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Bill Would Force Patent Trolls To Pay Defendants' Legal Bills 167

Posted by samzenpus
from the pay-up-sucker dept.
First time accepted submitter TrueSatan writes "With support from the EFF's Defend Freedom Project two Republican congressmen seek to introduce a bill called the 'Shield Act' which, if passed, would enable judges to award costs to defendants if they are found to be the victims of frivolous patent litigation. From the article: 'A new bill introduced in the House of Representatives attempts to deter frivolous patent litigation by forcing unsuccessful patent plaintiffs to cover defendants' legal costs. Introduced by Rep. Peter DeFazio (D-OR) and co-sponsored by Rep. Jason Chaffetz (R-UT), the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act is limited to patents related to computer hardware and software.'"
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Bill Would Force Patent Trolls To Pay Defendants' Legal Bills

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  • Rep. != Republican (Score:5, Insightful)

    by SJHillman (1966756) on Thursday August 02, 2012 @08:10AM (#40854409)

    " two Republican congressmen seek to introduce a bill"
    "Introduced by Rep. Peter DeFazio (D-OR) and co-sponsored by Rep. Jason Chaffetz (R-UT),"

    So the parties are officially merged now?

    • Re: (Score:3, Funny)

      by Anonymous Coward
      Shhhhh... Don't tell anyone. We are hoping that nobody notices.
    • by Therad (2493316) on Thursday August 02, 2012 @08:24AM (#40854565)
      Don't worry citizen, the Ministry of Truth will soon fix this incorrect article..
    • by tomhath (637240)
      Introduced by a Democrat and co-sponsored by a Republican is a good thing. It might have a better chance of getting through committees and the Senate, even though this looks a lot like election year posturing.
      • by v1 (525388)

        (A) I thought they had rules saying they weren't allowed to agree on anything and (B) it's good to see a Republican pushing legislation for the Little People.

      • by dgatwood (11270) on Thursday August 02, 2012 @01:07PM (#40857883) Journal

        Introduced by a Democrat and co-sponsored by a Republican is a good thing. It might have a better chance of getting through committees and the Senate, even though this looks a lot like election year posturing.

        Actually, it's a bad thing. Whenever those two parties agree, only one thing is certain: the American public are going to get screwed. This is one of the worst possible patent reform laws that could realistically be passed. Anyone who truly understands intellectual property would know that the way to prevent patent trolls is through fixing the loopholes that they take advantage of. This means:

        • Pass laws that strengthen the doctrine of laches so that those who should reasonably have known that patent infringement was taking place have about a one year window to bring a lawsuit, or else they can never sue that particular plaintiff again. Patent trolls almost invariably wait to sue until the alleged patent violator can no longer realistically remove the functionality or engineer around it, and until the alleged patent violator's sales volume is high enough to make it a very expensive case if they lose. Remove that incentive, and you cut trolls off at the knees.
        • Pass laws that absolutely require a functioning implementation created by the plaintiff, not just a description of that implementation, before the plaintiff actually gains the right to sue. At the core of patent trolling is suing over ideas with no concrete implementations. Remove that ability, and you deal the trolls a death blow.
        • Pass laws that redefine obviousness more broadly so that if anyone unaffiliated with the patent holder published a paper suggesting a similar solution prior to the earlier of A. the patent approval date or B. the date at which the patent holder first released a product exemplifying the patent, the patent can be invalidated by a simple administrative process. Redefine obviousness to mean "obvious to an expert in the field, given the problem it attempts to solve", not "obvious to a person with average skills, without being told the problem it attempts to solve". This would, of course, eliminate 99% of software patents, but given that 99% of software patents are patently crap, that would undoubtedly be a good improvement.
        • Pass laws that allow anyone to challenge a patent through an administrative process at any time, by paying a fee not to exceed $100, and by providing evidence of prior art that should have invalidated the patent, had it been considered when the patent was originally evaluated.
        • Pass laws that mandate a longer public comment period after a patent is published, extending up to the date at which the patent is actually approved, in which the general public is allowed to discuss the patent and submit additional prior art at a convenient website.
        • Pass laws that reduce the duration of patents depending on the rate of progress in the industry. The software industry goes through complete design cycles every four or five years. If patents lasted only four or five years, it would greatly reduce the ability of a patent to cripple the industry.
        • Pass laws that limit the ability to sell patents such that a company who buys a patent can only sue over that patent if they continued to manufacture a product or provide a service that exemplified that patent for at least a year or two after the purchase of the patent (or if they are actively manufacturing or providing such a product or service at the time of the lawsuit, during that initial period of time). This greatly reduces the viability of holding companies that exist solely to monetize patents.
        • Make patents expire automatically if the patent holder ceases to manufacture products or make services available that exemplify the patent for a period of a year or more. This basically eliminates the viability of holding companies that exist solely to monetize patents.
        • Ideally, pass laws that r
  • by Anonymous Coward on Thursday August 02, 2012 @08:11AM (#40854423)

    Please FIX the system don't PATCH it!

    The patent system is so badly broken that it kills innovation for generations..
    Patent trolls are just an sideffect, and they won't stop just of risk of paying some money in 1 case out of 10...

    • by Irishman (9604) on Thursday August 02, 2012 @08:58AM (#40854823)

      I definitely agree with this comment but I think that the bill being proposed is something that should be expanded far beyond patents. Allowing judges to force the plaintiffs to pay for an unsuccessful suit against the defendants in all cases would help limit spurious legal cases. If groups like RIAA had to pay when they lost the case against someone, it would go a long way to reduce these legal manoeuvres against people who cannot afford it.

      • NA they will just form companies for the purpose of bringing the suit assign the rights to the company in a very specific way and have no downside. Forming a corp only cost a few hundred bucks after all.

        • by Mikkeles (698461)

          Since that company now has the rights, they could be judicially re-assigned to the defendant in lieu of payment on a failed suit.

          • Shell companies. (Score:4, Informative)

            by Firethorn (177587) on Thursday August 02, 2012 @10:12AM (#40855653) Homepage Journal

            A truly *good* shell company will only have the rights to ONE patent, and only enough money assigned to it to feed the lawyers for the patent suit itself.

            There's deeper rules that try to prevent this sort of stuff, but it's complicated to work through. If I understand it right today, in many ways companies that are wholly(or mostly wholly) owned by another company are considered part of that company.

          • They could but they are generally given in very narrow terms often with huge payments. The payments eat up anything they might get buy suing and since the term is limited with a pile of conditions the rights are pretty much useless. There are rules to try and get around this but they can be worked around. The fix requires them putting up a bond to cover the potential amount but that effectively blocks the little guy from ever suing or giving the judges leeway to alter contracts and make investors responsi

        • Re: (Score:3, Interesting)

          by AlecC (512609)

          In the UK, where allocation of costs against losing litigants is common, there is a concept of constructive support. If a body can be shown to have been funding an action, then they can become liable for costs laid against the litigant they were funding. Precisely to avoid this sort of blocking. Obviously, the support has to be shown to the court's satisfaction, but that is usually straightforward.

      • Allowing judges to force the plaintiffs to pay for an unsuccessful suit against the defendants in all cases would help limit spurious legal cases. If groups like RIAA had to pay when they lost the case against someone, it would go a long way to reduce these legal manoeuvres against people who cannot afford it.

        It will also limit non-spurious cases, because it would tend to deter all who don't believe that they have a 100% solid and airtight case. It will also deter those without deep pockets from seeking j

        • Re: (Score:3, Insightful)

          by AlecC (512609)

          The court has first to determine that the case was frivolous (assuming the law is properly drafted). Courts are familiar with the idea of honest but wrong complainants, and would not wish to punish them. Insofar as the court has an interest - which they are supposed not to, but obviously do - they would not wish to have the strangling effect that you describe, because it would reduce their work. So i don't think you need worry about the court classifying every loser as frivolous.

      • It would also provide another check/balance against using the courts as leverage for obviously invalid patents. I commented the other day that I thought judges might start imposing penalties against those litigating obvious/invalid patents....lo and behold a bill is in committee to this effect. It is the court's responsibility to validate patents, I don't think things are as bad as we make them out to be. It looks like the courts are acting sensible in regard to software patents lately.

    • by bws111 (1216812)

      Yes, clearly innovation has been completely killed. There are no new products being brought to market. There are no improvements to existing products. We still use computers exactly as we did in the 60s, with only the very largest of companies being able to afford them. Nobody has bought a cell phone in the last 20 years except to replace a broken one, because there has been no innovation making people want to get a new one (that is why we all still carry around 2 pound voice-only behemoths). You can

      • We still use computers exactly as we did in the 60s, with only the very largest of companies being able to afford them.

        I see the sarcasm in your post, but unfortunately, the "in the cloud" and "post-PC" fads appear headed that way.

    • Dramatically lowering the presumption of validity would go a long way to reducing the trolls. At the moment, patents are presumed valid unless clear and convincing evidence proves otherwise. How about something like a preponderance of evidence? How about prior art the patent office didn't even consider? As it stands, the Patent Office is essentially unchecked with such a high burden of proof for defendants.

  • by gcnaddict (841664) on Thursday August 02, 2012 @08:11AM (#40854425)

    6 ‘‘ 285A. Recovery of litigation costs for computer
    7 hardware and software patent
    8 ‘‘(a) IN GENERAL.—Notwithstanding section 285, in
    9 an action disputing the validity or alleging the infringe-
    10 ment of a computer hardware or software patent, upon
    11 making a determination that the party alleging the in-
    12 fringement of the patent did not have a reasonable likeli-
    13 hood of succeeding,
    the court may award the recovery of
    14 full costs to the prevailing party, including reasonable at-
    15 torney’s fees, other than the United States.

    The language allows the judge presiding over the case to effectively determine whether the case was a frivolous case, meaning there's a decent chance that this won't deter legitimate patent suits. That said, only time will tell.

    • The cases interpreting Section 285 already do this. This legislation is unnecessary.
      • by gcnaddict (841664)
        The legislation appears intended to cause potential plaintiffs to reconsider, with the secondary benefit of codifying an already-implemented tactic.

        I agree with you in that the legislation should be unnecessary, but perhaps it's needed as a deterrent.
        • by Anonymous Coward on Thursday August 02, 2012 @09:18AM (#40855019)

          The reason it's unnecessary is that the law already allows the judge to order the plaintiff to pay the defendant's costs and attorney fees if he determines that the lawsuit was frivolous. This law, like many others, is a purely political move with no purpose but to create redundant legislation. The problem is that redundancy in the law can actually create ambiguity in its meaning. Neither patent trolls nor their victims will actually be affected by this one, except that the lawyers on both sides will get to play with the law's meaning more and, of course, bill for it.

  • SHIELD? (Score:5, Funny)

    by KazW (1136177) * on Thursday August 02, 2012 @08:13AM (#40854457)
    I think we can make a good guess about which movies these congressmen may have watched recently...
  • Garunteed Backfire (Score:4, Informative)

    by dywolf (2673597) on Thursday August 02, 2012 @08:14AM (#40854463)

    Now instead of no-name or proxy companies holding giants hostage, the giants themselves will become the hostage takers, violating patents left and right, and daring any little guy patent holders to try, just try, to take em to court. Then when the giant outspends I mean wins the court case, the lil guy is now really fookered cause he had to the giant's lawyer bill for its high profile team of super expensive attorneys.....

    Result: no lil guy will ever take on a giant that violates his patents, and when he contacts the company for any kind of settlement or sale offer, they'll just brush him off.

    Ya this is a great idea.

    • little guys don't tend to go for the big corps unless they know they have a solid foundation... why on earth would you otherwise? I think this has been brought to life with the Apple/Samsung debacle.
    • by dokc (1562391) on Thursday August 02, 2012 @08:24AM (#40854573) Journal

      Now instead of no-name or proxy companies holding giants hostage, the giants themselves will become the hostage takers, violating patents left and right, and daring any little guy patent holders to try, just try, to take em to court. Then when the giant outspends I mean wins the court case, the lil guy is now really fookered cause he had to the giant's lawyer bill for its high profile team of super expensive attorneys.....

      Result: no lil guy will ever take on a giant that violates his patents, and when he contacts the company for any kind of settlement or sale offer, they'll just brush him off.

      Ya this is a great idea.

      I don't see any difference to current situation.

    • by Trepidity (597) <delirium-slashdot AT hackish DOT org> on Thursday August 02, 2012 @08:49AM (#40854761)

      The bill gives the judge discretion to determine if it was a frivolous lawsuit, so if judges use that discretion properly (admittedly, subject to question), people who sue and lose won't be assessed the costs if the suit was at least a reasonable one.

      • And whether or not they use it responsibly - the system will tend towards clogging because the losing party will almost invariably appeal. "Frivolous" and "likely to prevail" are both terms open to wide interpretation.

      • Perhaps, but would you risk going up against a company capable of spending millions of dollars on lawyers who are going to be much better than any you can afford and potentially owing the company that out-lawyered you those millions? I think there needs to be some kind of limit. Perhaps there should be a cap in which the most you can owe to the case's winner is the same amount that you paid to your own lawyer(s).
    • by LordLucless (582312) on Thursday August 02, 2012 @09:07AM (#40854907)

      Well, if they get a judge to agree that the little guys suit was frivolous, yeah. This legislation doesn't mandate loser pays, it gives judges the option to enforce loser pays if they determine that the plaintiff knew the suit was likely to lose when they brought it.

      And if you reply by saying that the big corp will just buy out the judge too - well, there's your problem. No matter what legislation is passed, you can't have justice if the officers of the court are corrupt. That's not a problem with this legislation, it's a problem with the legal system as a whole.

  • Hmmm (Score:5, Interesting)

    by Coisiche (2000870) on Thursday August 02, 2012 @08:16AM (#40854487)

    Much as I'd like to believe that this is the result of politicians actually having a good idea, I suspect it's nothing but a negotiation ploy because they want bigger payments from corporations who draw a large revenue stream from the questionable use of patents.

  • by Compulawyer (318018) on Thursday August 02, 2012 @08:18AM (#40854503)

    Section 285 of the Patent Act of 1952 (35 U.S.C. 285) already permits judges to declare patent cases to be "exceptional" and award appropriate relief. From the defendant's perspective, a case can be declared exceptional if the plaintiff cannot show that at least one claim of the patent in suit covers the device or process accused of infringing the patent. This section is regularly used by defendants to obtain attorneys fees and costs.

    Rule 11 of the Federal Rules of Civil Procedure and Section 1927 of Title 28 of the U.S. Code also provides bases for the same relief.

    The problem with patent trolls is not the inability of defendants to get costs. It is that trolls often wage licensing campaigns by bringing highly questionable claims but set the costs of licenses below the cost to defend an action in court. Companies typically choose to go the economical route and take a license.

    • by nedlohs (1335013)

      The problem with patent trolls is not the inability of defendants to get costs. It is that trolls often wage licensing campaigns by bringing highly questionable claims but set the costs of licenses below the cost to defend an action in court. Companies typically choose to go the economical route and take a license.

      If you can be awarded costs that lowers the expected cost of taking it to court, and hence lowers the cost of the licenses offered. Surely that's a good thing?

      If the claims really are highly quest

      • Except that you have to make the initial investment, there is always a risk that you will lose, and there is always a risk that although you have been awarded costs, you will not actually be able to collect the money. Early settlement by taking a license provides financial certainty and eliminates the legal risk, which are two things that companies like a hack of a lot more than litigation.
        • by nedlohs (1335013)

          Yes, but if you are likely to win costs then the threshold where the licensing cost makes it worth going to court is lower.

  • Um, why? Seriously, why on earth would you possibly think that there would be any benefit in restricting this law suit to just one industry when it clearly applies in principle to *every* industry that involves patents, even if not all of them are quite so litigious right now? OK, this law was probably paid for by IT industry lobbyists, but are things really that screwed up in US law making that if you don't fund the congress critters writing the legislation then you don't get covered and have to fund you
  • Republican congressmen? Then obviously the /. crowd will hate it. @_o
  • by captainpanic (1173915) on Thursday August 02, 2012 @08:29AM (#40854615)

    A wants X amount of money from B. A loses the case, but B is still bankrupt from the costs of the case.

    I may be mistaken, but I think that in the Netherlands, if A loses, they always pay the entire costs of B too. That's the risk of suing someone for financial gain.

    • by Bombur (544425)
      Well, I do not know about the Netherlands, but in Germany the losing party always pays the winners fees.. Both in civil and in criminal cases.
      • Ah, I see what you misunderstood. The 1st line in my post was about the current American situation, where you can win a case, but still go bankrupt.

        Then in the 2nd line I explained how it's done in the Netherlands, which apparently is similar to the German situation.

      • by Firethorn (177587)

        How does that work when the person wronged is an individual of midling means(IE poor) and the one who did wrong is a huge company? Can the huge company bury the small guy in legal fees/bills?

        There needs to be a balance, and you can't always assume that the losing party was in the wrong, or at least to the extent that it shouldn't have been a court trial.

      • by Sique (173459)

        It is not that easy. It's not "loser pays" in civil cases in Germany, because there you don't have losers. It's more like this, that the plaintiff in his suit defines the "Streitwert" (lawsuit value), which determines for instance the salaries for the lawyers and thus also the costs of the whole case. When in the judgement the damages get awarded, they are compared with the initial Streitwert, and you have more or less to pay the difference between the damages you get awarded and the initial valuation of th

    • by Shavano (2541114)
      That is not a good system. The wealthier party can always use the threat of hiring really expensive lawyers as a deterrent and the deterrent works even of you have a legitimate case. Also in some cases both parties are partially right. You shouldn't be penalized for having a court sort out a judgment.
      • by Sique (173459)

        No, this doesn't work. At least in Germany, the lawyer's fees are determined by the valuation of the case. There is a table which lists for each case value how much the lawyers will earn at maximum, and the plaintiff is the one putting a value on his suit. So you can always block the attempts of the defendant to shock you with high costs because you are the one determining how much the case will cost you.

    • by dkleinsc (563838)

      Imagine this scenario if you will: B damaged A for $X, but B has a much more expensive and better legal team than A, so A loses. A is now forced to pay for B's lawyers, and is now bankrupt.

      That's why in the US, it's the judge that gets to decide whether a case is frivolous and award attorney's fees accordingly.

  • by f3rret (1776822) on Thursday August 02, 2012 @08:38AM (#40854679)

    Patent frivolous patent lawsuits and sue EVERYONE!

  • Oh noes! (Score:5, Insightful)

    by AbRASiON (589899) * on Thursday August 02, 2012 @08:42AM (#40854703) Journal

    Apple might have to go back to innovating instead of what they've been doing the last 18 months. (Retina display being the last really clever thing I'd credit to Apple)
    Galaxy S3 folks, Apple are shitting themselves and rightfully so, S2 was good, S3 is great, genuinely good hardware - some great software too.

    Disclaimer: I've owned an iphone 3/3gs/4 and Galaxy S2 and S3.

    • Re:Oh noes! (Score:4, Interesting)

      by chenjeru (916013) on Thursday August 02, 2012 @09:05AM (#40854883)

      You do know that the retina display in the iPhone is designed an manufactured by Samsung, right? The only "innovative" thing Apple did was to lock the supply chain by buying every single one of them, making them unavailable for anyone else until manufacturing capacity ramped up.

    • by Shavano (2541114)
      What's clever about a retina display? Pretty yes. Obvious also yes.
    • Only Apple could get away with calling the decades-old progression towards more pixels per inch as "innovation" by giving it a fucking brand name. That fact that the displays are made by Samsung is just icing.

      Apple doesn't innovate. They tinker with existing forms and make them more pleasing. It's not a bad thing, it's incredibly profitable, but don't pretend that Apple is actually trying stuff that might not work. Apple's patent stuff campaign, you will note, is not aimed at innovators, but at companies th

  • Might not help (Score:5, Informative)

    by jeti (105266) on Thursday August 02, 2012 @09:07AM (#40854917) Homepage

    Keep in mind that IP Ventures is said to use between 1600 and 1800 proxy companies for suing. Those companies are formally independent of IP Ventures, but the filings indicate that IP Ventures has a financial interest in the outcome (they get their share). If the legislation is not carefully crafted, the proxy companies can just go bankrupt and sell the patent(s) back to IP Ventures.

    Source: http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack/ [thisamericanlife.org]

    • by ewieling (90662)
      It seems that if the proxy companies go bankrupt they should be forced to hand over the patents to the winner as compensation.
  • not enough (Score:5, Interesting)

    by Shavano (2541114) on Thursday August 02, 2012 @09:09AM (#40854933)
    If the claims are truly frivolous the plaintiff should have to pay whatever they asked for in damages to compensate their intended victim for damage to their reputation. And it shouldn't just apply to trolls. The same should go for big sue-happy companies.
  • Be careful what you wish for, people!

    The bigger patent trolls have plenty of money.

    The small guy with a legitimate beef does not.

    Here's what you do -- imagine you're a patent troll with $30 billion at your disposal. Now pay your multiple genius lawyers to figure out ways around it.

    Now revise the law according to that before even bothering to pass it.

  • Ahem (Score:4, Interesting)

    by kenp2002 (545495) on Thursday August 02, 2012 @09:45AM (#40855301) Homepage Journal

    ...did not have a reasonable likelihood of succeeding, the court may award the recovery of full costs to the prevailing party, including reasonable attorney’s fees, other than the United States...

    All this bill does is give judges the ability to required the loser to pay up. The legal definition and use of the word MAY is very important. MAY gives the judge discretion, SHALL does not. IANALBMWIAPL and she says this effectively does nothing other then give a judge the same ability to require one side to pay up without having to dismiss the case with prejudice. Nothing more then giving the judge more tools to punish trolls.

  • I have a better idea (Score:5, Interesting)

    by RogueWarrior65 (678876) on Thursday August 02, 2012 @09:58AM (#40855473)

    "Bill would force patent trolls *and their attorneys* to pay defendants' legal bills"

  • by flyingfsck (986395) on Thursday August 02, 2012 @10:32AM (#40855927)
    All that will do is cause the patent trolls to create a number company with no assets for each lawsuit. So when costs are awarded, they will be bust and the victim will still be burdened with all the costs.

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