2

      Company A, which manufactures products, has inventors, spends lots of money, gets Patent 1. Company A sues Company B for patent infringement using Patent 1.

      Company A also gets Patent 2, but decides to divest this to NPE A. NPE A makes no products and employs very few people, mainly attorneys. NPE A sues Company B for patent infringement using Patent 2.

      So, Company A is virtuous, righteous, a pillar of society, and the patent system obviously works well in light of Company A’s producing products sold to people.

      Meanwhile, NPE A is e vil, sli me, worse than dirt, and the patent system is obviously broken in light of NPE A’s lack of production of products.

      Is this your argument? If not, how do you reconcile these two situations (which are actual, real-life situations, by the way)?

      And is it the patent system that is broken or the companies who are taking advantage of the system (whether broken or not)?

      What about Company C, which spends millions of dollars getting many, many patents, and creates many jobs and produces many products, but which aggressively licenses those products including suing other companies? Is the patent system broken in some way for Company C?

      And, for all of these situations, how could the “broken” patent system be fixed in a way that corrects whatever you think is broken?

      1. 16.2.1

        Company A also gets Patent 2, but decides to divest this to NPE A.

        And why would “Company A” do this? More specifically: why would anybody except a patent litigator /andor wannabe patent troll want a patent system that enourages company A to do this?

        Answer that question in a compelling articulate manner and you’ll be one small step along the steep path to selling the awesomeness of patent trolling to the public.

        And is it the patent system that is broken or the companies who are taking advantage of the system

        It doesn’t really matter much because fixing the system is going to cause the exploiters financial pain. They are going to weep and cry and complain that their awesome contributions to “progress” are being unfairly denied and “everybody” is going to “pay the price” for treating them so unkindly.

        This was absolutely predictable and it was predicted and those predictions are coming true in spades. Time to cue up the “PTO scandal machine”! Time to sling that “big corporations don’t innovate” baloney. Time to beat that dead horse about the “little guy” who can’t make $50 million dollars dreaming up patent claims and asserting them against the “thieving big corporations” while at the same time doing everything possible to make life harder for people who make ten or 100 times less than the typical “little guy” and his patent dream machine.

        how could the “broken” patent system be fixed in a way that corrects whatever you think is broken?

        Golly, it seems like I’ve answered this before but here it is again: completely expunge from the system claims to information processing in all forms except those apparati that are described in objective structural terms which distinguish those new apparati from the prior art. That’s a great start because right there we’re back to where we were before the system started going off the rails and some stooge attorney could dream up “new” functions and/or pure business methods with which to harass successful companies that provide actual goods and physically transformative services to people.

        The major mistake that the patent expansionists continue to make is to pretend that the issues around information processing patents are going to “go away.” They’re not going to go away. They’re going to become more and more obvious to more and more people and it’s going to come to a head and there is going to be even more gnashing of teeth.

        For cripes sake the same people who can’t figure this stuff out (or pretend not to) railed against KSR, Prometheus and Alice. They are incapable of expressing any thought deeper than “the Royal Nine are bad because Amish”.

        1. 16.2.1.1

          …another dissembling tactic: misrepresent what others have posted.

          It appears that Malcolm cannot have an intellectually honest conversation – ever caught up as he is in his spin game.

        2. 16.2.1.2

          “And why would “Company A” do this? More specifically: why would anybody except a patent litigator /andor wannabe patent troll want a patent system that enourages company A to do this?”

          Company A would do this because patent 2 while valuable is not directed to subject matter in the core business of Company A or is of more value to Company B and Company B is willing to pay a premium for it.

          For example, patent 2 might come from Chicago way
          and be related to a boogie style that no one else could play.

          Who ever has it would be the top man at his craft.
          But Company A might not be interested in Boogie.

          So, when the patents number comes up
          it ‘s gone with the draft
          Someone else uses it
          He’s the boogie-woogie bugle boy of Company B..

          And now the company jumps
          When he plays reveille
          He’s the boogie-woogie bugle boy of Company B
          A-toot a-toot
          A-toot diddle-ee-ada-toot
          He blows it eight to the bar
          In boogie rhythm

          –with apologies to Laverne, Maxine and Patty–

    2. 16.3

      The thinly veiled “patent armegeddon” of only Big Corp should have patents (and thus the “Mutual Assured Destruction”) IS the origin of the so-called “Tr011” counter measure. Race to a bigger war chest and a “you better cross license or else” is quite evident.

      This should be incredibly easy for everyone to understand.

      Of course, Malcolm only wants the most accessible forms of innovation de facto blocked (and yet still whine about “1%ers and grifters” and such.

      1. 16.3.1

        The thinly veiled “patent armegeddon” of only Big Corp should have patents

        No idea what “patent armegeddon” is supposed to mean. But the idea that “only big corp should have patents” is a strawman of your own making. It’s certainly not mine.

        Malcolm only wants the most accessible forms of innovation de facto blocked

        That’s pretty much what everybody wants except for a tiny, tiny, tiny fraction of wealthy, entitled people who apparently can’t figure out any other way contribute to society except to obtain and buy junky pieces of paper that give them the “right to sue” other people.

        1. 16.3.1.1

          and once again dissembling – claiming that his agenda affects the wealthy while it is quite obvious that it is aimed at a different set of inventors.

          Classic propaganda: repeat the L I E no matter what.

          1. 16.3.1.1.1

            a different set of inventors.

            A “different set of inventors”?

            Describe this “set” to me. How big is this “different set” and what is the average income/net worth of “inventors” in this “non-wealthy” set? Then can we all decide how many buckets of tears to fill up for these poor, poor “innovators” who dedicate their lives to “progress” and slave away in their dangerous, dirty garages.

            1. 16.3.1.1.1.1

              What is the point I your question?

              All I see is dust-kicking and poorly used ad hominem.

              Buckets of tears? What strawman are you attempting to build?

              Dangerous garages…? Yet another strawman.

              You do everything here EXCEPT acknowledge the propaganda that you are so evidently engaged in.

              You really do not f001 anyone.

  12. 15

    I would just like to point out the two recent Supreme Court cases, MedImmune and eBay, and IPRs, have increased both the likelihood of litigation and their expense.

    1. Because license negotiations are no longer possible without an infringer filing a defensive declaratory judgment action a due to MedImmune, many patent enforcement organizations simply file suit.

    2. Because injunctions are no longer reasonably possible due to eBay, infringers have very little incentive to actually settle either before litigation or during litigation.

    3. Because an accused infringer can file an IPR at the first hint that they are an infringement target, patent owners have every reason to keep their powder dry, not engage a license negotiations and simply sue when the time is right.

    If we want to reduce litigation and produce more settlements, amending the declaratory judgment action law to allow a mandatory period of negotiation prior to anybody being able to file a declaratory judgment action might help.

    Ditto IPRs.

    And if we want to reduce the cost litigation in favor of settlements, we should restore to the reliability of injunctions in patent cases.

    1. 15.1

      Ned, yes, eBay’s reduction in getting injunctions may be a factor, but remember that it does NOT apply to most traditional patent infringement suits between actual producing competitors. Its primary impact has been in making NPE suits less lucrative.
      Yes, IPRs could be an option for companies approached by a patent owner, but the actual undisputed [but ignored] fact is that 80% of IPRs are only filed by parties being sued by the patent owner, after they are sued, not before.
      Re: “license negotiations are no longer possible without an infringer filing a defensive declaratory judgment action a due to MedImmune” I again ask where is there statistical or other proof for that widespread assertion? I.e., that any such alleged flood of D.J. actions by companies approached with a license offer has actually happened to any significant extent? Simply repeating such assertions does not make them any more valid than those of the subject WSJ article. The facts will undoubtedly show that D.J. actions are a very small percentage of total initiated patent suits.
      Anyone can express their personal views on this blog, but why not stick to t those actual provable facts?

          1. 15.1.1.1.1

            Well, Paul, my statement was “many” simply file suit. Jane has made the point that “many” do just that from her own personal experience. Since I am no longer inside at a big company, I rely only on anecdotal evidence provided by the likes of Jane.

            The problem I see with is that there is no reliable way of negotiating with an infringer without them starting litigation. It is the hair trigger nature of the beast that forces the patent owner’s hand.

            1. 15.1.1.1.1.1

              there is no reliable way of negotiating with an infringer without them starting litigation.

              Reliable? You mean “guaranteeed”, I think.

              I don’t see why such a guarantee is necessary. Is the infringe guaranteed that you are going to negotiate reasonably, taking into account how the patent was obtained by you, whether you are practicing the patent, and whether the patent is likely valid or not? Of course there is no such guarantee. Given the types of the patents and “monetizers” that we know are out there, the opposite expectation is more reasonable.

    2. 15.2

      The flaw in this argument is assuming that reducing litigation, in and of itself regardless of the merits of a case, should be an end goal in itself. I agree, if the suggestions you made were implemented, protracted litigation may reduce, because accused infringers would often have no choice but to settle lest they be hit with an injunction that destroys the business. A rational company then would settle for anything up to bankruptcy, even if they have strong reasons to believe the patent is invalid and/or not infringed.

      But I don’t think we as a society should be attempting to limit litigation simply for limiting litigation’s sake, and allowing undeserved advantages to parties solely because of relative litigation positions.

      What we should be doing is figuring out ways to better allow parties to figure out their relative rights without having to spend millions of dollars (on both sides). This is the failure of the current system. It takes too long and costs too much money to figure out whether someone is infringing a valid patent. Certain patentees know this, and use this fact to their advantage. Certain defendants are surely guilty of the same thing.

      A patent, on average, is examined for only 19 hours before issuance. The Patent Office has essentially pushed all the costs of figuring out whether something is truly an invention on to players in the system, and that fact has been taken advantage of by certain players. Better examination would go a long way to reducing costs because it would both better keep bad patents (i.e. those that never should have issued) out of the system and would allow patentees who get a patent to be able to better rely on the patent as a true description of what rights they have.

      1. 15.2.1

        Jane, we need to allow negotiations before anyone can file suit (while preserving rights); and we need to force parties to file summary judgment motions at the earliest opportunity — and until that time, we need to defer other motions and discovery, e.g. that are directed to damages.

        If for example, the patent owner wins on infringement and his patent is not summarily declared invalid, the only remaining issue is damages, and that is the subject of negotiation, not litigation, and potentially validity. But for all intents and purposes, the case really is over.

        On the other hand, if the patent owner loses on summary judgment, the case is over.

        Summary judgment is the way to go to reduce costs. Moreover, while the court is deciding, the case should be put on hold.

          1. 15.2.1.1.1

            Exactly, and they are not the only D,C. that may not even timely entertain, much less decide, S.J. motions until near the trial date, and thus preclude S.J. from reducing litigation costs. For that matter, the Fed. Cir. does not have a good track record for sustaining S.J. judgments for invalidity [anything other than non-infringement] [as exemplified by KSR itself] where there is an allegation of “disputed facts.”

          2. 15.2.1.1.2

            Jane, if, after claim construction, neither party can prevail on SJ for infringement or non infringement, then of course the matter has to go to trial.

            But if a mandatory time to file SJ motions comes and goes, both sides will know that the issue of infringement is uncertain. This is where serious negotiations are possible. At this point, there should be mandatory mediation.

            The point of having a mandatory time to file SJ motions in a patent case or else is, of course, to either get early resolution or settlement. The “or else” needs to have teeth, for example, denying the non moving party any right to collect attorneys fees, etc.

            As to local rules requiring a motion to file a motion, these do seem to violated due process.

        1. 15.2.1.2

          I have several times filed summary judgment motions along with the answer or within a few weeks, and even a 12(b)(6) motion instead of an answer. It works. Plaintiff’s attorneys go ape, like it’s unfair to point out the absence of a big giant claim element in the accused device before they get a chance to impose a million dollars in fees (and bill a million for themselves).

      2. 15.2.2

        “The flaw in this argument is assuming that reducing litigation, in and of itself regardless of the merits of a case, should be an end goal in itself.”

        Imma disagree. The merits can be safely set aside as the merits themselves are a separate issue. Whether or not people make the choice to fight about the merits is the current issue. That and ways to stop them from fighting about the merits, or, in the alternative make those fights more reasonably sized.

        1. 15.2.2.1

          6, totally agree. See 15.3.1.1.1.1.2

          As inside counsel, I could decide whether we infringed, the patent was invalid, whether we any other good defenses, or whether the whole point was to get a lower-cost license. If the reason we did not settle was because we believed we had a solid defense, we usually ended up litigating.

          And then I lost control.

          Most litigation then went off the rails and into a swamp where the whole reason we were fighting was forgotten. This is an old saying about war, but it is also so very true about litigation.

    3. 15.3

      Ned what about the inherent proportionality/equity problems with injunctions when infringed features may be tiny components, or even tiny components of sub-components that have zero realistic effect as sales-drivers?

      If a patentee has such fear of a DJ that they have to sue first, ask questions second, how strong is their patent? Can a patentee go out into the world to assert a patent and not be prepared to defend it in court?

      This subject is one where my lack of legal training is trumped by my personal experience: IBM Kenexa sued my very small business (along with 11 other small companies, some literal mom and pops) over a joke of a ’90’s functional patent, without warning.

      Their demands, throughout the litigation (including through copious discovery when they should know better), likely exceed everything we made in the period in question, and the subcomponent they sued on never made a single sale for us. We removed it and nobody even noticed. (we have our own exact prior art, but that’s a whole other issue).

      An injunction in our case would have compounded an economic crime into an economic atrocity. Bad enough that we have suffered slower growth and been able to hire fewer people etc. because of this scam, but to put us out of business over it? Utterly insane.

      The problem is this: to be accused of patent infringement is to lose. You cannot win, and any patentee can accuse with no virtually no sanction.

      While this is true of any civil litigation, to defend against a patent infringement assertion with zero merit is not $5K or $10K or $20K – the kind of money any going concern can absorb, but more like $100K, or $300K or $600K, and that’s simply an economic crime. There is something basically wrong with a system that allows it, and it happens every day.

      It happened to me.

      Maybe Octane/Highmark changes things, but I’m not hopeful because the judicial worm turns so slowly, and the Fed Circuit is so resistant to virtually any meaningful change….

      1. 15.3.1

        Martin, every case is different. But if the infringement is a component, why not simply swap it out for a licensed component?

        Posner in the Apple v. Motorola case noted that most software can be made non infringing with a few edits of code. No big deal.

        Regarding IBM, they have always maximized litigation costs. They have a reputation. This is why one negotiates with IBM rather than litigate.

        1. 15.3.1.1

          Ned we don’t need a license because the feature is essentially worthless in the marketplace. We took it out, nobody cares. Even so, we developed it ourselves, and sold it commercially, well before the priority date.

          Yes, we would have paid a reasonable fee to make it go away, but they want everything we made in the period- as in likely over 100% of our total profits. How do you negotiate from there?

          1. 15.3.1.1.1

            Martin Snyder, “Yes, we would have paid a reasonable fee to make it go away, but they want everything we made in the period- as in likely over 100% of our total profits. How do you negotiate from there?”

            Arbitrate that issue.

            Stop the litigation.

                1. Why should someone be forced to concede potentially winnable claims solely to get someone to be reasonable?

                2. Seems highly risky to surrender a series a strong defenses to the whim of an unknown arbitrator. If the other side would agree to some baseline royalty rate etc. prior to such an agreement…but they won’t. We have offered settlement discussions, and they come back with utterly unhinged figures. We have zero effective choice but to pay and pay and pay to defend ourselves. I mean, notwithstanding paying for something you know damn well you should not have to pay for. Like mafia “protection” ya know?

              1. 15.3.1.1.1.1.2

                Jane, I understand Martin’s frustration. He is litigating only because of one issue. So, litigate that one issue only by settling the case leaving that one issue to binding arbitration.

                I cannot tell you how many times I have thought that a case could be simplified to one dispositive issue, which I would be willing to arbitrate or to even flip a coin to resolve. But I always found myself blocked by litigation counsel who wanted to litigate everything (to their own benefit, I might add.)

                For example, I had one case where we did not settle because I believed the claims were invalid on their face under 112, p.2. But instead of seeking early summary judgment on this issue, litigation counsel ran amok, IMHO, ran up the bill and cost the company a fortune.

                Such is life.

                1. If you didn’t like what litigation counsel was doing, perhaps your problem was with the choice of litigation counsel.

                  I am happy to recommend some firms to you who are much more strategic in their choices if you prefer. IMHO, these firms are the ones that keep their clients long term, and the firm that didn’t listen to you is likely not one of them.

  13. 14

    Unfortunately, this WSJ editorial (if you can call it that) is based upon the discredited Bessen and Meurer study reported in “The Direct Costs from NPE Disputes.” The methodology in that study has been shown to be highly flawed by others. No more need to be said as to unreliability of this WSJ editorial to prove anything.

      1. 14.1.1

        It could have been a lot more enlightening if it had pointed out facts WHY the Bessen and Meurer study and the WSJ article should be discredited. Such as the APJ non-joinder statute that artificially inflated patent suit filing statistics from before and after that statute.

        1. 14.1.1.1

          Such as the APJ non-joinder statute that artificially inflated patent suit filing statistics from before and after that statute

          Litigation rates were rising before the APJ statute.

          1. 14.1.1.1.1

            What’s missing in those “stats” Malcolm is the proper norming of lawsuits per available patent claim.

            When viewed properly, the boogeyman of being sued and “Tr011” can be seen for the witch hunt and tail of flea on the tail of dog wagging the dog that the big Mega Corp picture and anti-patent rhetoric that it is.

            1. 14.1.1.1.1.1

              Why is normalizing per available patent claim necessary?

              System churns out record numbers of patents, record number of lawsuits…that seems obvious.

              Maybe normalize for the population of the country, or something like that?

              1. 14.1.1.1.1.1.1

                No one said “necessary.”

                But if you want a more realistic trend line (per the implicit message that “patents are bad,”) then it only makes sense to normalize upon the most pertinent factor.

                In fact, when you do so you would likely see that the incidence of lawsuit rate was DROPPING.

                When you see this – and understand the big picture – you can identify the propaganda better.

                It’s like comparing the number on a straight basis between auto f@talities now and one hundred years ago and declaring that autos were immeasurably safer back then.

                One should understand perspective and context.

            2. 14.1.1.1.1.2

              What’s missing in those “stats” Malcolm is the proper norming of lawsuits per available patent claim.

              Ordinary Guy: “My family has been operating a business for 150 years and we were never sued but now we’ve been sued twice in one year.”

              Disciple of Ron Katznelson: “Have you not heard the Good News? The reason you have been sued twice in one year is because there are 100 more times more patents now than ever before in the history of the patent system. Go now in peace.”

          2. 14.1.1.1.2

            Your statement MM that litigation rates were rising without acknowledging the unethical conduct of the authors for not normalizing the litigation rates should in a rational world be enough for you to endure about 10 years of censure.

            Shameful.

        2. 14.1.1.3

          “It could have been a lot more enlightening if it had pointed out facts WHY the Bessen and Meurer study and the WSJ article should be discredited.”

          It would be super enlightening if it pointed out facts as to what the actual facts are in their opinion (hopefully using the same definitions as B and M and then perhaps providing alternate definitions and numbers to go along with them)

  14. 13

    Query: If the cost of litigation is literally “too high”, what plaintiff or defendant in its right “mind” (or under any reasonable leadership) would choose to litigate rather than take any other course of action?

    Certainly if the plaintiff or defendant believed another course of action were more financially optimal would it not rationally choose that course instead?

    If a plaintiff or defendant actually chose (rationally) to litigate does not that indicate that the “costs of litigation”, far from being too high, instead represent a combination of the least risk, lowest liability/costs, or highest financial return, i.e. that choosing not to litigate would actually (given all the risks over the long term) “cost more”?

    Stating litigation costs are “too high” for any plaintiff or defendant making the choice to litigate is tantamount to stating they are making a financially suboptimal decision.

      1. 13.2.1

        Certainly, but a businessman cannot escape the ultimate responsibility of deciding what the best course to take is given all the financial, marketing, PR, legal, regulatory , etc. advice he/she receives.

        1. 13.2.1.1

          anon2, are you to suggest that a General Counsel, CEO or Board is going to overrule the advice of litigation counsel? If they do, and something screwy happens, who gets fired?

          1. 13.2.1.1.1

            Correct Ned, which is why I keep saying that a rational company that wants a valid patent litigation risk analysis and/or cost-benefit analysis should logically be getting a second opinion in advance from another expert firm that is NOT going to be their litigation counsel and thus has no unconscious or conscious large personal financial bias to litigate. Just as one does for major surgery.

          2. 13.2.1.1.2

            I’m sure CEOs will have no problem firing legal advisors who are dabbling in giving bad financial advice.

            Legal advice deals only with legal consequences and legal issues, not the overall business and financial consequences.

            A rights holder could, for example, simply to decide to sell IP, close a widget line down, if financially over the long term it makes more sense than litigation. An infringer might employ a work around which does not infringe, or sign a license, and a non-infringer might decide to cross-license or settle.

            Legal rights cost money to enforce, those rights also represent a value (why else enforce them?). Properly valuing the rights in a business context is required to know whether the cost of enforcing is justified as against all other options.

            Again the CEO not the legal advisor is best situated and in fact responsible for making the business decision.

            E.g. a valid patent which covers technology worth $100,000 world wide is not worth the money required to sue

  15. 12

    Oh poor, poor Cisco. Cry me a f&*#ing river. Are you arguably infringing a patent? If yes, then either pony up the $$ to license or expect to get sued. Who is doing the suing is irrelevant.

    I have to say, though, the anti-patent agenda is being pushed extremely hard by its proponents (i.e., serial infringers). I wonder why the likes of IBM, Microsoft, et al. aren’t pushing back.

  16. 11

    The elephant in the room is the exorbitant cost of the litigation process and the inability and unwillingness of courts to do anything effective to make the process more cost-effective.

    It is wrong to take the position that such costs are confined to patent matters. In the UK there was recently an action for defamation brought by the MP Andrew Mitchell. The allegations concerned use of the allegedly toxic word “plebs” in an argument with policemen at the gates of 10 Downing Street which occupied some 30 seconds of time and part of which can be viewed as CCTV recordings. According to the press, the dispute cost £3 million up to first instance trial. Court costs have escalated, both in the UK and in the US, where middle income individuals and medium size enterprises face financial ruin in taking their disputes to court and consequently to quote the words of Magna Carta, justice is denied.

    Automobile purchasers pay close attention to fuel economy measured in miles per gallon. In litigation, the analogous quantity is litigant £ or $ per decision, effectiveness being considered on the basis of the combined spend of the disputing parties. There is little evidence that courts are giving serious consideration as to how just decisions can be reached at the minimum cost and resources can be concentrated at an early stage on the important and meaningful points of dispute.

    In the EPO an opposition and appeal might cost each party some £50,000. For that outlay there is an exchange of written arguments based on documentary evidence, witness testimony and cross-examination in the rare cases where it is needed and a reasoned decision at first instance and at the appellate level. There are some who say that what you get is rough justice, but on the whole the level of complaint is low. Small companies and even individuals can initiate and defend oppositions without having to sell their homes or facing liquidation of their businesses.

    What is needed is a thorough review of civil procedure, both in the UK and in the US to promote cost-effectiveness. It is wrong to think that amendments to patent law can solve the problem – it is a structural problem underlying the whole court system and not just intellectual property. That being said, oral testimony, discovery and cross-examination are an essential aspect of UK and US civil procedure and are essential to avoid disingenuous or perjured testimony. The difficulty is to devise a framework in which they are deployed proportionately and cost-effectively so as to reduce cost while preserving justice.

    1. 11.1

      It is wrong to take the position that such costs are confined to patent matters.

      Absolutely correct.

      As I have pointed out, the anti-patent forces seize a “whatever” excuse to weaken patents and the problems should be addressed outside of the patent sphere.

      Another such area is the “ownership” facade – that belongs to a revamp of corporate formation law.

      Another such area is the “tax” facade – recently a subject of its own thread.

      The answer folks does not lie within patent law – such attempts should be shunted to the proper realms. Anything less just creates a more intricate (read more costly) legal landscape.

      My friends Occam and Einstein are waiting in the wings with additional advice if need be.

    2. 11.2

      Thanks, yes, especially as to U.S. discovery costs and failure to early define the actual claim scope, as noted below.

      But also note that attorney fees for patent litigation add up in a hurry at $500-$1000 per hour with several attorneys billing in parallel on the same case, along with paralegal, investigator and expert costs. That is not a court supervision problem it is to some extent a client cost-benefit supervision problem. Corporations that have hired in-house, and used, real patent litigation experts can reduce some of those costs.

      1. 11.2.1

        Both of the above posters are correct. We also have certain judges in certain venues who are absolutely opposed to any sort of early and expedient resolution of even junk patent cases. These judges are also convinced that they are the best arbiters of patent disputes. As a result, they represent Valhalla for NPEs with junk patents and always have clogged dockets, further slowing resolutions. Combine all that with a reputation for being extremely plaintiff friendly, and you get millions of dollars in “transfers” (which everyone except university economists calls “costs”) that are not based on anyone’s conception of value, but rather on the costs of litigation.

        If a defendant spends $1,000,000 in attorney’s fees fighting a case that it’s sure it will eventually win only to settle for a trivial amount on the courthouse steps (with the plaintiff who’s sure he will eventually lose) to avoid the expense of a slanted trial and inevitable appeal, the pro-patent crowd calls it evidence that the system works, and chalks that up to a “constitutionally approved transfer,” rather than calling it what it is.

        1. 11.2.1.2

          .f a defendant spends $1,000,000 in attorney’s fees fighting a case that it’s sure it will eventually win only to settle for a trivial amount on the courthouse steps (with the plaintiff who’s sure he will eventually lose) to avoid the expense of a slanted trial and inevitable appeal, the pro-patent crowd calls it evidence that the system works, and chalks that up to a “constitutionally approved transfer,” rather than calling it what it is.

          Yup.

          And these are the same folks who cheered the patent bubble every step of the way.

          There is no reason to listen to them. They are i d i o ts.

      2. 11.2.2

        Paul, most defensive litigation that I have seen has no other purpose but to delay and to increase litigation costs so as to force the plaintiff to settle for less than demanded because of the delay and because of the litigation expenses that the defendant might impose. I have seen very little in the way of defendants trying to get to a resolution of the issues quickly, unless they know they cannot lose.

        In a sense, this is why IPRs are attractive. It allows accused infringers to litigate an issue to a quick decision without placing at serious risk an ultimate loss on infringement.

        1. 11.2.2.1

          I could easily provide you examples Ned, where defendants have tried to get early resolution but have been prevented by courts and/or other parties.

          I could also provide you examples of where it was clear the patentee had no interest in getting to the merits.

          In the end, it comes down to this: why aren’t we getting quick decisions on the merits and why are we allowing any party to delay a just resolution?

          The system should support parties who are looking for quick resolutions (where appropriate) regardless of what side of the v. they are on. It is disingenuous to argue what’s good for the goose is not good for the gander.

          1. 11.2.2.1.1

            No doubt Jane that if one party has a weak case, they want to stay as far away from summary judgment as possible.

            What we need are rules and judges that force early motions for summary judgments with real consequences for failing to do so.

    3. 11.3

      Personally I think minimum wage laws prevent consumers from purchasing the level of incompetence they are willing to pay for (both in terms of money and potentially costly results)…. and that is equally true for hiring law firms.

      Certainly to the extent that inefficient tactics could be reduced by oversight of the process reform could be useful. The issues are complex, and the effort to ensure due process and justice as regards the property rights of patentees and the rights of defendants not to be found liable for non-infringing activity, can be, monumental. But the people who work to ensure justice are not slaves, and if the cost of fighting something when one is in the wrong is too high, perhaps one needs to re-evaluate one’s economic priorities.

  17. 10

    To me, while the causes of high prices for litigation are interesting, so are the effects of high prices – specifically, for small companies and clients.

    On the one hand, procurement is becoming cheaper and faster. Fees are being reduced, with micro-entity pricing now available; price stabilization in patent practitioner rates; and options for faster allowance = lower prosecution costs.

    On the other hand, the costs of enforcement are enormous – and continuing to grow, largely thanks to the expansion of anti-patentee options: IPR, CBM review, the added need to prepare a vigorous 101 defense for trial, etc.

    The result is a vastly disparate system that will give applicants a patent for a very affordable cost – but where enforcement is only available for the most well-funded applicants. For limited-budget applicants, if you can’t find a licensee, the patent is basically worthless… unless you sell it to an NPE.

    There is an inherent unfairness at play, and I can’t help but wonder if it is an intentional result.

    1. 10.1

      Good points David. I think we are more like a registration system now. In reality, you can get a patent, but you can’t enforce it without suffering through an IPR.

      1. 10.1.2

        Night, I agree; and to add to the insult, the IPR is rigged — BRI and the patent owner has to prove validity.

    2. 10.2

      Perhaps, but the reduction in fees paid to get a patent can be false economy. If you skimp on the patent prosecution side you will get bitten on the litigation side.

      1. 10.2.1

        Very true – anyone remember the old Fram oil filter commercials…?

        In fact, if we were to embrace a registration system and save the innovation community Billions in user fees that currently end up in examiners’ pockets, institute a much better tracking/cross reference library systems for a tiny fraction of the cost, remove the presumption of validity from registered patents, smart innovators would STILL pay well for patent applications because the crucible of enforcement would still have to be contemplated.

        The office budget is Billions folks – are we getting our money’s worth?

        1. 10.2.1.1

          You pay for getting something which has already been searched and examined, and has a presumption of validity. Thus, you have a stronger basis to assert ownership of an IP asset. Society benefits because there is less garbage patents: if you just did registration, everyone would have to perform a search, which would cost far more than the user fees.

          1. 10.2.1.1.1

            if you just did registration, everyone would have to perform a search, which would cost far more than the user fees

            A search and a legal analysis.

            Now ask yourself who benefits from that system. And then ask “anon” what he does for a living.

            But he’s not biased! Nope. He’s super objective. Just ask him.

          2. 10.2.1.1.2

            Just not true Simon.

            At all.

            Actual searches would NOT be done on every item and by everyone.

            Period.

            They would only be done by interested parties, and the search would be made easier by a state of the art reference system put in place with a fraction of the current Billion dollar bloat system.

            Malcolm, the services I provide are of value to my clients and are not a bias to the proposal. Quite in fact, it appears the you are now arguing against clients paying for quality application writing.

            That is the outcome of your dissembling “point” trying to impugn my motives.

            Your attempt at as hominem fails.

            1. 10.2.1.1.2.1

              A neutral arbiter can lower transaction costs for the entire society. A search firm can do a better job, but there is value in having a basic level of quality.

              For example, the government requires you to get a license before you drive, instead of requiring everyone involved in an accident to prove their competency.

              1. 10.2.1.1.2.1.1

                Requires…?

                You seek something that is just not there.

                Revisit Tafas my friend. That “some value” may be a worthwhile notion to pursue through the proper channels of changing the law, but as of today and right now – the law is not what you portray it to be.

                There just is NO such requirement of applicants to engage in ANY type of search (and make no mistake, search is a part of examination).

                Your argument then, simply falters on historical grounds.

                1. Your analysis completely misses my point. I am responding to your advocacy of a registration system where there is no examination, and am talking about the GOVERNMENT (here, the PTO) doing the examination.

                2. The BASIC level of examination does not prohibit a HIGHER level of examination that you get from an independent search and analysis.

                  I am certainly not advocating for the PTO position in Tafas: I have written and published arguments against those rules that mirror those taken by GSK in the Tafas case.

    3. 10.3

      When the people who are calling the shots about policy all share the same goals and interests, they do not see or even comprehend the legitimate arguments of people who will be adversely affected. There was a quote from Goodlatte that the opponents of his bill were trolls or some such. I think he really believes this, as if there were no legitimate arguments against his bill.

      1. 10.3.1

        There was a quote from Goodlatte that the opponents of his bill were trolls or some such. I think he really believes this, as if there were no legitimate arguments against his bill.

        Patent trolls certainly are opposed to Goodlatte’s bill. Pretty much all of them are, as far as I can tell.

        They were also opposed to KSR. They were also opposed to Prometheus v. Mayo. They were also opposed to Alice. And they will always oppose any legislation that weakens their ability to obtain and enforce the worst patents out there.

        There’s nothing wrong with pointing this out. It’s a fact. Goodlatte’s bill is going to hurt a certain class of participant in the patent system. That’s what it’s designed to do.

        If these horror stories that are being told by the people who are typically wrong about everything are true, we’ll all be happy to amend the laws again. But there’s a good chance that the horror stories are just baloney being flung around by the same tiny tiny group of self-interested entiled rich loudmouths who vociferously oppposed even the most reasonable fixes ever made to our sad patent system — fixes that pretty much nobody on the planet disagrees with except for them!

        1. 10.3.1.1

          Same old tired script…

          “It’s the tiny elite moneyed group”….

          Talk about your c0nspiracy theorists….

          (while the actual dichotomy remains that Malcolm is in pursuit if removing de facto the single largest and most accessible path to ALL people in the modern world of innovation)

  18. 9

    The office, because it doesn’t take the properly aggressive stance it should. It’s too interested in making nice with its “customers” (our word!) and seeking out something to patent rather than dispassionately judging the claims in front of it.

    Consequently, weak patents issue, and people sue on patents that have the presumption of validity, and defendants properly defend because they use all the arguments the office should raise to begin with.

    If the office subjected to claims to the standard a defendant would subject them to, defendants would be more likely to settle.

    1. 8.1

      Agreed. One simple solution: Encourage the parties to talk more before starting litigation. Reduce the risks of talking for both sides and penalize unreasonable behavior if ends up in litigation. Step One: Revise the standard for DJ actions. The Supreme Court’s decision in MedImmune started swinging the pendulum from one extreme (too hard for DJ actions) to another extreme).

      1. 8.1.1

        Couldn’t agree more. This coupled with allowing a plaintiff to stipulate that their case is worth “no more than X” would help courts and parties scale discovery and set thresholds for reasonable litigation expenses.

          1. 8.1.1.1.1

            “Just curious…why would a plaintiff stipulate a max value for the case?”

            Maybe hoping that the court would then help courts and parties set thresholds?

            I’m not exactly clear on that question myself, but I think that’s the answer he’s going to be giving.

            1. 8.1.1.1.1.1

              Small company brings suit against a big company to stop infringement. If the small company is reasonable and is not looking for a golden lunch ticket, the small company can stipulate that they are not looking for millions of dollars in damages. If the company is looking for a 150K license from the big company to use their patented tech, it makes no sense for either to burn more than that in atty fees to prosecute or defend the case. It is a signal to the judge that discovery should be limited and targeted.

              Furthermore, idiotic local rules that artificially rocket-docket patent cases increases the likelihood that unnecessary fees for services will be incurred. Patent cases should not be accelerated. In fact the opposite is true, more time allows parties to make rational decisions.

              Mediation should be used early and often (prior to claim construction) to resolve cases. Parties that expend more in atty fees than was stipulated to at the outset would only be able to recover the stipulated damages amount. This would put pressure on the defense side and understand that not every case needs to be solved with nuclear war.

              Again, big companies pi$$ away exorbitant amounts of money defending cases because (1) it rarely affects the bottom line for the company; (2) defense counsel is rarely motivated to put fewer folks on cases for fear of leaving some stone unturned; (3) claim construction and patent litigation, in general, are a complete crap shoot based largely in part on the judge assigned to your case; and (4) the business model of defense practices is not centered around minimizing hours spent on cases. Not all defense counsel are guilty of the above, but those who choose to deal rather than litigate are castigated for “folding”, especially if the plaintiff is an NPE.

  19. 7

    “When reach a point where out-of-litigation resolutions are rare, we should recognize that it is a systemic problem.”

    1) Is this the case? Only a very small percentage of patents are litigated. This could indicate that the overwhelming majority are settled or enforced in a reasonable manner (either through companies avoiding infringement of solid claims, companies avoiding the enforcement of claims with questionable scope or validity, or parties agreeing to formal or informal licenses and cross licenses.)

    Some companies are receiving close to or over a billion in royalty payments every year (IBM, Qualcomm), so someone must be negotiating settlements.

    2)Lowering the costs of dispute resolution isn’t a purely good thing. It can encourage more disputes, rather than encourage negotiation of disputes. If patent litigation only cost $5 dollars and took 10 minutes there are a number of patents that would likely be enforced against everyone who uses a computer to connect to an internet to do X, everyone who owns a device containing a memory chip, etc.

    As well, if companies are looking at paying damages based on a reasonable royalty rate if found to be infringing, but nothing if they aren’t, why wouldn’t they challenge validity and infringement if it was quick and easy? Every time.

    In many cases today a driving factor towards settlement is that the costs of fighting is so significant relative to the costs of settlement. If the costs of fighting decreases, you may have greater reluctance to negotiate a resolution, particularly for those cases where the damages are significant.

    1. 7.1

      That lowering patent litigation costs would just invite more patent litigation is an interesting argument. But note that this argument could be used to support a strong “loser pays” all the winners legal fees system, as in Goodlatte Bill.

      1. 7.1.1

        …which would then invite all the valid criticisms of that bill…

        Such as the scale again tips to those who will spend whatever to win.

        A king’s game and all…

  20. 6

    I’m skeptical of the claim that it is the defendants’ refusal to deal that raises costs when it appears that the vast majority of NPE cases are filed without any attempts to reasonably reach a conclusion prior to litigation. We see empirical evidence of this in the fact that NPEs are often unable to claim pre-suit knowledge of the patent for claims of inducement or contributory liability. Instead, they have to limit them because they didn’t even bother reaching out to the company beforehand. They just filed suit.

    Anecdotally in my experience, the same is true for direct infringement claims. Suits are filed without even an attempt at reaching a negotiated agreement. It’s a shoot-first-ask-questions-later approach. And given the extremely liberal pleading standards under Form 18, defendants don’t even know whether they should settle until well into litigation, when many of the costs are already incurred. And once you’ve incurred them, defendants often have (arguably irrational in some cases) responses to settlement.

    The current Innovation Act being debated is meant to address some of these issues. For example, making much stronger pleading requirements, and limiting discovery. These are good for BOTH sides to limit costs, and to better be able to evaluate whether they should settle.

    Finally, re fighting tooth-and-nail, for some defendants and patentees for that matter this makes sense given our current system. A patentee with many lawsuits is going to spend whatever it takes to make sure the patent isn’t invalidated, and a defendant that is a frequent target is going to spend whatever it takes to make them a less appealing target by signaling to others they’re not just going to settle cases that lack merit. It’s the repeat-player issue that has long been described in legal literature.

    1. 6.1

      Everyone knows why there is no pre-suit attempt to negotiate a license in the majority of cases — fear of a DJ action in Defendant’s home court. If BHT (big high tech) companies would announce a policy that they would not DJ patent holders attempting to negotiate a license, then the majority of cases would start with an offer to license letter. The second reason is that BHT often ignores such letters in any event. In-house people will admit that they are overwhelmed with the cases that are actually in litigation and can’t even bother to respond to the letters.

      1. 6.1.1

        If your position is that patentees get to enjoy the advantage of their home court but somehow that would be improper for defendants to want the same thing, I don’t think that withstands scrutiny. No party should be able to get a venue-shopping advantage (plaintiff or defendant). Unfortunately that is not the case today.

        But to the larger point, I don’t agree. There are ways to write licensing letters that don’t create DJ jurisdiction. Everyone knows this as well. As to your point about people ignoring licensing demands, I have no information about that.

        1. 6.1.1.1

          Post Medimmune there is no safe way to write a licensing letter and avoid DJ jurisdiction. Without the Arrowhead bright line rule, jurisdiction becomes a fact specific litigable issue. Venue selection is not some patent specific thing; throughout the law, plaintiffs generally get to pick the forum; in fact, thanks to the Fed Cir, patent infringers have it much better than most areas of the law with a presumption that most discovery will be with the defendant. What would you propose instead — flipping a coin? If the idea is the letter would lead to actual discussion (as opposed to a race to the court house) then BHT should have no problem agreeing not to file a DJ action. This would allow the parties to explore liability and settlement before the filing of a lawsuit.

          1. 6.1.1.1.1

            BHT (big high tech) companies

            aka DPTCBPBACLTSBATEMGHITPS (deep pockets that can be picked by attorneys completely lacking technical skills but able to exploit massive gaping holes in the patent system)

          2. 6.1.1.1.2

            Although in the law it is true that plaintiffs get to pick the forum, it is not true that in most areas of the law, plaintiffs get free reign to pick any jurisdiction in the nation.

            This is the real issue. Most causes of action have to be filed where the alleged injury has occurred and where the defendant can be found, and can’t be manufactured based on the fact that a shell company can set up a fake office in a jurisdiction that has rules that heavily favor patentees.

            I agree that companies should have no problem agreeing to not filing a DJ, so long as the patent owner also agrees to not file a lawsuit. This is not a one-way street.

      2. 6.1.2

        I won’t dispute the argument that too many companies just ignore licence offer letters these days. But I do question, without statistical evidence, the assumption that a large defendant, simply by filing a D.J.* in one of its locations first, has greatly better odds of success than when the patent owner files first in E.D.TX or elsewhere. [The odds in E.D.TX do not seem to be what they used to be.] This ought to be the subject of a legal academic study.
        *Which means the patent owner files a counterclaim for infringement there.
        *Note that filing expensive D.J.’s in response to license offers is inconsistent with saying that they just ignore license offers, so how frequently a D.J. filing actually occurs without a really serious suit threat by the patent owner would make for another good research question. In particular, are not at least some % of the 1000-odd IPRs now being filed per year even further reducing the number of patent D.J. suits?

        1. 6.1.2.1

          It wouldn’t surprise me if you were right that, when it came to trials, plaintiffs in one district fair no better (or no worse) than plaintiffs in another district.

          But what about those cases that don’t go to trial? A good study would look at the how the different settlements patentees were able to procure in different jurisdictions in order to analyze how the local rules influence settlement.

          For example, some jurisdictions (e.g. ED Tex) have local rules* that make it difficult to get summary judgment even heard (for both parties, admittedly). These sorts of rules (delaying SJ motions until the close of discovery even where the argument can be resolved very early, and only if the judge agrees to hear it in the first place) push defendants into a position where they know that more likely than not, they will have to go to trial to get a ruling on the merits. I would hypothesize that this would skew parties towards settlement of even the most frivolous claims in order to avoid trial costs. In other jurisdictions, the fact that a merits ruling may come early and with lower cost may lead to more frequent merits decisions (in either direction) and more settlements where the cost of settlement is more closely related to the worth of the patent instead of the cost of litigation.

          *I have seen people suggest that certain of these rules are not lawful in light of the Federal Rules. That would be an interesting challenge to bring.

    2. 6.2

      May I suggest that the real problem is that there is no real barrier to prevent litigation by the infringer (or for their filing an IPR). The system now has a hair trigger.

      If anything, we need to fix this. No DJ’s, no IPR’s or anything of the kind pending negotiations/mediation.

  21. 5

    largely not compelling

    Propaganda can becompelling.

    But when the schlock factor is so blatantly obvious (dare I say patently-so…), only those truly shameless join that chorus.

  22. 4

    One answer to the blame-question in this title is “neither” to a large extent. That is, a large part of the litigation cost is large unrestrained discovery cost burdens on large company defendants, often before any Markman determination to even define the claim scope and thus the the likelihood of actual infringement or not which could lead to a settlement. Part of the Goodlatte Bill would address this.
    Since it is not in dispute that about 97% of defendants settle before trial, it seems hard to blame “defendants for refusing to deal and instead fighting.” No doubt some companies should take a license sooner. It is not always easy for companies to make corporate decisions to pay a significant amount of present dollars just to avoid paying even more in litigation costs later. The few companies that do play multi-million dollar hardball defenses all the way through trials and appeals are in general companies threatened with very large damages claims, not those being offered reasonable licenses. On the plaintiffs side there are also sometimes extremely costly personal vendetta patent wars like the one Steve Jobs started, and look how that turned out.
    Of course it is also true that some large companies do still hire law firms on a prestige basis and let them run with uncapped billing opportunities, and make no other effort to question or control pre-trial litigation costs, or even get second opinions from anther good firm that will not be handling the case. Or, fail to promptly consider alternatives like an IPR or expert mediation.

    1. 4.1

      “large unrestrained discovery cost burdens” — judges, litigators and the patent litigation bar should work together to reduce these costs

    2. 4.2

      Paul, the simplest way to reduce litigation costs is to impose a mandatory time to trial, and to make that period short. Add to that a mandatory pre-suit period for negotiation/mediation, and we might have something.

      We might consider creating a pool of patent judges (Art. III) that might ride to the rescue of a local district court that cannot keep up.

      1. 4.2.1

        Given the problems with the Federal Circuit that have been well-documented, I don’t think it’s reasonable to suggest that a small pool of patent judges is the way to go. We tried that with the Federal Circuit, it hasn’t worked. If anything, we should consider disbanding the court to get new ideas into the mix. The Federal Circuit’s (and often the patent bar’s) insularity is its biggest weakness.

        1. 4.2.1.1

          Jane, I somewhat agree. After so many unanimous reversals and open criticism of the Court by the Supreme Court itself, and by fellow circuit courts judges, the Federal Circuit must be aware that it on probation.

          But long term, I don’t think the basic problem of being a special interest “court” having a special interest bar can ever be solved. The whole point of an independent judiciary is the lack of any political or other bias. But we can never expect to achieve that with a special interest court dominated by a special interest bar.

          A few more unanimous reversals this year might spell the end of the Federal Circuit’s exclusive jurisdiction over patent appeals. This might also help explain the court’s sudden interest in citing and relying on the old Supreme Court cases. (The exhaustion case thoroughly discussed most of the relevant Supreme Court authority on the topic. Another case on collateral estoppel, not yet discussed here by Dennis, relied as well on mid-1800’s Supreme Court cases.)

          1. 4.2.1.1.1

            Ned,

            Your admonition scone across as hollow and empty, given that you insist on being oblivious to the Court’s own “other bias.”

            The 1952 Act was – in very real part – a reaction against such a bias.

            Flash of Genius…

            Inventive gist (or others of a dozen or so other euphemisms by the courts)

            The only valid patent is one that has not yet appeared before us.

            The list goes on.

            Your “selectiveness” as to the historical record is alarming, and always has been.

            Need I remind you yet again that the power to actually write patent law was not provided to the Judiciary by our Constitution?

            Once again here you take aim at the CAFC, while the ammunition you choose to use applies even more so to the Supreme Court. At least the CAFC was charted by Congress to bring order to patent law jurisprudence – and therein the reason for the Supreme rebukes: tis but a p1ss1ng match by proxy. If the Supreme’s won’t give up their Nose of Wax addiction in the face of the direct words of Congress (see Prometheus and the comment about what exactly would not be allowed to become dead letters), do you really think that the Supremes would let a “lower” court have any final word on statutory law that did not fit the Supreme’s bias?

            You simply cannot be so selective as to ONLY see bias when it suits your views and turn a blind eye to bias when it aligns with your views. That is simply the path to no credibility for any of your views.

  23. 3

    The vast majority of those labeled “Patent Trolls” buy up patents from operating (or formerly operating companies). Thus, the quality of the patents between practicing and non practicing entities is roughly equal. The suggestion that one can determine the quality of a patent suit by the corporate structure of the plaintiff is simply nonsense. It is the same silliness that led people to believe that tort reform was about saving little league baseball instead of raising insurance company profits. Note that Cisco — which is a the poster child for patent litigation abuse (with its “don’t let them damn jews hold down us honest Christian people” litigation strategy) — is leading the charge here.

    “Serial infringers” are just as much to blame for alleged increased costs that NPEs. Talk to any foreign patent lawyer or company that is new to US patent litigation and they are amazed that US litigants (whether plaintiff or defendant) don’t want to discuss liability rationally before full blow litigation.

    1. 3.1

      The vast majority of those labeled “Patent Trolls” buy up patents from operating (or formerly operating companies). Thus, the quality of the patents between practicing and non practicing entities is roughly equal.

      Because the innovations of unsuccesful businesses are “roughly equal” to those of successful businesses?

      There seems to be some logical disconnect in your proposition. And never mind the spectactular repeated failures of many professional trolls whose patents seem to habitually end up in a burning cloud of invalidity and ethical sanctions.

      I’ll grant you that it’s certainly true that within a large class of highly suspect information processing patents, the “quality” (not really the right term) is “roughly equal” between operating and non-operating companies but somehow I doubt that’s what you meant.

  24. 2

    <ithere is also a strongly compelling case for arguing that the defendants are to blame for refusing to deal and instead fighting every lawsuit tooth-and-nail.

    I’d like to see someone make this “strongly compelling case”, providing actual examples and the complete text of the actual claims being asserted in those examples.

    Then we can see whether “defendants” (like Newegg?) “are too blame” for not simply playing along with the patentee and our excellent patent system.

    The last time I checked, patent claims and lawsuits don’t fall out of the sky. Patentees write them, or they buy them, and then they assert them.

    at this point – where the primary complaint is high litigation costs – the solution is not to favor one side or the other, but instead to look for systemic changes

    The change that needs to happen should be crystal clear to everybody at this point. A system that was designed to promote progress in the useful arts has been warped into a system designed to reward grifters and speculators who do nothing except push paper around. How did that warping happen? Some judges decided that logical relationships and information processing steps were “the essence of electronic structure” and they spent decades trying to build a shiny castle on that foundation and prevent attacks on it.

    Yes, by all means, let’s have some “systemic change.”

    1. 2.1

      You are aware of course (especially since I have told you) that the exceptions to the judicial doctrine of printed matter are not limited to the useful arts of your pandering mantra.

      But why let facts get in the way of your rants Malcolm…

      1. 2.1.1

        Anon,

        I feel like you have some ideas here that you could more fully develop. Lay out your position!

        I know it may be annoying to retype stuff, but the I, for one, want to see what you have to say. I know, archives. That’s not going to happen and I think you could sway some minds, at least towards some sort of middle ground (I know..Chamberlain…).

        1. 2.1.1.1

          Thanks Go.

          As you indicate – the ideas are already fully developed, and I know that the person I am reminding these ideas of knows the controlling law – because that person has volunteered admissions as to knowing that controlling law.

          It suffices then for me to be sparse and remind that person of which he has admitting knowing.

          This person wants to project that he is an attorney, yet advocates perpetually in a known deceptive manner dissembling and omitting critical material points of law and fact in his curse-ade against ALL software innovation (and patent protection thereof).

  25. 1

    Patent litigation is expensive because the stakes are extraordinarily high. Are you really going to risk your $10MM or $100MM verdict – for or, worse, against – by skimping on legal costs? Of course not.

    Contributing factor: The extraordinarily convoluted nature of patent law. The basic principle of an infringement case – does claim (x) cover product (y)? – has been vastly complicated by Markman hearings, proper levels of review, layers upon layers of review (IPR, district court, CAFC panel, CAFC en banc, remand, etc.), and a host of truly unknowable and unpredictable standards: patent exhaustion, patent abuse, 101, definiteness (Biosig), willful vs. unintentional vs. contributory, etc. We can attribute the cost to 40+ years of “we’re reluctant to provide a bright line, so here’s some squishy rhetoric that can be interpreted multiple ways” indecisions.

    1. 1.1

      Agreed, but there are procedural reforms that could lower costs. I have followed US and European litigations and the US ones seem to have a lot more paper, and more procedural posturing, which takes more time and money.

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