Posts Tagged: "Attorneys Fees"

Innovation is the lifeblood of a prosperous economy. Sound patent policy, which encourages the nexus between risk and ideas (especially for small entrepreneurs), makes invention profitable. The U.S. patent system enables that dream by protecting the market an invention creates long enough for the inventor to gain a toehold against competition, and by creating a property right capable of attracting critical investment to bring the invention to market and grow the business. Don’t let H.R. 9 or S.1137 kill this can do American spirit of innovation.

As patent reform keeps chugging along in Washington, an important briefing was held on Thursday, July 23rd, between members and staff of the U.S. House of Representatives Judiciary Committee and U.S. Patent and Trademark Office Director Michelle Lee. The meeting focused on H.R. 9, the Innovation Act, which recently moved out of committee and is heading to the floor of the House for a vote once it’s scheduled, although a vote is not expected until September at the earliest. The briefing was closed to the press.

Most Congressional offices now understand how loser-pay, bonding and joinder stops the flow of capital to innovation startups, how customer stays make defending patent rights impossibly difficult, why eliminating PRG estoppel perpetuates litigation shifting almost all of the costs onto inventors, and how IPR’s and CBM’s unjustly strip property rights and devalue all patents. Rank and file offices seem to be listening. However, key offices are deliberately deaf.

In this issue of the Federal Circuit Review: (1) Personal Jurisdiction Remains Unchanged – Federal Circuit Declines “Stream-of-Commerce” Theory; (2) Court Denies Fee Award Under Octane But Recognizes “Troll”-Like Behavior is Relevant Consideration; (3) 35 U.S.C. § 324(e) Does Not Bar Judicial Review of Initial USPTO Determination That Patent is for a “Covered Business Method” (Versata I); and (4) 35 U.S.C. § 324(e) Bars District Court Review of USPTO Decision to Institute CBM Review (Versata II).

Everybody has to be careful because you’re right if we undermine our patent system that is the only thing that allows America to remain strong competitively because China they just have labor rates that are a fraction of ours. We couldn’t possibly make products as cheaply as China. We need to make sure that Congress isn’t hearing so much about how bad the patent system is that they without intention undermine it in significant part and then hurt our competitive advantage against China. I mean that’s all possible. I agree. I share that concern. Are we going too far?

I think there was certainly a level of abuse prior to patent trolls from larger companies that weren’t scrupulous trying to sue smaller companies and using the high cost of patent litigation to get things they weren’t entitled to. The only difference was these smaller companies that were being abused didn’t have any lobbying efforts before Congress. So when the whole patent troll issue came to a fever pitch the biggest companies in America were being held hostage to it. Apple, Microsoft, Facebook, LinkedIn, all of the most notorious companies that are just great technologies were being sued by smaller entities. And how do these smaller entities get economic leverage over these big companies? They did it because they could file 40 lawsuits at a time so the incremental cost beyond case number one didn’t cost anything. And they would just hold out for these nuisance value settlements and that’s why even the largest companies in America were being held hostage. How Octane changed that is now that you have a realistic chance of getting attorneys’ fees, now you have that chance now the bigger companies can stand up to a troll.

In this issue of the Federal Circuit Review: (1) Bad Lawyering Is Not Misconduct For Awarding Attorneys Fees; (2) Continuing Applications Are not Entitled to Patent Term Adjustment for Delay in the Prosecution of the Parent Application.

Today, our patent system is faltering. For the first time in our history, inventors and their counsel are considered villains for defending hard-earned patent rights. Companies that steal patents from inventors are called our innovators. The innovation world has turned up-side-down. A few misguided decisions by the courts and the “so-called” America Invents Act of 2011 has made it a CEO’s fiduciary responsibility to steal patented inventions and massively commercialize them with no concern for patent rights.

The reach of the veil piercing is also unprecedented. The proposal implies that an inventor who assigns to other companies that make no products and stand to make a royalty is an interested party. Think about that – we are no longer considering charging just investors or shell company owners with attorneys’ fees. Instead, the proposal would pierce the veil all the way down to the inventor that assigned the patent to his or her employer. If this broad a reading seems unreasonable, consider the recent manager’s amendment, which clarifies to exclude lenders, because the language is so broad it might have included lenders before.

Dissent among members of Congress on the nature of the Innovation Act was evident from the opening remarks of the committee’s two ranking members. Congressman Bob Goodlatte (R-VA), the House Judiciary Committee Chairman and the Innovation Act’s major sponsor, stated that the Innovation Act would “ensure that the patent system lives up to its constitutional underpinnings” while targeting the abusive patent litigation which has been central to the debate on patent trolls. The ranking Democratic member of the committee, Congressman John Conyers (D-MI), said the bill was overly broad and yet it didn’t adequately address issues significant to this debate, including abusive demand letters and the ending of fee diversions from the U.S. Patent and Trademark Office’s budget.

The House Judiciary Committee will hold a hearing on Thursday morning, June 11, 2015, at 10am ET in order to markup the Innovation Act. The Manager’s Amendment is currently available on the hearing webpage. Additional proposed amendments by Judiciary Committee members are excepted to come in and be posted sometime later today. While a markup of this legislation has been rumored numerous times only to be postponed, it seems that this hearing will go forward. It is widely expected that the Innovation Act will easily clear the House Judiciary Committee. The resulting bill with whatever amendments may be approved may move quickly to the full House of Representatives for a vote.

Strong patent protection is almost universally considered critical to robust innovation. Venture capital and private investment in new technology-based businesses heavily depend upon it. Yet, the Innovation Act is positioned to significantly reduce the value of patents by making the risk of enforcement prohibitively high.

Fees for patent attorneys are going to vary quite significantly depending upon the geographical market and the attorney’s level experience. Based on 2011 economic data, the national average for a partner level attorney is $441 per hour, the national median is $410.00 per hour, the 25th percentile is $325.00 per hour and the 75th percentile is $535.00 per hour. Cities like Boston, New York and San Francisco tend to be the most expensive (where the average is $555 to $570 per hour). Texas, Chicago and Washington, D.C. also tend to be more expensive than most other parts of the country, but not as significantly so when compared to Boston, New York and San Francisco.

Many of the provisions of H.R. 9 would unnecessarily undermine the enforceability of all U.S. patent rights, even when clearly valid patents are being enforced in good faith against clearly infringing actors. While a consensus on measures to target abusive behavior in patent litigation is achievable, the sweeping provisions of the Innovation Act cannot be supported.

There were statements recognizing the need to keep open legitimate avenues to for innovators to protect themselves against infringement, and a strong desire to make sure that legislation focus on bad actions and actors. Not surprisingly, the Committee seems to largely think that the Innovation Act does strike the proper balance, although there was also recognition that changes could be made to make the bill better. USPTO Director Michelle Lee was wholeheartedly in support of fee shifting, justifying the position by saying that fault based fee-shifting will raise the costs for those who engage in abusive actions.