Why should litigation costs of the infringer be relevant to determine if a license is fair or just a nuisance?

By Gene Quinn
October 18, 2016

“Without any understanding… of the value of the core innovation… there is no way to know whether a license is being offered for nuisance value or whether it is being offered at full, fair and appropriate value to compensate the patent owner for the infringement they had to chase down in litigation.”

Federal Trade Commission

Federal Trade Commission, Washington, DC.

The much anticipated report on Patent Assertion Activity (PAE) released by the Federal Trade Commission (FTC) several weeks ago was much ado about nothing for a variety of reasons. It should also be used as Exhibit A with respect to the type of nonsensical debacle that befalls an agency dabbling in an area where they have no substantive expertise.

Let’s recall the role of the FTC. The FTC was created in 1914 for the purpose of preventing unfair competition. It is true that over the years Congress has expanded the FTC role with respect to policing anticompetitive practices, but the FTC is primarily responsible for policing deceptive practices that defraud consumers. Indeed, according to the FTC website, the agency’s mission is: “To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.”

It is hardly surprising the word “patent” is not found in the FTC mission, the agency does practically nothing relating to patents or the innovation industry in any substantive way. Instead, the FTC is most often involved in garden-variety scams that prey on the unsophisticated, identity theft, antitrust violations, mergers, fraudulent advertising, and the Do-Not-Call Registry. Simply stated, the FTC has absolutely no knowledge, familiarity, or expertise with the subject matter. The FTC stepped out of their lane for political purposes in order to take on Patent Assertion Entities. It is no wonder the resulting report shows little understanding regarding the core issues involved.

For example, the FTC was fixated on the number 300,000 throughout the report. It seems that the FTC got in their collective conscious the idea that a patent settlement that is less than $300,000 is some kind of sham settlement or shakedown. Only those who are blissfully ignorant to the realities of the patent licensing marketplace could ever come to such an absurd conclusion.

When speaking of “Litigation PAEs,” the FTC writes:

Litigation PAEs typically sued potential licensees and settled shortly afterward by entering into license agreements with defendants covering small portfolios, often containing fewer than ten patents. The licenses typically yielded total royalties of less than $300,000. According to one estimate, $300,000 approximates the lower bound of early-­stage litigation costs of defending a patent infringement suit. Given the relatively low dollar amounts of the licenses, the behavior of Litigation PAEs is consistent with nuisance litigation.

I’ve been as critical of anyone when it comes to the extortion-like shakedowns that sometimes take place, which rely on the inefficiencies of the federal judiciary to shake down defendants into settling rather than fighting. The system can and should do something about these abuses. If the FTC were to have conducted a review of these abuses the report might have been useful, although they still would be dealing with an issue where they lack expertise and the conclusions hardly worthy of being called a “report” given the shallow investigation undertaken (i.e., only 22 responses received and one niche market considered).


Instead, the FTC has in its collective consciousness that $300,000 makes a settlement a nuisance litigation. But why? According to the FTC this is because patent litigation is so expensive. The report explains:

The American Intellectual Property Law Association (AIPLA), which periodically surveys the costs of patent litigation, recently reported that defending an NPE patent lawsuit through the end of discovery costs between $300,000 and $2.5 million, depending on the amount in controversy. By this estimate, 77% of Litigation PAEs’ settlements fell below a de facto benchmark for the nuisance cost of litigation. This suggests that discovery costs, and not the technological value of the patent, may set the benchmark for settlement value in Litigation PAE cases.

So the $300,000 number has nothing to do with whether that amount represents fair value for the license obtained in a forced settlement after litigation is commenced, but instead only relates to the cost of defending the claim brought by the property owner in order to defend the property rights trampled?

Why should the costs of the tortfeasing infringer be relevant in determining whether the extracted value from a settlement is fair?

“The report highlighted one significant issue: why do patent litigations in the United States cost so much? I lay that at the feet of all the parties including the judiciary,” explained Jaime Siegel, CEO of Cerebral Assets and Global Director of Licensing for the Open Invention Network (OIN). “There are inconsistent practices within the judiciary, in terms of scheduling, to allow parties to clarify case dispositive points early in the case, for example.”

Another issue driving up litigation costs is the pressure on law firms and attorneys, who in the real world don’t get paid once a settlement has been achieved.

“Law firms are under pressure, so there is this perverse incentive to prevent settlement until discovery is done, which helps the firm’s bottom line,” Siegel said. “Of course that is not to suggest that most attorneys do not put their client’s best interests first, but it is incumbent on clients to ensure that they are managing their law firms to get to the most efficient result possible from a business perspective.”

I have to agree with Siegel, and will take it one step further. Many years ago, when I was a new attorney, the firm where I worked represented plaintiffs in all manners of litigation. It was well known that you could not settle a case with defense counsel until after they had achieved a certain amount of billing. Once the client had been billed at least a certain amount settlement might be possible, but never before. That is just the way things work in the real world.

So the fact that law firms charge a lot of money to defend patent infringement cases, and don’t particularly have any incentive to settle cases early, somehow translates into certain settlements being for nuisance value without any consideration of whether the settlement is a fair value for the rights trampled upon by the infringer? The FTC has quite a lot of explaining to do, because it seems they picked an arbitrary number that is a function of what attorneys ordinarily charge infringing defendants through discovery. I don’t see how that is a function of the value of the innovation, or how it says anything about the merits of the infringement case, the damages case, or the tactics of the patent owner. In fact, it seems as if the $300,000 figure is completely irrelevant.

“Not every patent license is worth $1 million,” Siegel explained. “I’m aware of patents that were valued at a $25,000 license, which was set not to be a nuisance, but rather because the alternative was a $50,000 work around, so the appropriate price was less than that amount. A patent license should be based on how much value is in the license, and it isn’t always $1 million. There are always big players and small players in a market. Where a few big market share licensees may be paying millions, a smaller market shareholder may be paying less than $300,000. That doesn’t make the smaller license a nuisance; it just is a reflection of market size.”

“$300,000 is a completely arbitrary number that attempts to put patent licenses into buckets and suggests that if it is $300,000 and below it must be a sham claim, and that generalization is absolutely untrue,” Siegel said. “What makes a nuisance claim a nuisance claim is when a patent is not infringed or is almost certainly invalid; that is what makes a case a nuisance settlement. When a patent owner says we know we have a lousy patent, be we know the defendant will pay us X dollars because it costs so much to litigate, that is what makes a nuisance case.”

Siegel is absolutely correct. Pretending that $300,000 is a relevant number ignores the reality that innovations come in all shapes and sizes, and they convey very different values. It almost seems as if the FTC is suggesting that if your innovation cannot be licensed for more the $300,000 then you shouldn’t have a right to license it at all. Go back to the drawing board little poor failed inventor and try harder next time! How arrogantly ignorant!

Of course, the reality is the FTC doesn’t know enough about the industry to understand that $300,000 is an arbitrary line in the sand that holds no relevance in the real world. For the very same reason that they said the term “patent troll” is unhelpful (i.e., because it inappropriately discriminates against rights owners without understanding the business model and practices), so too is $300,000 equally unhelpful. Without any understanding or appreciation of the value of the core innovation subject to the license there is no way to know whether a license is being offered for nuisance value or whether it is being offered at full, fair and appropriate value to compensate the patent owner for the infringement they had to chase down in litigation.

I thought the FTC was charged with ensuring fair business practices? It seems what they are doing is radically discriminating against incremental innovations valued at less than $300,000 and actually encouraging patent owners to charge more for their licenses than they are worth so they don’t get labeled a nuisance. Talk about perverse incentives! The FTC should stick to areas where they have subject matter competence and leave these patent issues to the experts.

EDITORIAL NOTE: Jaime Siegel will be moderating a panel at the IP Dealmakers Forum in New York City on Thursday, November 17, 2016, on the topic of Efficient Transactions vs. Efficient Infringement. CLICK HERE to REGISTER.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 29 Comments comments.

  1. EG October 18, 2016 10:45 am

    Hey Gene,

    As you correctly state, the FTC is clueless about the innovation world generally, and the patent world specifically. The same could be said of the Anti-Trust Division of the DOJ.

  2. Valuationguy October 18, 2016 11:23 am

    This whole report is a result of a turf grab by the FTC….i.e. politics….rather than meaningful policy.

    The federal bureaucratic agency that can best publicize/support the current anti-patent policy of the corporate lobbyists…will get the better funding.

    The report itself was crap…BUT will be used by paid academics (who ignore all its flaws) to support and publish more important sounding ‘analysis’ which parrots the “party-line”….building momentum on itself by self-referencing related studies. Kinda like the past 20 years of academic environmental policy research being based on flawed (and redacted/ biasedly edited) temperature data to convince everyone that rising sea levels are going to swamp every coastline community in our lifetime.

  3. zaldar October 18, 2016 11:43 am

    Gene:

    Was antitrust not presented to you as the opposing balance measure of patents in law school? It was certainly presented that way to me. The legal monopoly granted by patents is in opposition and balance with antitrust laws. Sure this doesn’t really come into play in the day to day world but on a higher academic theory level this is how things work.

    Now this doesn’t necessarily mean the FTC knows as much about patents as they should but as it is the legal doctrine that is in opposition to them they certainly know something and saying it is completely outside their jurisdiction is rather silly.

  4. zaldar October 18, 2016 11:55 am

    Eh can’t edit comments it seems. On the major points of the article though I agree. It may be that companies rather than offering licenses for what is a fair value of the patent are offering licenses knowing “hey they will pay this much because defending litigation costs this much” given my opinion of humanity I expect many are as it is in their interest to do so. BUT assuming everyone that is offering a license for less than 300,000 dollars is doing this is wrong.

    Maybe force people to have an independent firm give a license valuation? I don’t know and though I think a more academic tone would be useful overall I agree with this article.

  5. Night Writer October 18, 2016 12:16 pm

    It is a problem that a person with a patent can file a suit for very little money, and the response from the D can be very expensive.

    Consider that many local rules don’t allow amendment of the counter claims so that you have to find all the prior art you are going to use within a couple of months–can be very expensive.

    There is something wrong with the way it works. I think local rules would probably be enough to fix it, but judges don’t care. They seem to want everyone to settle to get it off their docket.

  6. JNG October 18, 2016 12:26 pm

    Gene – as you know, I just don’t talk, I do the walk too… I’ve been litigating the Keranos (flash memory infringement) case for almost 7 years now against a number of big semi players, and I will tell you the one common denominator is that the big legal firms do everything in their power to prevent a settlement because these cases are cash cows for them; its gotten to the point now where they will find any excuse to file yet another piece of paper, as witnessed recently when they filed YET another motion, complaining about a minor Judge ruling on a tangential point. But to read the papers, the judge made such an awful error on a case saving issue that it will take another 2-3 months and another round of papers to straighten it out.

    The case is just back from remand where we won with the CAFC on a discovery issue, and of course the first thing they did was file yet another piece of paper arguing to the Court that the CAFC decision really didnt mean anything. The whole thing is a charade by them.

    Everyone who is in this business knows the big firms are to blame for most of the current scorched earth litigation climate and high price of patent cases as they struggle to keep fat paychecks for their partners. Anyone who thinks its an “NPE” problem has never litigated a real case; the NPEs in fact do everything in their power to streamline and keep case costs down since they are doing it on a contingency usually and might not ever get paid.

  7. Anon October 18, 2016 12:34 pm

    The adage of “wag the dog” is simply not as reaching as is required here (as exemplified by JNG’s post).

    Imagine then not only a flea on the tail of the dog, but the flea’s tail wagging setting the tone of the entire dog.

  8. Gene Quinn October 18, 2016 1:50 pm

    Zaldar-

    First, patents are NOT a monopoly. Anyone that thinks they are just doesn’t understand the patent grant, patent law or the business of innovation. See:

    http://www.ipwatchdog.com/2012/09/03/debunking-innovative-copycats-and-the-patent-monopoly/id=27749/

    Second, you are exactly right to say that antitrust law does not come into play with patents in the day to day world. Patents provide an exclusive right and by their nature they are specifically intended as a reward that creates an anticompetitive advantage. It has been generations since antitrust or patent misuse has been at all relevant.

    Finally, what seems silly is to suggest that anything to do with patents IS within the jurisdiction of the FTC. At best once or twice a generation they dust off the IP licensing guidelines, which then fade into obscurity. Whenever the FTC seeks to interject themselves into the patent debate it is all political. They are in over their head with issues they clearly do not understand. They are supposed to police fair business practices and instead the conclusions to this report would actually encourage abuse of patent rights by charging more than a patent license is worth simply so the amount collected is above some arbitrary threshold that bears absolutely no relationship to value of the underlying innovation. All you have to do to conclude with exactitude that the FTC knows nothing about patents is to read the report.

    Patents are outside of the jurisdiction for a reason. They are NOT substantive experts. The FTC does a lot of one work, but when they engage on patents they are nothing more than political hacks seeking to support a predetermined narrative. In this case they didn’t even try and do it in a way that would lead to being taken seriously. This “study” is at best a collection of carefully selected anecdotes.

    -Gene

  9. Gene Quinn October 18, 2016 1:58 pm

    JNG-

    I agree with you 100% and will be taking more of an in depth look at this in the coming weeks and months. If you care to go on the record let me know.

    Before his passing Ray Niro had started to do some fixed fee defense work specifically for the reasons you mention. It saved big clients money, gave them cost certainty and there was no incentive to keep cases alive and treat them like a cash cow. Of course, done that way it could lead to what might seem like a windfall for the defense attorneys, so it had to be done after careful consideration. I understand there are a number of big clients dissatisfied with the cash cow defense mentality.

    Given that we know that defense firms treat these cases like they are intended to pay for a second home and to put their kids through graduate school, why should the over billing of defense counsel be at all relevant in considering whether a license is for “nuisance” value? Of course, that question won’t be asked let alone answered.

    Keep up the fight!

    -Gene

  10. Night Writer October 18, 2016 2:12 pm

    @JNG: I’ve done litigation with a AMLAW 100 firm. You are right. Some of the IP boutiques do not do this.

  11. JNG October 18, 2016 2:25 pm

    Gene – I’d be happy to talk to you anytime; I’ve been deposed TWICE in this case already and I’m not afraid to point out the abuses by the opponents – I think you have my email through your registration system so feel free to connect

  12. Anon2 October 18, 2016 2:46 pm

    Gene@8

    IMHO

    We know that all property rights, whether time limited or not, whether tangible, real, or intellectual, could be said and are said to provide an “anticompetitive advantage”. Property after all is an exclusive right.

    I would suggest that that term “anticompetitive advantage”, however, originates primarily with people of a different stripe than yourself: with those who least uphold the propriety of property rights.

    I know you are fighting against those very people every day (specifically in regard to patent rights) and I admire and support you, my only purpose here is to note that implicitly equating property rights with “anti-competition” partly buys into your opponents’ politics.

    I would submit that true “competition” in a free market goes hand-in-hand with protection *from* theft, *from* trespass, *from* infringement, i.e. and thus “competition” it is partly defined by the absence of those violations of property rights, not the inverse. The fruits of one’s own mental or physical labor simply are not owned by the state, the people, or any random person, they are his or hers by right, they are property. Regardless of who claims otherwise or would otherwise seek to deny or erode those rights.

    I would say (again IMHO) that free men would agree that competition cannot be achieved and certainly is not exemplified by the violation of property rights, by any amount of theft, trespass, or infringement.

    BTW: This is an excellent article.

  13. Gene Quinn October 18, 2016 3:07 pm

    Anon2-

    I understand your point. I meant only to point out that the very purpose of antitrust laws, to prohibit anticompetitive behavior, is antithetical to the purpose of the patent system, which is to provide rights that are by their very nature going to inhibit competition. In that regard, patents are anticompetitive, but no more or less so than any form of property.

    Antitrust and patents do NOT go together. In fact, one who is appropriately exercising patent power cannot be said to be engaging in patent misuse or engaging in an antitrust violation. Thus, to suggest that the FTC has jurisdiction or expertise over patents because they have jurisdiction over antitrust matters is to thoroughly and completely misunderstand both areas of law.

    Still, I take your point. I do try hard not to say things in ways that could be misconstrued.

    -Gene

  14. Anon October 18, 2016 5:14 pm

    If the patent right is one of exclusivity to the owner of the property, why is there even a question of “nuisance” at all?

    The propery owner has every right to set his “price” at any level.

    Period.

    Underlying the “logic” here is some “innate” infringers’ rights’ about being free from “nuisance” of the property (at a certain “convenient” or “efficient” amount).

    That assumption needs to be rooted out and quashed.

  15. Anon2 October 18, 2016 5:22 pm

    Anon @14

    You are entirely correct, but you know that wont happen any time soon.

    Going through metaphysics, then ethics, then politics, … starting from the very start one person at a time… we won’t see it brother, and things will get much worse before they ever get better.

  16. Night Writer October 18, 2016 6:08 pm

    I think too Gene that it is easier for the defense counsel to get fees from some clients because of the well-known “trolls.” The mark seems to feel they are going to have to pay up.

    The other game that is played is making the mark feel indignant about having to pay royalties. The mark ends up paying 10 times in legal fees as the royalty would cost.

  17. Night Writer October 19, 2016 8:28 am

    Over at the blog that claims to be number one there have been people that owned companies that were sued.

    It is interesting to read their comments. They seem to feel the entire patent system is a scam and that they shouldn’t have to participate in it. So, I think a big part of the problem too is the attitude of the business owners who don’t believe the patent system should exist. They are then easily led into expensive litigation rather than paying royalties.

    You have to have real clients and hear the way they think about this before you get it. People like Lemley have them believing that the patents are just junk that someone made up. It is really weird. For example, I had a client who was sued for infringement and despite the fact that they set up a computer system with essentially the same functionality of the other computer system years after the patent was filed, they still thought it was bitterly unfair to pay royalties. Really weird.

    I think it goes to the general ignorance of the populace.

  18. Anon October 19, 2016 9:05 am

    Lemmings more like it, marching up Propaganda Hill and taking innovation over the cliff.

  19. Jeffrey Sheldon October 19, 2016 9:39 am

    Gene,

    The FTC got it right.

    How much would you charge, outside of the litigation context, to do an infringement/validity analysis on a software patent, with a search, that has undergone reexamination with added claims, and prepare a favorable opinion? $20,000? $30,000?

    And if your client got a letter from a troll without an infringement analysis or claim chart offering to settle a “portfolio” for $40,000, what would you think? Could you at whatever rate you charge do that analysis, prepare an answer, prepare for the Rule 26 meeting, do your early disclosures, and attend the scheduling conference?

    Blaming litigators for the cost of litigation is just wrong. The FTC got it right.

    Low settlement demands without an infringement analysis by trolls is a fact of life. And it is not the litigators fault. Patent litigation is the second most complex litigation after antitrust, and that is what the trolls do. If the courts would expedite the infringement analysis without allowing damage discovery, and start awarding attorney fees against the troll attorneys, that would be great. Hopefully in view of the FTC report the courts will get their act together.

  20. American Cowboy October 19, 2016 9:44 am

    The cost of litigation does not only affect patent cases. Most cases settle, cases of all types, not just patent cases. In a big number of those cases a major motive for settlement is to get out from under the cost of the ongoing litigation. How many lawyers have had clients eager to sue, but getting cold feet after a couple of months of their legal bills?

    We see headline after headline of major banks paying BILLIONS to end or avoid lawsuits, “to avoid the cost and uncertainty of litigation.”

    It is not just patent cases where the cost of litigation has its own coercive effect. The FTC should take a look at what the Justice Department is doing to coerce the big banks…. or criminal prosecutors to coerce plea bargains.

    it is the way the legal system works.
    Get over it.

  21. Paul F. Morgan October 19, 2016 9:58 am

    There seems to me to be strange numbers argued here? First, a mere $300,000 or so for “what attorneys ordinarily charge” their sued defendant clients “THROUGH discovery” is unrealistically cheap, as some of the comments above note. The only even likely possible way for a sued client to spend so little for that long in a patent suit is to file and win an ab initio Alice-101 motion or an IPR with a stay. Secondly, if patent owners really thought the patent they are suing on was valid and infringed why would they settle for such a small amount, unless the accused infringing product or method was only being made, sold or used in small quantities? The defendant must meet a high burden of proof with “clear and convincing evidence” on every possible defense issue. The patent owner only has to prove infringement. So, why did the patent owner bring suit to begin with, unless it was to accumulate multiple such small settlement amounts from large numbers of defendants they knew would promptly settle? Discovery and other pre-trial costs for defendants are vastly higher than for most patent owners, especially for the many patent owner plaintiffs these days that are not the inventors or patentees?

  22. American Cowboy October 19, 2016 12:44 pm

    Another thought: Why is it that it is considered “normal” to litigate patent infringement/licensing/coverage questions?

    Shouldn’t we consider licensing of one’s intellectual property rights to be what is considered normal and filing suit the exception?

    Real estate transactions rarely involve a lawsuit to reach a settlement, so why should intellectual property transactions be different?

  23. Gene Quinn October 19, 2016 1:39 pm

    Jeff-

    We are going to have to agree to disagree.

    Litigators are notorious for WAY over charging to defend litigations. Everyone in the industry knows that. There is no need for 3, 4 or 5 attorneys to be present at their hourly billing rate on telephone calls, at depositions, at hearings, or client meetings. If a large company wants to hire a firm that will collectively charge $3,000 to $5,000 per hour that should be their right, but that cannot be at all relevant to determining whether a license is being offer for fair value or nuisance value.

    It is just fact that some innovations, perhaps many if not even most, are worth less than $300,000. By picking an arbitrary number like that the FTC has in an backhanded way vilified the vast majority of innovators.

    -Gene

  24. Paul F. Morgan October 19, 2016 2:00 pm

    BTW, since others here brought up the subject of the high litigation costs of large major law firms that many companies retained to defend themselves against patent suits, here is something else to consider discussing:
    Being a litigation partner in a large firm does not have a lot of “job security” these days, as a number of recent articles have noted. The business pressure for clients with the kind of billable hours only on-going litigation can normally provide can be intense. [And, that lucrative billing stream can be quickly ended by a settlement or an IPR or arbitration.] Past performance or seniority is no longer job security for many large firm partners. Hence, there is an inherently strong built-in preference for litigation versus alternatives. It is up to in-house counsel and the management of clients to do a better job of getting professional second opinions, making realistic financial decisions, and considering alternatives, both as patent owners and as defendants.
    Yes, much better Court control over excessive discovery and other litigation costs would help. Even greater cost reduction could be provided by early Markmans to define proper claim scope, and disposed of many cases or at least reduce discovery, instead of waiting until just before trial. Likewise, more summary judgments where appropriate. Also, more costs-consideration in local rule-making, as noted above. But even if such changes are not resisted by some judges as a threat to their independence, in general, an underfunded and understaffed federal judiciary burdened by large dockets of criminal and other cases does not seem likely to have the time to greatly improve the pre-trial case supervision needed to reduce unnecessary patent litigation costs?
    How often have we even heard of any efforts to get funding for qualified magistrate judges for patent cases?

  25. Curious October 19, 2016 2:44 pm

    Litigators are notorious for WAY over charging to defend litigations. Everyone in the industry knows that.
    I think of it more of inside counsel doing quite a bit of CYA, with outside counsel enabling it. If you are inside counsel and you lose a $50M case, do you want to go to the CEO and explain why you went the cheap route? Alternatively, do you want the CEO to hire an independent law firm that comes in and says “well, they could have argued ‘this, this, and this’ but they didn’t” and have to defend yourself to the CEO about not doing ‘this, this, and this’? Sounds like a great strategy to get fired.

    On the other hand, if inside counsel goes to the CEO and says, “we hired the best attorneys, they threw 15 attorneys on the litigation, and we employed a ‘take no prisoners’ type a strategy — unfortunately despite our best efforts we still lost” then the inside counsel has a better chance of keeping his or her job.

    Attorneys tend to be conservative by nature, and in a high stakes litigation, they tend to be more conservative. As such, so long as outside counsel has a legitimate reason for doing the work, inside counsel will likely buy into it. Unfortunately, that is the system we are working with. If someone were to develop a sophisticated cost/benefit analysis tool that gave inside counsel better insights as to how the spending of certain $ translated into better chances of winning, then they should be able to make wiser decisions with how their money is spent by outside counsel. However, that type of tool isn’t out there.

  26. Paul F. Morgan October 19, 2016 3:24 pm

    Curious, I have seen that also. Also even corporate management above the G.C. level telling G.C. “big company X uses the [incredibly expensive silk stocking] firm Y, why don’t we?” [That might possibly make sense for “bet the company” litigation, but not for just another patent suit that is not.]

  27. Curious October 19, 2016 7:23 pm

    That might possibly make sense for “bet the company” litigation, but not for just another patent suit that is not
    The same happens in patent prosecution — rarely a ‘bet the company’ affair. Unless the issue is cutting costs, as inside counsel, nobody is going to question your choice of law firm if you select one of the patent-prosecution behemoths. However, if you select a small firm (no matter the pedigree of the attorneys therein), there will be questions. This is especially so when it comes to patent prosecution or patent litigation since what we do is barely comprehensible to most people. Consequently, the only way for someone not experienced in patent law (e.g., a CEO) to judge the quality of the work is to see who charges the highest billing rate with the expectation that higher billing rate = better quality attorney.

  28. Anon October 20, 2016 6:26 am

    The squabble about billing rates (while perhaps revealing some truths therein) remains a distraction to the point made above that

    trying to tie ANY of that to the notion that somehow the person with the exclusionary right is not free to do with his property what he wills

    is something that that needs to be surfaced, analyzed for what it is (a tool of efficient infringement) and extinguished.

    Reminds me: “Come into my parlor, says the spider to the fly”

  29. Anon October 20, 2016 8:52 am

    Ms. Osenga’s post adds quite clearly to the notion here that these efforts are merely incorrectly aimed and “politically” (read that as captured politicians) aimed vehicles.