Supreme Court Clears Patent Invalidity Suits 120
The Empiricist writes "The United States Supreme Court has cleared the way for entities to sue over the validity of a patent — even while paying user fees to the patent holder. The eight-to-one Medimmune v. Genetech decision, written by Justice Scalia, held that by paying royalties to a patent holder, one does not necessarily waive the right to challenge the validity of the patent."
Re:Who dissented? (Score:4, Informative)
"Justice Thomas, dissenting, felt that a patent licensee in good standing must breach its license prior to challenging the validity of the underlying patent pursuant to the Declaratory Judgment Act, 28 U. S. C. 2201. 546 U. S. 1169 (2006). He held the opinion that the Court has consistently held that parties do not have standing to obtain rulings on matters that remain hypothetical or conjectural and that this was such a case."
Re:One would hope... (Score:5, Informative)
You might be. It depends on what kind of agreement you signed when you licensed me the patent. Many patent agreements either license the patent for n units (i.e., You agree to license your PatentWidget(tm) technology to me for a flat fee on 1,000,000 units of my product that incorporates your PatentWidget(tm) technology), x years (i.e., You agree to license your PatentWookie(tm) system to me for a period of 1 year), or some are even in perpetuity, but say, limited to a specific geographic area. Many do, however, have stipulations that the license becomes revoked if a lawsuit is filed against the patent holder.
IANAL
Re:Covenent not to sue now part of boilerplate (Score:2, Informative)
Some things just can't be signed away. Since the Supreme Court has already upheld that the right to sue for patent validity cannot be subsumed through licensing, putting such a clause in the licensing agreement would have no legal effect.
Re:Makes total sense (Score:3, Informative)
Of more interest to companies is that they can avoid treble damages for willfully violating a patent if they acquire a license and still have the option to challenge the patent. As was learned in the Blackberry vs NTP case although NTP's patents were in the process of being invalidated Blackberry could not stop the patent troll case against them. Perhaps Blackberry could have saved some capital by licensing NTP's patents when they first demanded extortion payments and then followed up with a suit against NTP to invalidate the bogus patents and request compensation for royalties paid.
Auto-revoke clauses may have no teeth (Score:5, Informative)
For those who are talking about auto-revoke clauses in lawsuits (of which I've seen a number post), read the article:
During arguments in October, Chief Justice John G. Roberts Jr. suggested there may be some way to structure a licensing agreement to diminish the threat of a lawsuit. Best predicts companies will likely try including contractual provisions prohibiting filing suit, potentially charging lower fees for those who agree to waive that legal right. But it's unclear whether such measures are legal. Courts generally hold that the right to sue should be retained - a sentiment that came out in this case.
Simply because a clause is within a contract/agreement, doesn't make it legally valid. As the courts have established through decisions, the right to sue should be retained and it's likely that clauses stipulating the prohibition of filing suit would be deemed legally unenforceable. A contract/agreement could be structured to make it undesirable to file suit or more desirable to persuade a licensee not to, but clauses that seek to waiver that right most likely will fail.
This decision has a more profound effect then simply the right to sue. It also raises the bar in the establishment of knowingly violating a patent. If a person/company sues to invalidate a patent, then only if the lawsuit is unsuccessful and the person/company continues to violate the patent can it be established they "knowingly" violated the patent. So this will also have an effect of making it more difficult to seek treble damages. Any person/company with the foresight and resources would file an invalidation lawsuit for that very reason, I suspect.
I agree with the Supreme Courts interpretation that just because you license, doesn't mean "Actual Controversy" requirements for filing an invalidation suit are voided. Previous court decisions established that you had to violate a patent first in order to file suit to fulfill "Actual Controversy" requirements. The Catch-22 of this is that by the very act of violating the patent, you are doing so "knowingly" in order to pursue an invalidation suit. Which means that should the suit fail, you'll automatically be nailed for treble damages since you've already established you knowingly violated the patent in order to pursue the invalidation suit in the first place.
The previous logic was flawed. It was like saying that if someone portends you owe them money, you would have to acknowledge you do owe them money before you could file a suit to establish you don't. The refusal to acknowledge a patent as valid should be grounds enough to fulfill the actual controversy requirements.Re:One would hope... (Score:3, Informative)
Going way, way back into the history of English law (from which the American courts are descended), there are a couple of basic operating principles that are echoed throughout legal decisions that seem to be more practical than theoretical. Case in point is stare decisis, the concept behind precedence in judicial decision-making: if a case or judge has previously decided the same or a similar issue, you are obliged to apply his logic to your case in a consistent fashion.
This principle doesn't come from an attempt to maximize "justice", at least not in the Aristotelean sense. It's a basically practical rule that imposes some consistency and durability on the legal system--that a claimant or defendant can be sure that the same rules apply to every situation (critical when most law is not statutory, "written-down" law), so the trust the courts more and don't try to settle things vigilante-style.
Returning to the question in front of us... Another general principle finding application in our law is this idea that once you're assented to something in practice, you're admitting to its correctness in theory, too. There's lots of examples, here's a few:
- child support and paternity: If you EVER admit paternity of a child, even falsely (or mistakenly), you will be liable in the future for child support no matter what. So if you accept a woman's assertion that you're the father of her baby and start paying, and then three or four years later you get a paternity test and find out she duped you, you're still fucked. (Some states have begun changing this through specific statutory law, recently, but not many.) Note that this usually applies even if you never explicitly admit paternity, but say if you co-habitate with the child's mother or provide financial assistance...
- jurisdictional challenges: If you believe that a court does not have jurisdiction to hear your case, but you show up to argue the case, anyway, the court views this as proof that you really do believe the court has proper jurisdiction. Once you've responding to a brief or made an appearance, you can never worm your way back out by trying to claim the court has no authority. (Sometimes, there is a strictly jurisdictional type hearing to address that one particular question, without granting it, but those are a relatively recent innovation.)
If your actions belie an agreement with the truth of a particular proposition of fact, the courts will generally hold you to that fact. If you relate this principle to patents, the lower court's original decision makes a lot more sense--if you thought the patent was invalid years ago, why didn't you sue THEN, instead of paying the license fees and waiting until now?
Generally, this is practical: the courts want things settled as soon as possible, and as finally as possible, to save them effort and to save everybody money. (Strange as it sounds, the law tends to discourage additional litigation through this principle.) Had the USSC made the opposite decision and let the lower court ruling stand, companies would be forced to do all their homework and look at every possible detail BEFORE they agree to licensing, because that would be their last chance, ever, to challenge patent validity.
Of course, there are problems with this approach, some of which may be related to the USSC decision:
- What if the facts change, because new prior art is discovered? In patent litigation, it might take some time for prior art to come to light, and since there's no unified "prior art" collection (like the collection of patents at the USPTO) it isn't reasonable to expect a claimant to be able to discover every possible potential prior art example in a finite amount of time.
- Patent litigation i