This recent article from the Wall Street Journal brought a chuckle. Seems the Obama Administration just stepped in to veto an ITC ruling, won by Samsung, that barred importation of certain Apple iPads and iPhones. What's interesting is some of the language used to justify the veto:
U.S. Trade Representative Michael Froman made the decision to veto the ban on the Apple devices, citing concerns about patent holders gaining "undue leverage" as well as potential harm to consumers and competitive conditions in the U.S. economy.
* * *
Critics of the ITC order questioned whether companies should be able to block rival products in cases involving patents that have been deemed to be essential to creating products based on key technologies overseen by industry standard-setting groups.
* * *
"We applaud the Administration for standing up for innovation in this landmark case," an Apple spokeswoman said in a statement. "Samsung was wrong to abuse the patent system in this way."
"Undue leverage," huh? Questions "whether companies should be able to block rival products." And, "abuse [of] the patent system." Gee, where have I heard those words before?
I trust Samsung and its lawyers are sitting back in quiet reflection today, wondering how they let their professional and ethical standards slip so far as to let them engage in such underhanded tactics, and vowing never to do it again.
Abusing the patent system, indeed.
This interesting article in the New York Times regarding a so-called "patent troll," raises the obvious question: If the patents are obviously no good and the claims of infringement clearly frivolous, how is it that supposedly top-notch lawyers must charge millions to show that to a judge?
I found this statistic from the article telling:
"One study found that United States companies — most of them small or medium-sized — spent $29 billion in 2011 on patent assertion cases. 'And only about $6 billion of that money wound up in the hands of inventors,' said James Bessen, a co-author of the study and a professor at the Boston University School of Law. 'As for the other $23 billion, most of it goes to legal expenses...'"
Legal expenses, eh? Incurred by whom?
Assuming a more-or-less standard 33% contingency fee, this means the inventors get $6 billion, their lawyers another $3 billion, meaning about $20 billion goes to defendant's counsel -- you know, those upstanding lawyers who complain about trolls, frivolous suits, abuse of the system, and threats to our American Way of Life, and only reluctantly -- reluctantly, I say-- put that $20 billion in their pockets.
The eyes of the patent world were on Seattle this week as an Order denying injunctive relief was handed down in the ongoing Microsoft v. Motorola heavyweight title bout.
While I will leave it to others to discuss the minutiae and determine the implications for the industry, the main question on my mind is whether this is what Motorola and other large companies had in mind when they welcomed the decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
Now admittedly, I do not know whether Motorola ever considered itself victimized by "patent trolls" or whether it held the view that patents, and in particular injunctions, should be reserved only for "serious" and "established" businesses. But I have a sneaking suspicion that Motorola, its lawyers, and others in similar situations might well be thinking, "Hey! This isn't how eBay was supposed to work."
For grins, check out the docket sheet for the case as well. More than thirty-four pages just to list the lawyers involved. (As a former big firm mouthpiece myself, I can well understand the pressure to hit your hours, particularly in a soft economy.)
It is always amusing to watch the intellectual gymnastics of clever people trying to defend the intellectually indefensible. Seventh Circuit Appellate Judge Richard Posner'r recent, article, "Patent Trolls Be Gone" (You talkin' to me, Judge?) is entertaining in this regard, as we watch the good judge try to "clarify" the "problems with our patent system, which are profound," before formulating, "feasible solutions."
According to the judge, one of these profound problems is the problem of "patent trolls, as they are called" who "purchase large numbers of patents in the hope of using the threat of a patent-infringement suit to extort a patent-license fee from a company that makes a similar product." (Emphasis mine.)
Extort? Since when is enforcing rights formally recognized by a Federal agency extortion? Strong words to be coming from a supposedly impartial judge.
As noted by the judge, "the alleged infringer may decide to pay the licensee fee, if it is not too large, to avoid the cost of litigation." But this raises the question of why does it take $3 million or more in legal fees to dispose of a case that supposedly has no merit in the first place? Most jurisdictions today have specific local rules for patent cases that call on a patent owner state with specificity in the very early stages of litigation precisely what products are accused of infringement, what claims are alleged to be infringed, and precisely how those claims cover the accused products. In a truly baseless case, the weakness becomes apparent very early on. (And if the case is that weak, no reasonably ethical lawyer would file it in the first place.)
The comments in the linked article are entertaining and instructive as well.
A few years back I wrote about what I saw as a developing "War on Juries" in patent cases. A couple of recent incidents suggest that the war continues.
Last week we lost a hard-fought case on summary judgment. That happens, it's part of the game, and the lawyer who never loses most likely never accepts a real challenge either. But what's humorous about it is that the decision came four days after trial was originally scheduled to have begun. Given that the whole idea of summary judgment is to increase efficiency and resolve one-sided cases early on, the fact that the case could have been tried to a verdict in less time than needed for summary judgment leaves me scratching my head.
This week, the Federal Circuit (surprise, surprise) overturned yet another lower court decision in favor of a patentee. In that case, the judges concluded that the invention was "obvious" based on some sort of "common sense" inventive standard. (Guess that's kind of up there with the "we know it when we see it" standard.)
What strikes me about both developments is all the judicial lip service paid about what "the trier of fact" could and could not reasonably conclude. Rather than simply present the evidence to the actual trier of fact, i.e., a jury, the courts prefer to spend more time, effort and money guessing about what a jury could find rather than simply presenting the evidence and finding out for real.
The elephant in the room is that juries play little, if any, real role in patent litigation today. Courts still seat them (if you get that far) as some sort of quaint hold-over from the past, but as far as their decisions actually carrying any weight, well, given that virtually every important question is now an issue of law, and hence reviewable de novo by the CAFC, the sad truth is that you will win only if the handful of judges there decide to let you win.
Hope I'm wrong about this, but the handwriting is on the wall. And it doesn't look encouraging.
Count me among the latest to question whether the Eastern District of Texas is still THE venue for bringing plaintiff's patent cases. A "Rocket Docket" it ain't.
We've filed a fair number of cases in the Eastern District over the years. Although things used to move with dispatch, in one of our latest, the first available date for a Markman hearing was June 2010. In another case, we are awaiting a Markman ruling following a hearing in April 2007.
And check out this apparently routine order we just received. Basically, it requires asking for permission before filing a whole host of motions and on its face plainly states the measures are needed "Due to the large number of patent cases pending on the Court's docket."
This is all no doubt due to the Eastern District's well deserved reputation as a fair and friendly forum for hearing patent cases. But I suppose there can be too much of a good thing. The backlogs were probably inevitable.
*Yes, I am aware Houston is not actually in the Eastern District. Just couldn't resist the cheap humor.
Just when it appears things can’t get much worse for patent plaintiffs, the Federal Circuit surprises us with a modest string of decisions actually finding in favor of patent holders.
Just one week after Muniauction, Inc. (pdf) took it on the chin by having its $77 Million jury verdict reversed (that’s reversed as in “you get zip, nada, nothing”), the boys in DC actually decided one in favor of the patentee. (pdf) What’s more they did it by upholding a summary judgment finding of infringement. Hmmm, haven’t seen that in quite a while.
On August 1 of this year, they truly outdid themselves by not only reversing summary judgment findings (pdf) of invalidity, noninfringement, and inequitable conduct (with fees thrown in to boot), but directing that the case be reassigned to a different judge on remand as well. I had to pinch myself to make sure I wasn’t dreaming. I wasn’t – six days later they did it again (pdf) (well, almost – no reassignment to a new judge this time).
Then in short order they (1) reined in a potential infringer who filed an early DJ action, (2) partially upheld a jury verdict in favor of an individual patent holder, and (3) vacated a lower court’s summary judgment finding of no infringement and no liability for damages. What’s truly amazing is that in the second of these (Voda v. Cordis), they actually upheld the jury’s finding of infringement under the doctrine of equivalents – THE DOCTRINE OF EQUIVALENTS of all things! (For you youngsters who’ve never heard of it, just ask anyone in practice before 2002. He might even be able to tell you about phlogiston too.)
Speaking of ancient history, the Eight Circuit at one time was so anti-patent they had an unbroken string of 18 or 19 decisions, each finding the subject patents invalid. Finally, and no doubt recognizing that this had not gone unnoticed by the bar, they upheld some obscure patent, probably just to get one in the “win” column for a change.
While the cynical side of me says the Federal Circuit is simply doing the same thing here, (after all, even the tightest casinos have to let someone win on occasion) I’d like to think maybe the pendulum is swinging back in favor of patentees once again.
On a serious note, what I’d truly like to think is that the work former Judges Markey, Rich and others did to deliver patent law from an arcane backwater to the forefront of law has not been wasted. There is no doubt in my mind that the law has shifted away from protecting individual inventors in recent years and that some on the Court have an agenda in that direction. Whether they will win out is unclear.
Perhaps this minor string of cases upholding patent rights signals a real change back to strong patents. Perhaps they are only a minor aberration. Or perhaps the real aberration has been the first twenty years of the Federal Circuit’s existence and that what we are witnessing now is merely a reversion of the law back to what it has been all along. I’d like to think not, but the truth is that for most of the Twentieth Century patents weren’t worth much, if anything. We’ve lived through that before and it could easily happen again. Are we heading that direction? Guess time will tell.
A recent blog entry at Patently-O discusses the economics of so-called "patent thickets" (which, I gather, is the new name for what used to be called "a crowded art"). There's quite a bit of detailed and fascinating discussion concerning, among other things, the recent ebay decision and how patent owners in such a "thicket" will act, given that injunctions are (supposedly) no longer a foregone conclusion.
As I understand it, the question is whether an extensive "patent thicket" might result in more or less patent litigation and whether the ebay case will reduce or even increase patent litigation where such a thicket exits. While I don't purport to know or understand all the economic theory behind the competing views, I was struck by what I think is a misguided emphasis among the commentators. Why all the theorizing over what effect this will have on litigation and the propensity of patent owners to sue? Why all the concern whether this will encourage or discourage so-called "patent trolls"? Is the goal of the patent system simply to make life easier for lawyers and judges? Is it to let large companies steal technology with impunity? And (to be fair all around) is it simply to provide lucrative opportunities for contingent-fee patent trial lawyers like me?
The constitutional justification for the patent system is, of course, to "promote the progress of science and useful arts" -- not to provide patent lawyers with a comfortable living or to make life easier for federal judges. The question I have (and I really don't know) is whether the patent system is or is not fulfilling its mission of promoting the progress of science and useful arts. Has anyone actually done a scientific study of whether patents do promote scientific progress and whether the profound changes in the patent system over the past twenty four years have been effective in actually achieving that goal?
There's no question that the explosion in patent and IP growth has been great for lawyers. It's also been good for companies (both large and small) and even individuals able to exploit their patents. But again, the question is whether progress in science and useful arts has actually been promoted by what has gone on and what is presently going on. Frankly, I'm not sure anyone actually cares about this anymore.
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