Posts Tagged: "Patent Trolls"

The attack on individual inventors using names like NPEs and patent trolls is nearly identical to the attacks previously waged by corporate America on personal injury lawyers, using the McDonald’s hot coffee case as an example of lawyer abuse (now it’s the Wi-Fi patent cases). Like the corporate attacks on everything from the private enforcement of securities fraud claims to unfair business practice, civil rights and age discrimination claims, the new target is patent infringement claims brought by “boogie man” entities that don’t manufacture products.

Acacia Research Corporation (Nasdaq: ACTG) announced on Friday, July 5, 2013, that its Board of Directors appointed Matthew Vella, Acacia’s current President, as Chief Executive Officer and a Director effective August 1, 2013. At this important moment when the patent rights pendulum has swung Vella takes over. He will have his hands full as he steps into the spotlight as the public face of Acacia. There is growing animosity toward non-practising entities and numerous legislative attempts underway to benefit big business at the expense of universities, individual inventors, research and development companies and those who acquire rights. His task will not be an easy one. As a publicly traded company Acacia’s information is there for all to see, making them an easy target.

This is an exceptional case; IA Labs brought an objectively baseless claim, which the Court finds was brought in bad faith. Interaction Laboratories, Inc. — the original ‘226 patent holder — developed a product known as the Kilowatt that embodied the invention of the ‘226 patent. It was sharply apparent that the Kilowatt had been publicly demonstrated at trade shows, disclosed in numerous publications, and offered for sale more than one year prior to the filing of the patent application. Thus, the ‘226 patent was, without question, statutorily invalid pursuant to the on-sale bar. Since IA Labs knew of these invalidating activities before it sued Ninetendo for infringement, the Court can only conclude that it sued on the ‘226 patent in bad faith…

Patent Freedom’s data shows that roughly 56% of all NPE suits are brought by companies that are owned or controlled by individual inventors — the original assignees of the patents involved. If you include companies in which individual inventors receive a substantial portion of any license fees or other recoveries, the number is more like 80%. So, why all this hysteria about the evils of entities enforcing and licensing patents, rather than those manufacturing products? The answer is because the debate (if you want to call it that) serves the interests of a group of high-tech companies on the West Coast and some foreign companies who, together, have thrown hundreds of millions of dollars at political groups to influence Congress and even the President.

What’s regrettable is that the White House didn’t wait for such empirical data on patent litigation and instead rehashed the findings of discredited studies of PAE-related lawsuits and their purported economic consequences. Specifically, I mean the infamous $29 billion victims are said to have paid to patent trolls in 2011, a number that has echoed around the Internet and made it into congressional debate despite its dubious origins. The number was produced by a study that failed to adequately define just what a troll is – even universities and many manufacturers were included – and then harvested its data not from a reputable polling or academic institution but from a company that has a dog in the patent fight and profits from fueling fears about infringement lawsuits.

Last Tuesday evening Chief Judge Rader was on a panel with U.S. District Court Judge Lucy Koh of the United States Federal District Court for the Northern District of California. Law.com reports that Jude Koh took a shot at Chief Judge Rader’s NY Times op-ed article, calling it “a little bit unfair.” Koh took issue with the articles suggestion that District Court Judges have the ability to shift fees in frivolous patent cases. According to Law.com, Judge Koh went on to explain that attorneys fees can only be awarded in “exceptional cases,” which she explained was “a really high bar.” Her final dig at the Chief was saying: “We can’t cite a New York Times editorial as authority.”

We know that Trolls for example have a methodology and they send out cease and desist letters in waves, right, and they collect all they can until they have to start filing suit. By the way the defendants we should be praising, the defendants in any Troll lawsuit means they told the Troll to take a jump so they’re already a hero, right, but we know that these Trolls work in waves with these cease and desist letters and most people who get these cease and desist letters figure they’ll just keep quiet. The problem with that is they’re giving up key advantages like forum choice so they can all talk with each other without talk — speaking publically you might be able to figure out how to pull funds and go have one company step forward or find the best DJ Jurisdiction and have that company step forward and bate the Troll into giving him another correspondence to trigger DJ Jurisdiction, right? That’s one way where you might really start to push back on these 8 Symmetries, but there’s no way, there’s no forum, there’s no secret forum for the recipients of these letters to even speak with each other.

Rachael Lamkin is a patent litigator who recently became Associate General Counsel at Blue Ocean Enterprises, Inc. I have known Rachael virtually for several years, communicating with her both via e-mail and via Twitter

The latest incarnation of the SHIELD Act was introduced on February 27, 2013, and changes direction as if the first iteration were waived off in disgust before it could even lower its gears. SHIELD Act 2, scuttles the “reasonable likelihood of succeeding” idea floated and introduces a new tool aimed at walling off the troll: a bond requirement. If the plaintiff is not an original inventor or assignee, did not make a substantial investment in practicing the invention, or is not a university, that troll must post a bond. Like SHIELD Act 1, SHIELD Act 2 does not require the troll to fire the first shot. Interestingly, under SHIELD Act 2, Facebook would have had to post a bond in its battle against Yahoo! and theoretically an involuntary but necessary party joined as a plaintiff could be required to post bond.

“Patty Sue Just Won’t Go Away.” So went a 2002 article in the San Francisco Chronicle, one of a many articles spanning several years about Patricia McColm, a vexatious litigant blacklisted since 1994. She was the Most Vexatious Pleader of the vexatious litigants. If she were a patent attorney, frightened examiners would give her a 100% allowance rate without amendments. If the anti-joinder provisions of the America Invents Act (“AIA”) applied to Patricia McColm, she would have her own clerk’s office. One draws similarities between the problems presented by firms such as Intellectual Ventures, Acacia, and Lodsys and those presented by Ms. McColm, and a flurry of proposals were recently introduced in Congress.

Obama’s action plan was heavily influenced by a report, “Patent Assertion and U.S. Innovation,” which was released by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy. The full text of the report can be read here. It is surprising that a report that was prepared by such an august and high-level set of entities could be so blatantly biased and one-sided. The body of the report slams PAEs and points to everything that’s bad about them. It creates an artificial distinction by referring to “good” patent middlemen as “patent intermediaries,” although there is no indication in the report of what are the characteristics of a good “patent intermediary” versus an evil PAE.

Today the White House announced major steps to improve incentives for future innovation in high tech patents, a key driver of economic growth and good paying American jobs. The White House issued five executive actions and seven legislative recommendations designed to protect innovators from frivolous litigation and ensure the highest-quality patents in our system. Additionally, the National Economic Council and the Council of Economic Advisers released a report, Patent Assertion and U.S. Innovation, detailing the challenges posed and necessity for bold legislative action.

Late yesterday I was contacted via telephone by a representative of Google about my article titled Is Patent Litigation Really a Problem for Big Tech? I was told during that telephone conversation that I misunderstood what Suzanne Michel said during the symposium at American University. I was also told that Google does not sell patents to patent trolls, although other big tech companies do, which concerns Google. Google has asked for a retraction. I am not entirely comfortable with a retraction because I think my interpretation of what Michel said was fair, although I’m willing to accept Google at face value when they tell me that they do not sell to patent trolls.