Posts Tagged: "Attorneys Fees"

I think that the Supreme Court decision will be enough to prevent the so-called “patent reform” from gaining any traction in the Senate. The cynical view is that there is so much lobbying money flowing why would Congress want to turn that spigot off when it could easily flow into the next Congressional term? Further, there has been a growing and steady effort by those opposed to the pending patent legislation. Opponents were already making their case heard as the Senate continued to time after time postpone dissemination of the Manager’s Amendment, signaling the consensus that some Senators desperately wanted to reach was illusive, if not impossible. Now with the Supreme Court decisions in these two cases those on the Hill who were already skeptical have more than enough ammunition to slam on the brakes, at least for now, to see what the ultimate ramifications of the decisions will be on the reality of patent litigation.

35 U.S.C. § 285, which is an extremely short statute, authorizes a district court to award attorney’s fees in patent litigation to the prevailing party. In its totality, § 285 states: “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” With such a simple statute you might wonder how or why it was necessary for the Supreme Court to step in and provide clarity. Because in 2005 the Federal Circuit departed from three decades of case law and made it difficult, if not impossible, for prevailing parties to demonstrate entitlement to attorneys fees.

In Kilopass Tech., Inc. v. Sidense Corp. (Fed. Cir. December 26, 2013), in a 2-1 decision, the majority suggested that the fee shifting provisions of 35 U.S.C. §285 have broader application and are not applicable only when subjective bad faith and objective baseless claims are found. The push for broader application for the existing fee shifting statutory provisions is particularly relevant since there has been an increase in media coverage about certain abusive litigation tactics of patent trolls. This case might signal a nod to the district courts to apply the fee shifting provisions when trolling behaviors are practiced by the patent owner.

EDITOR’S NOTE: What follows is a summary of the Goodlatte patent bill created by American Continental Group, which is a government affairs and strategic consulting firm in Washington, DC. Manus Cooney, a former Chief Counsel of the Senate Judiciary Committee is one of the partners at ACG, and is also frequent guest contributor on IPWatchdog.com. Cooney and his partners and associates worked to prepare this summary, which was described as a team effort. It is republished here with permission.

I’m a fairly new/young patent attorney. I work at a firm where I am the only patent attorney, of several attorneys. I am trying to figure out how to set my fees and fee structure for patent prosecution and trademark registration work. Friends from law school in the Dallas area suggested using a flat-fee for prosecution, rather than an hourly rate. My concerns are, because I’m relatively new to prosecution, I’m not sure how to accurately estimate the time involved from an inventor’s initial disclosure so I set a flat-fee that won’t grossly underpredict the amount of time required. Of course, I also want to set my fee to be market competitive. I’m located in the Greater Nashville Area.

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…

Indeed, the bill’s co-sponsor acknowledges and states “[t]his bill combats the problem of patent trolls by moving to a ‘loser pays’ system for software and hardware patent litigation.” However, the bill’s sponsors fail to explain what makes the frequency, risk, or social harm of “egregious” patent lawsuits any different than those of other “egregious” civil suits in America so as to single out patent right enforcement for a special treatment under civil law. In fact, the following graph shows that in the last four decades the number of patent lawsuits filed per year has risen at slower pace than other IP lawsuits or when compared to all Federal civil suits. Patent lawsuits now constitute a little over 1% of all Federal civil suits – the same fraction as that in the mid 1970’s.

Yesterday Congressman Peter DeFazio (D-OR) and Congressman Jason Chaffetz (R-UT) introduced the Saving High-tech Innovators from Egregious Legal Disputes Act, or SHIELD Act for short. If ever passed into law the SHIELD Act would ostensibly adopt a variation on the English Rule, where the losing patent owner pays the legal fees of the victorious patent defendant when there was no “reasonable likelihood” that the patentee would prevail in the litigation. If theAct required a claim chart upon filing, applied across the board to all those who would seek to manipulate the patent system and not just computer/software patents and defined “reasonable likelihood of success” I would be on board with both feet.  As it is, I am on board with one foot and hopefully that improvements can be made to this important piece of legislation.

Having spent time as a litigator I know exactly what goes into taking a case on a contingency basis and you only take cases on a contingency when you know beyond a shadow of a doubt that there WILL be money ACTUALLY recovered. That is why it is perfect for personal injury attorneys. They can tell with great certainty, if they are being honest, if money will be recovered. So you need to be 100% sure when you take the case that money will be obtained because as it turns out cases can and do take on a life of their own and even when you are 100% certain at the outset you make mistakes. If you are not 100% certain at the beginning you pretty much never recover anything.

In Patent Strategy I explained that a reasonable quote for an office action response is $2,000. Certainly it can be more depending upon the technology, but if you were going to poll patent practitioners from patent attorneys to patent agents I suspect you would come out with something close to a $2,000 average. This prompted one patent examiner to comment: “You said in this article that practitioners make $2,000 per response on average. How much do examiners make per response? Probably a fourth or a third of that. I mean I try to do the best job I can but do you really expect all examiners who get paid a fourth or a third of what you make to perform at the level that you do?”

In what seems to be a continuing trend, the United Stats Court of Appeals for the Federal Circuit is continuing to show increasingly little tolerance for abusive patent litigation tactics. In the most recent pronouncement along these lines the Federal Circuit, per Judge O’Malley (with Judges Newman and Prost joining), ruled the district court appropriately awarded the defendant $3,873,865.01 in attorney fees and expenses under § 285, as well as $809,788.02 in expert fees.

It was also determined that the underlying patent litigation was brought for no other reason than to extract nuisance payments despite the fact that there was no infringement. Specifically, the district court determined that Eon-Net filed the lawsuit against Flagstar had “indicia of extortion” because it was part of Eon-Net’s history of filing nearly identical patent infringement complaints against a plethora of diverse defendants, where Eon-Net followed each filing with a demand for a quick settlement at a price far lower than the cost to defend the litigation.