Today's Date: November 23, 2014 Search | Home | Contact | Services | Patent Attorney | Patent Search | Provisional Patent Application | Patent Application | Software Patent | Confidentiality Agreements

Chief Judge Rader Speaks Out About Patent Litigation Abuse


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course
Posted: February 28, 2013 @ 8:05 am

View Gene Quinn's profile on LinkedIn

Tell A Friend!



#The 1 Patent Bar Review Course
LIVE or HOME STUDY ~ CLICK HERE to REGISTER
Call 888.296.5973 and mention "IPWatchdog" to save 10%


Chief Judge Rader at AUTM, Feb. 27, 2013

Chief Judge Randall Rader of the United States Court of Appeals for the Federal Circuit kicked off the public programming at the annual meeting of the Association of University Technology Managers (AUTM) in San Antonio, Texas, last night. He participated in a question and answer session in front of a packed theater at the Henry B. Gonzalez Convention Center in downtown San Antonio, Texas, just a block away from the famed River Walk and only several blocks from the Alamo.

The event was billed as a fireside chat with Chief Judge Rader, sans fire. Nevertheless, those familiar with the fireside chat genre get the feel for the evening. It started out a bit biographical before it turned to an in depth discussion of the patent system and heavy issues of the day. The conversation was lead by Sean Flanigan, who is President-Elect of AUTM. Questions were also taken from the audience, which I would estimate at well over 500.

Chief Judge Rader is known for his frank discussions, and he is not afraid to defend the patent system. He did not disappoint with his candor. Very early on in response to a question from Flanigan, the Chief Judge said matter-of-factly: “Yes, I do think there is a litigation abuse problem.” Game on! Chief Judge Rader would go on to discuss the blackmail-like shake-downs that are plaguing the industry and giving the patent system an unjustified bad name.

If within the first several minutes Chief Judge Rader was going to tackle litigation abuse this was going to be far more than just a typical discussion with a Judge. As Chief Judge, Rader has more latitude than others perhaps because he is not only a judge but he is also the face of the Federal Circuit, and by proxy one of the primary leaders within the patent community.  Additionally, he is the advocate for the Court within the federal government and judiciary. In terms of advocacy, at one point Rader mentioned the fact that in the AIA the Congress found plenty of resources for additional Administrative Law Judges to do the work thrust upon the Patent Office, but didn’t find any additional resources for the Federal Circuit who will be reviewing more cases from an expanded ALJ corps that will likely soon reach 300 administrative patent judges.

Chief Judge Rader (left) and Sean Flanigan (right), on stage at the Henry B. Gonzalez Convention Center.

But before I digress too far, let me return to the remainder of Chief Judge Rader’s opening salvo into the issue of patent litigation abuse. The Chief immediately went on to say:

Interestingly, that has been misdirected towards the patent system. Even earlier this afternoon I received an invitation from a House Committee to come and talk about abuse of the patent system. I’m not sure I’ll be able to attend, but if I could attend I’ll tell you exactly what I would say: There is nothing wrong with the patent system.

The patent system has a narrow focus. It is not a consumer affairs program. It is not a manufacturers guarantee compliance program. It’s not a competition program.  It has one objective, summarized well by the Constitution: promote the progress of science and the useful arts. It’s there to create more investment and more incentive for innovation and invention. The things that the patent system is criticized for is not its job.

Now, the abuse they are talking about is not an abuse of the patent system. It is an abuse of the patent system by litigators. The abuse always takes the same character. They assert a patent far beyond the value of its contribution to the field of technology in which it is found. That is the abuse. That is what we need to target. We do not need to reform the patent system. We need to reform the expense and burden of the litigation system.

Chief Judge Rader would also go on to address the question of what is a patent troll. He said:

Let me tell you my definition of a patent troll — A patent troll is anybody who asserts a patent far beyond the value of its contribution to the art. That means that any institution can be a troll. We all understand that there are entities that are created solely for the purpose of litigating patents, which is not intrinsically bad. Again, if they are properly valuing and properly using the system to vindicate the incentives in investment and opportunities on behalf of the Patent Act there is no problem in that.

The problem comes when they will sue on a minor, minor patent… and then keep the infringement contentions very vague. Then approach and say “wink, wink, you know this is going to cost you $2 to $3 million in discovery expense alone. I’ll be happy to save you money by settling at far less than that.” And, of course, that it litigation blackmail. That’s the tactical use of the expense of the system, which is abusive. And I’m happy to say that the Federal Circuit and its Advisory Council is targeting for some kind of correction.

Frequent IPWatchdog contributor, Eric Guttag asked a question, first acknowledging his question (about joint infringement) may be akin to a “legal hand grenade.” The Chief joked back by building a wall of water bottles.

Later Chief Judge Rader would explain that in the coming months we will see more from the Federal Circuit Advisory Council. It will be a four-step process. Step one has already been put forward – the model order limiting eDiscovery. Step two, expected out some time this year, will be another model order requiring particularization of issues within a certain limited time after filing.  This will limit issues and prior art to be asserted, which will focus the lawsuits rather than making them a never-ending “strategic tug-o-war over details.” Step three will be urging earlier valuation of lawsuits so they resources can be put behind those cases that need and deserve more time. Finally, Chief Judge Rader explained that the final step will be a reversing of the fees when it is clear there has been litigation abuse, which will likely be a few years down the road. In other words, the final step will be some movement toward the so-called British Rule where the loser pays in those situations where there has been litigation abuse. That would presumable include those situations Chief Judge Rader referred to as “litigation blackmail,” where there is a miniscule offer to settle and only the most vague assertions.

Continuing with the theme of patent litigation abuse, I went to the microphone to ask the Chief if he could give us his thoughts on requiring more substance in the complaint that gets filed, which to me seems to be in keeping with the Supreme Court direction on the issue. He pointed out that he thought that a strict requirement that might mandate claim charts could violate due process, but he certainly seems to think that such information ought to be able to be produced relatively quickly by the plaintiff, perhaps within a few months of a lawsuit.

After introducing myself and exchanging niceties with the Chief, our exchange went as follows:

QUINN: With respect to going back to the abuses, one of the things that I am hearing from a lot of folks is about the shakedown. Where they get sued and then very quickly in the lawsuit they are offered 25, 35, 50 thousand.

RADER: Yeah, that is the litigation black mail I was talking about.

QUINN: Maybe you can’t speak to this, but I wonder about creating more rules for particularizing the complaint. Because it seems like the last two times the Supreme Court had the opportunity they have said they really want a particularized complaint that maybe is more than what is in the Federal Rules of Civil Procedure. And a lot of these complaints, I think that if the defendant didn’t even respond the judges couldn’t even enter a default judgement because they don’t make enough assertions in the complaint. Because you can’t infringe a patent, you have to infringe a complaint. So I wonder if they were forced to provide some kind of claim chart, even a basic claim chart that tells what product and which claims.

RADER: Gene will you be happy if we do that three months into the trial?

QUINN: Yeah, I would be very happy.

RADER: I think so too. And that’s probably a little easier to justify. To ask somebody to make all of their allegations at the outset is a little against our system. And I don’t think we have to go that far to achieve the goal that you’re seeking.

QUINN: For me three months would be fine if we had —

RADER: Or four or five.

QUINN: Whatever. It could be 12 months really if everyone of the 94 district courts would apply the same rule then the defendants would know that we don’t have to cave for $35,000 right now. We know in two or three months down the road they are going to have to show us their cards. And then everyone will know if this is a shakedown or not. It seems to me, at least by the people I talk to, that they shake them down before they get to anything substantive so that the shake down price is pocket change. It’s like less than a week of lawyer time.

RADER: Let me seize on one little aspect of what you said. That the key to the success of this as you say, is getting all 94 districts and frankly there’s no easy way to achieve that. What the Federal Circuit is doing is trying to use the patent pilot project and encourage changes there in those districts. With the model eDiscovery order we have six or eight of those districts who have already taken some steps to limit eDiscovery costs. Now I get to make my pitch to you. We need you, the litigants in the case demanding that the courts implement these model orders. They are just that, they are model orders. They have to be explicitly adopted by a judge or a court. You can have an influence on that if you are standing up through your counsel in front of the district judges and saying “This would make things more efficient your honor. Would you consider it? The federal circuit seems to be urging that result.”

On reflection, I’m not sure I’d be OK with particularization coming 12 months into the case, although that was what I said in the moment. I do think there needs to be uniformity and if Chief Judge Rader and the Federal Circuit can influence the district courts to require particularization within the first 3, 4 or 5 months that would be major progress. It would allow those defendants who want to fight to stay in the fight at least long enough to see whether the case is the shakedown that they believe it to be. It would make those engaging in what several district courts and the Federal Circuit have referred to as “extortion-like” litigation activities.

Conclusion

What a way to star the AUTM annual meeting! I have long been preaching that the patent system is not the problem, and that even the patent litigation system is not the problem. The problem is the bad actors who give the entire system a bad name.

It is good to know that Chief Judge Rader is engaged publicly and behind the scenes. In addition to all the talk about patent litigation abuse, the Chief also urged the audience to become engaged (politically and by filing briefs) over the issue of personal medicine, saying that those innovations are to important to lose.

Indeed, the patent system is far to important to allow bad actors and those with an anti-patent agenda to manipulate the mass-media, public and policy makers into believing that patents are inherently evil and deserving of the blame. Patents are objectively good by any fair and factual assessment of history. We just need to get the message out.

And on that note a plug for my panel at AUTM. I will be speaking about Bayh-Dole and how there are forces that seek to dismantle this most successful innovation policy. It is all about getting the message out, but thankfully the truth is on our side. Innovations save lives, cure pain and lead to greater quality of life, and patents are at the heart of the incentive equation. We shouldn’t have to struggle like we do to win hearts and minds, but sadly we do.

The fight continues!

- - - - - - - - - -

For information on this and related topics please see these archives:

Tags: , , , , , , , , , , , ,
Posted in: AUTM, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patent Troll Basics, Patent Trolls, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

23 comments
Leave a comment »

  1. Editorial Note: Comment deleted, commenter banned.

  2. Call me naive, but why do you need the patentee’s claim chart? It seems to me that a patent lawyer who charges $25-30,000 a week should be able to tell his defendant client/accused infringer rather definitively if the patentee is just doing a shakedown or has a substantial claim.

    I suppose it helps if the patentee is forced to show his best case for infringement, which can then be pointed to in a summary judgment motion, where the alleged infringement is shown not to survive any reasonable claim construction. But, that would also require District Courts to promptly rule on those SJ motions in order to save the parties from more hassle.

  3. Comment 1 is a gross exaggeration, but it is true that prior art search needs improvement. I continue to believe that crowdsourced solutions are the right answer. A crowdsourced search, including a reexamination if the patent has already issued, should be a prerequisite to any patent litigation. As for patentable subject matter, a useful combination of anything that does not exist in nature should meet that test. Software in particular, meaning algorithms implemented by a computer, should definitely be patentable, unless the same process can be shown to exist in nature. Genetically-engineered biology should also be patentable. Both are man-made and useful.

  4. I’m very glad to hear that there is actually a plan and an effort being made to try to do something about the astronomical costs of litigation. Shortening the time frame is also very important to my way of thinking, so that the defendant can’t just buy time to continue to have their way for years in many cases. Having a chief judge with a healthy sense of humor also seems very encouraging to me.

    Thanks for being there Gene, and to EG as well. I hope Eric will provide his take away from the conference as well, as technology transfer out of our higher education institutions is extremely important in my view.

    Stan~

  5. Everyone-

    Just returning from the AUTM conference and back in the office. In reviewing the comment by Renee Marie Jones I have decided to delete the comment and ban Ms. Jones.

    There are not a lot of rules for commenting, but regulars know there are a few. First, comments need to be correct. I understand that in debate there is room to argue and disagree, but “the sun rises in the West” type comments are never going to be allowed on IPWatchdog because no matter how many times it is said the Sun never will rise in the West. Bringing it back to this comment in question, the rant accused Chief Judge Rader of nefarious actions relating to the granting of patents. Of course, Chief Judge Rader does not grant patents. That is not debatable in any way, shape or form.

    Still, if the commenter were wrong only on this point that likely would given rise to a warning without deletion of the comment. But the commenter then went on to make a juvenile personal attack on Chief Judge Rader. Completely incorrect factual recitation PLUS a personal attack on the integrity of ANYONE will be you banned 100 times out of 100.

    Facts and the truth matter here on IPWatchdog, even in the comments. Latitude is given to those who are forwarding discussion in a meaningful and respectful way. Absolutely no latitude is given when a comment is wrong on the law, wrong on the facts and includes personal attacks.

    -Gene

  6. AC-

    The trouble is in many cases the patent owner sues individuals and companies who are not engaging in anything that even remotely resembles infringement. The claim chart or greater particularization is for the purpose of highlighting for the court the fact that the defendant is engaging in litigation blackmail. If the court doesn’t identify that early enough many defendants will pay the extortion-like payment of $25K, $35K or whatever to get out of the case before it has ever publicly come to light that it is a litigation shake-down.

    I also personally think our system requires plaintiffs to put defendants on notice. Without being on notice of what a claim is how can one file a motion to dismiss, for example?

    -Gene

  7. Gene,

    The commentator you banned has that same “style” on several blogs.

    Thanks for clearing the refuse from yours.

  8. Anon-

    Reasoned consideration is usually the enemy of invective behavior. Fortunately it is not allowed here, which sets IP WatchDog apart from Other venues.

    Stan~

  9. Per Gene’s note at 6, I think the problem is not (necessarily) a patent litigation problem.

    If “notice pleading” is to blame, then it is to blame generally, and that would encompass far more than just patent litigation.

    What becomes difficult is where to draw the line, to strike the balance between making the court system available in the first place to resolve grievances. Make that balance too far on the one side is just as bad as too close. To be perfectly clear, patents are enforced – and ONLY enforced through the courts. Make it too difficult to bring suit lessons the value of the patents in the first place.

    Perhaps a way forward is to put forth a new line and an explanation of why that line would be drawn at that location. Until I can see that, my view is that the status quo is far better than a change merely for change’s sake.

  10. If the complaint never says what the infringed patent is or what the infringing product is, then it should be subject to a 12(b)6) dismissal. If it does give them both, then competent defense counsel should be able to say if the allegation has any remote merit.

    In addition, don’t forget rule 11.

    When the plaintiff says a bicycle infringes a patent on doxycyline, any doofus should be able to see that the claim is a scam.

  11. Agreed AC,

    And I think a more rigorous policing from Rule 11 would be in order.

  12. I agree with several of Chief Judge Rader’s points. I agree that patent trolls are not intrinsically bad. I agree that the patent system has a serious litigation abuse problem. But I do not agree that that is all that is wrong with the patent system.

    The court system has made a series of decisions that have created case law which allows patents on areas that should not be patentable at all. You grant patents on ideas, on creations of nature, and on computer software. In the case of software patents I have submitted an Amicus Curiae to you in CLS Bank v Alice corporation. My Amicus Curiae is too long to repeat here but I suggest that you read it again from your files.

    —————————————
    Steve Stites

  13. Just out of curiosity, why do you think 2 million dollar litigation proceedings are preferable to a more focused and much quicker approach? If the challenging litigator is just trying to pull out his gun and threaten others, ala a roadblock somewhere up in the hills near Tijuana, why is that better than cutting to the quick in the first place?

    Both situations seem somewhat like Highway Robbery to me, especially if the abductees happened to be driving a very expensive new Mercedes Benz. This is not a joke at all, as one of my former employers told me of using a beat up old car to travel there, with a few old unloaded Colt 45’s stashed under the seat, in the event that he was accosted somewhere up in the hills.

    If he gave the robbers the gun(s) he would be free to go on his way, since the guns weren’t loaded. Perhaps a crude analogy, but perhaps you can catch my drift here. In the absence of enforcement of some sort, what do you really have? Most likely very little except perhaps your future life. Much like the situation most smaller entities are facing.

    Mexican bandits sporting AK-47’s. I mean no offense towards Hispanic folks, but the scenario presented here was very real not very long ago.

    Stan~

  14. Gene,

    I completely agree with you, Anon and Stan that R. M. Jones’ invective is one of the “scourges” of the patent blogs and I’m glad she has been banned from this one. She obvioulsy has an “agenda” and an unsavory one at that.

  15. Gene,

    I would also be remiss in not thanking you for the very nice pic of me! The Chief Judge was very gracious to receive my questions.

  16. Let’s not forget that Chief Judge Rader was the one at the center of the butchering of the TiVo-Echostar case. What a fiasco, and his fingerprints were all over it. His reasoning in this case effectively denied the patent holder (TiVo) from being able to enforce an injunction against Echostar, who had multiple instances of egregiously bad conduct, on top of a laughable ‘work around’ that the district court rightly found to be a sham. (Yes, TiVo and Echostar eventually settled, but Rader’s outrageously poor reasoning easily cost TiVo tens of millions of dollars.) Sadly, this wasn’t the only case in which he made little sense. I, for one, will be happy to see him retire, because he is one of the reasons why litigation can be such a crapshoot. A great case can be laid to waste by a judge that thinks he’s omnipotent.

  17. That last comment at 10:48 leaves me wondering, does DT perhaps also have “an agenda”? Come to think of it is “DT” in fact Jones in disguise? I wonder, does DT’s rant also constitute a “personal attack on CJ Rader”? If not, how else can one characterize it?

    If so, though, should DT not also therefore be banned forthwith? Only asking.

  18. Great article. Thanks for bringing the details of this event to those trapped in the snow storms and delayed at airports.

  19. 4Most-

    I don’t think D.T. has crossed the line. The premise of the comment is that Judge Rader was wrong in TiVo, so there is substance there. Granted, the comment about the TiVo case not being the only one of his decisions that makes little sense is extremely vague. I disagreed with Rader on TiVo, as I have written.

    I do suspect that D.T. does have some kind of agenda though, but at least the comments are for the most parts substance. Jones offered no substance, was wrong on what facts were stated and engaged in juvenile name-calling.

    Having said this, let’s not forget that TiVo prevailed at the CAFC en banc. See:

    http://www.ipwatchdog.com/2011/05/02/tivo-dish-and-echostar-the-500-million-patent-settlement/id=16740/

    So any damage caused by the original panel decision was certainly not tens of millions of dollars, and would have been limited to the cost of pursuing an en banc rehearing.

    The TiVo decision in the original panel is the only decision I can recall ever really disagreeing with Judge Rader. D.T. is incorrect when he says that Rader’s decisions don’t make sense. Rader is one of the Judges who really gets patent law and his decisions virtually always make perfect sense.

    -Gene

  20. 4 Most-

    Nearly everyone has an agenda of some sort. The real trick would seem to be discovering what it is, and more particularly Why it is. The Why part is probably the more important aspect.

    The very old shell game. They will try to hide the Why part to try to obscure their actual motives, whatever they might happen to be. Discovering the actual motives will most likely be nearly impossible, since they might have a lot to lose if they can’t conceal or obscure that part of it.

    The MO seems all wrong for Ms. Jones, even if she were clever enough to get through using an anonymous moniker. These types of issues are very debatable and easy to get wrong, and no one of us is ever perfect. Cats and dogs are unable to lie for instance, because they don’t have language skills, in a human sense.

    Stan~

  21. For instance, my neighbor’s dog made a sort of yipping and whinining noise when I was headed out to my shop, which meant that his owner was gone, and that he missed seeing me. I went over and gave him some free pets and kind words, and he became as happy as a clam in the Puget Sound. It also gave me a great way to start my day.

    Arf!!

  22. […] Chief Judge Rader would go on to discuss the blackmail-like shake-downs that are plaguing the indust… […]

  23. […] readers of IP Watchdog are aware, Federal Circuit Chief Judge Rader recently delivered an important and noteworthy defense of the U.S. patent system the recent annual meeting of the […]