On Monday evening I wrote an article titled Supreme Court Refuses Soverain v. Newegg. It seems that this article caught the attention of Newegg’s Chief Legal Officer, Lee Cheng, who proceeded to contact me through LinkedIn and berate me in bizarre fashion throughout the day yesterday.
In the aforementioned article I pointed out that upon receiving news that the Supreme Court would not take the case, Lee Cheng made comments that could easily be interpreted as misogynistic. He proclaimed: “The witch is dead,” which is hardly the type of thing that your typical successful defendant in a patent infringement lawsuit would first think to say. It seemed relatively clear to me based on what I know of Cheng that the comment was directed at Katharine Wolanyk, Soverain’s President and CEO.
If Cheng was in fact calling Wolanyk a witch it was an extraordinarily inappropriate statement, not to mention incredibly offensive. But was this just a poor choice of words? As the bizarre rantings of Cheng came through LinkedIn periodically throughout the day on Tuesday it became clear to me that Cheng is emotionally unstable and that he really does have tremendous ill will toward Wolanyk. Quite telling, for example, despite my claim that his statement carried misogynistic undertones, he made no denial and never once said he didn’t intend or mean to call Wolanyk a witch. Had this been a slip or simply a poor choice of words it seems to me that he would have walked the comment back or apologized, but that never happened.
Attorney General Eric T. Schneiderman announced earlier today that a groundbreaking settlement was reached with MPHJ Technology Investments, LLC, a patent troll according to Schneiderman. Schneiderman’s investigation focused on MPHJ’s use of deceptive and abusive tactics when it contacted hundreds of small and medium-sized New York businesses in an effort to get them to pay for patent licenses characterized as being of dubious value.
“So-called ‘patent trolls’ exploit loopholes in the patent system and have become a scourge on the business community,” said Attorney General Schneiderman.“They drain critical resources from small and medium-sized businesses that would otherwise be available for reinvestment and job creation, which are sorely needed across New York. State law enforcement can’t cure all the ills of the federal patent system, but the guidelines established in today’s settlement will put an end to some of the most abusive tactics by placing the industry on notice that these deceptive practices will not be tolerated in New York.”
Law Professor Robin Feldman, the Director of the Institute of Innovation Law at the University of California Hastings College of Law and a frequent contributor to IPWatchdog.com, said this of the announced settlement: “Misrepresentation and downright fraud have become a major problem with patents, particularly against vulnerable targets like individuals and small businesses. Today’s historic New York settlement agreement strikes at the heart of this inappropriate behavior while protecting the legitimate exercise of patent rights. The agreement provides a model for other states, and for federal regulators as well.”
Phil Johnson (left) and Judge Michel (right) will be on the panel at this Sedona Conference. Shown here at the 2013 IPO Inventor of the Year ceremony.
Next Wednesday, The Sedona Conference will present a webinar that will take a look at an important, topical issue facing innovators – is legislative patent litigation reform necessary or can the Courts handle what some observe are abusive litigation tactics. On January 22, 2014, Patent Litigation Best Practices: A Matter for Congress or for Bench and Bar? will address the issue with an all-star faculty of leading practitioners in the field. The faculty includes former Federal Circuit Chief Judge Paul R. Michel, as well as current Federal Circuit Judge Kathleen O’Malley. Tina Chappell of Intel Corporation, Philip S. Johnson of Johnson & Johnson, and Alexander Rogers of Qualcomm will also offer their perspectives and insights as faculty members.
Patents and patent reform has been in the news, even the popular press, on an increasing basis. The issue of patents generally and patent litigation specifically has been the subject of intense debate over the last 8 years. Congress passed the America Invents Act (AIA) in 2011, with the bill being signed into law by President Obama on September 16, 2011. The overhaul of U.S. patent law was extraordinary, but not all of the parties involved were happy. Some thought the law went too far in some ways, others thought the law did not go far enough. Despite the AIA being the most significant change to patent laws since at least 1952, Congress is considering further reforms again, with the House of Representatives already passing the Innovation Act (HR 3309). Companion legislation in the Senate is likely to move forward during Q1 2014.
With the enormous media focus on the so-called problem of patent trolls one might start to think that any patent owner can easily stand up to and take on industry giants to obtain lottery like winnings. Not so fast! The great irony is that if you want a larger entity to fold like a cheap suit and settle quickly you would be better off filing a frivolous patent infringement lawsuit using a dubious patent. You see, the great irony is this: Only when large entities get sued on completely frivolous patent claims do they settle right away. Now I’m not advocating that course of action, rather just observing the truth of the matter asserted.
On the other hand, if you have a strong patent that covers real technology, perhaps pioneering technology, and there are substantial damages, the tech giants you sue will vilify you as a patent troll in the media and do whatever they can to make sure that they never pay you a dime. This is particularly true when the small company is building upon a base technology already owned by one of those technology giants.
Many large companies are happy to pay nuisance value on frivolous claims, but they are never going to pay meritorious claims if they can avoid it using any and all techniques and procedural machinations. The reality that frivolous claims get settled and meritorious claims get litigated has to make you wonder whether the so-called patent troll problem is really a problem or whether it is something that they actively perpetuate in order to achieve the “reforms” they continually ask Congress to adopt.
Baseball is a good analogy for politics, which is why political talk shows have names like “Hard Ball.” A defining moment for any hitter is realizing that a 95 mile an hour fastball has just been deliberately thrown at your head. Pitchers throw the “beanball” is to see if a batter has the courage to play the game knowing that the risk of serious injury is literally an inch away. As former Dodger pitcher Sandy Koufax said: “Pitching is the art of instilling fear.”
A similar challenge is delivered to those who get in the way of well-funded lobbyist’s campaigns. An equivalent of the beanball is the attack article in the Washington Post, the paper of record for the political class. So it should not be surprising that as soon as universities announced that they could not support the House patent reform bill in its current form that a beanball was immediately headed their way.
“The pitcher has to find out if the hitter is timid. And if the hitter is timid, he has to remind the hitter that he’s timid” said Don Drysdale, a pitcher who built a career successfully intimidating batters. In baseball and politics the message behind the pitch is the same: “Kid, are you sure you want to take me on?”
2013 turned out to be a very big year for IP, and especially patents, and the year took a course that few would have predicted this time last year. At that time, the senior team at the PTO was primarily focused on the imminent departure of our then-boss, David Kappos, and the end of what had clearly been an extraordinarily active and successful tenure. The AIA had been almost entirely implemented, the new Patent Trial and Appeal Board was up and running, and most of us expected 2013 to be focused on implementation and execution of the AIA and the other initiatives that had been set in motion under Director Kappos.
But things turned out rather differently. Nobody would have predicted a year ago that President Obama would personally call for additional patent reform legislation to curb patent troll litigation. Or that a comprehensive patent litigation reform bill would speed through the House by a lopsided margin and be heading to Senate consideration with a full head of steam. Nobody also would have predicted that the USPTO would also fall victim to sequestration and once again be denied full access to its fees so shortly after the passage of the AIA, which held forth the promise of full access to fees. And few would have predicted that the PTO would be without stable political leadership since Dave Kappos left eleven months ago. Or that a new Chief of Staff and a new Deputy and Acting Director would be named before a new Director was nominated. This unusual and lengthy transition period has caused understandable concern in the IP community, but we should all be pleased that a new Acting Director has been named and will take the reins on an acting basis in just two weeks.
In the American legal system, the popular notion is that the courts should be equitable and fair to all parties, both plaintiffs and defendants, regardless of the issue at stake. This is reflected in our system’s handling of lawsuit legal fees, which typically keeps the costs of engaging in litigation with the party who contracted those costs during the legal process. Only in the most special of circumstances does the losing litigant have to pay the attorneys fees of the prevailing party in the United States. This has long been believed to be the best way to make sure that even those of modest means have meaningful access to seek redress in Court for wrongs suffered.
The American concept that each party should ordinarily pay for legal representation regardless of whether they win or lose has developed in sharp and direct contrast to legal fee rules in other countries. The two contrasting regimes are named for the two countries that most clearly represent these differing views: the United States and England. In recent days, the United States Congress, urged on by certain high-tech corporations, has considered legislation that would create new rules regarding fee shifting for patent lawsuits as a way to discourage so-called “patent trolls” from engaging in litigation. Unfortunately, the legislative proposals currently being considered are not at all narrowly tailored to address the patent troll problem, even assuming there is a patent troll problem, which the objectively available data calls into question in the first place.
Certainly, there is abusive litigation that occurs in the patent world. This abusive litigation does not, however, signal a problem with the patent system. Rather, the abusive litigation tactics leverage judicial inefficiencies to force litigants into paying exceptionally paltry sums rather than pay to fight a patent litigation that on average could cost $2 million to see through to the end. Those sending demand letters for $500 or $1,000 to small entities should be stopped. Those that sue large entities without care of whether there is infringement and settle for $25,000 or $35,000 should be stopped.
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more.
Without hesitation I recommend One Simple Idea and think it should be required reading for any motivated inventor. There is so much to like about the book and so much that I think author Stephen Key nails dead on accurate. The book is educational, information and inspirational. For the $14 cover price it is essential reading.
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