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Patents The Courts

Patent Troll Ordered To Pay For the Costs of Fighting a Bad Patent 191

Posted by timothy
from the once-in-a-while-justice-peeks-through dept.
We mentioned last year that FindTheBest CEO Kevin O'Connor had taken an unusual step, when confronted with a demand by patent troll company Lumen View that the startup pay $50,000 for what struck O'Connor as a frivolous patent: He not only refused, but pledged to spend a million bucks, if necessary, to fight Lumen View in court. Now, as Ars Technica reports, O'Connor has succeeded on a grand scale. Before trouncing Lumen View in court, Ars reports, "FindTheBest had spent about $200,000 on its legal fight—not to mention the productivity lost in hundreds of work hours spent by top executives on the lawsuit, and three all-company meetings. Now the judge overseeing the case has ruled (PDF) that it's Lumen View, not FindTheBest, that should have to pay those expenses. In a first-of-its-kind implementation of new fee-shifting rules mandated by the Supreme Court, US District Judge Denise Cote found that the Lumen View lawsuit was a 'prototypical exceptional case.'"
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Patent Troll Ordered To Pay For the Costs of Fighting a Bad Patent

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  • Newegg did that too? (Score:5, Informative)

    by Anonymous Coward on Monday June 02, 2014 @08:12AM (#47145789)

    http://soylentnews.org/article.pl?sid=14/05/23/1347205

    "Unlike the other 36 codefendants, Newegg chose to go further and recover its legal fees, an action that most companies choose not to pursue because prevailing defendants were, until recently, required to demonstrate that a plaintiff acted in bad faith."

  • by Anonymous Coward on Monday June 02, 2014 @08:20AM (#47145813)

    The Patent troll will probably just declare bankruptcy and reform under a new name, all in the same day.

    Not even looking at how it is structured I'd blindly wager that they are held by no fewer than two shell companies. So the problem is that the people pulling the strings never suffer any real repercussions.

    • by Anonymous Coward on Monday June 02, 2014 @08:24AM (#47145837)

      The problem is also that the USPO granted the patent in the first place :/

      • by fuzznutz (789413) on Monday June 02, 2014 @08:40AM (#47145913)

        The problem is also that the USPO granted the patent in the first place :/

        Amen. The "experts" who are supposed to know better are accepting these bullshit patents all the time. The courts have to sort it out while the victims get to pay. How about we personally make the patent examiners financially liable for the costs involved in defending one of these bullshit patents. I'd bet that they'd be looking at these patents with a much more critical eye then...

        • The patent examiners are approving patents figuring that the courts will sort it all out. And the courts just assume by default that the patent examiners did their job and reviewed the patent. The end result is patents that shouldn't have been granted being held up in court or requiring lengthy, expensive litigation to get invalidated. I completely agree that there needs to be some accountability in these patent applications. If one of your patent applications is overturned by the courts, you go on prob

          • Re: (Score:3, Interesting)

            by Anonymous Coward

            The problem is that there are not enough examiners. Apparently as an examiner you have about 2 minutes to look at a patent and say yay or nay.

            • by deniable (76198) on Monday June 02, 2014 @09:50AM (#47146271)
              You're also expected to be a subject-matter-expert on every application that crosses your desk. And remember, you have 2 minutes to review an application written by lawyers paid to write confusing applications.
              • by msauve (701917) on Monday June 02, 2014 @10:10AM (#47146421)
                "you have 2 minutes to review an application written by lawyers paid to write confusing applications."

                This.

                Patents are supposed to be provided in exchange for an inventor disclosing the invention for future public benefit. But, they're written in such an obtuse manner that they can't be used that way - they're expected to be used to extract money out of the people who come up with something similar, not provide a workable explanation of how to make something useful.

                The solution is for examiners to simply outright reject any patent which isn't readily understandable. A person "skilled in the art," shouldn't have to learn deliberately obtuse patent-speak to even begin to understand a patent.
              • by stealth_finger (1809752) on Monday June 02, 2014 @11:02AM (#47146827)

                You're also expected to be a subject-matter-expert on every application that crosses your desk. And remember, you have 2 minutes to review an application written by lawyers paid to write confusing applications.

                Well if the examiner cant understand it immediately, they should deny it, if in doubt dent. Yeah I know they get paid for approvals and all that but really, the whole system sucks, it needs pulling out, burning, having the ashes jumped on then started again using common sense.

                • Re: (Score:3, Funny)

                  Well if the examiner cant understand it immediately, they should deny it, if in doubt dent. Yeah I know they get paid for approvals and all that but really, the whole system sucks, it needs pulling out, burning, having the ashes jumped on then started again using common sense.

                  Or if it isn't immediately obviously what the patent is even for.

            • by swillden (191260) <shawn-ds@willden.org> on Monday June 02, 2014 @09:54AM (#47146295) Homepage Journal

              The problem is that there are not enough examiners. Apparently as an examiner you have about 2 minutes to look at a patent and say yay or nay.

              Which means we either need more examiners... or fewer patent applications. What's really bad is that the current state is a vicious cycle. If any patent application is likely to be approved, then people will submit more applications, which increases the workload on patent examiners, reducing the time they have to look at a patent, and increasing the likelihood that any patent application that appears on its surface to be novel and to have referenced the appropriate prior art will be approved.

              Further exacerbating the problem is the fact that patent portfolios so often do battle by "weight". If company A has 10,000 patents and company B only has 5,000 patents, it's much easier for B to pay A some money and both to enter a cross-licensing agreement than to actually determine which of the 15,000 patents has value and is relevant. So, companies incent their technical people to patent all sorts of silly crap. More applications, more applications per examiner, less time per application, lather, rinse, repeat.

              IMO, we need to take a big step back and re-examine the whole system. I've been arguing for a long time that there's a very simple test we should be using to evaluate the effectiveness of the patent system which is supposed to be encouraging progress (not paying inventors, note. If that happens, well and good, but it's not the goal). The way patents are supposed to promote progress is by publishing details of the inventions so that other inventors can use the ideas and build upon them. The licensing fees patent owners can receive as a result are their incentive to publish, rather than keeping their ideas as trade secrets.

              So, to see if the system is working well, we just need to look at how often the patent database is used by inventors as a resource when they're looking for solutions to problems they have. If the patent system were working, we'd see the database being mined for ideas, and companies happy to pay licensing fees for useful inventions that help them build their products more cheaply than if they'd had to invent it all themselves.

              • by xbytor (215790)

                > we just need to look at how often the patent database is used by inventors as a resource when they're looking for solutions to problems they have.

                This has probably been brought up before, but typically companies will instruct their people to _not_ look at existing patents. The reason for this is that if they do create something that is similar to an existing patent, they can justifiably claim ignorance and avoid the treble damages associated with 'willful infringement'.

          • by sjames (1099) on Monday June 02, 2014 @10:24AM (#47146513) Homepage

            Change that to their boss is fired and it might work.

        • by StripedCow (776465) on Monday June 02, 2014 @09:18AM (#47146111)

          The problem is that USPTO is getting paid *more* for every approved patent than for every rejected patent application.

          Like it was said before here, this is like paying fishermen for the fish they *didn't* catch.

          • An easy way to fix this would be to have the USPTO grant every patent (for a fee) as it does currently, but also every time you want to sue someone, you would need an USPTO expertise granting you the right to sue.

            That way, creating bad patents would cost you money ; suing for nothing would cost you money, and invalidate your patents at the same time. And the USPTO would get enough money to have real experts look at each case.

        • by ConfusedVorlon (657247) on Monday June 02, 2014 @10:31AM (#47146589) Homepage

          Whilst I agree that a lot of bad patents are certainly granted, I actually think the systemic problem here is actually the review process after the initial grant.

          Even if USPO was a lot better, then it is safe to assume that some crappy patents would get through when an examiner was having a bad day.

          It's ok to have errors like that if you have a decent fast review process to fix mistakes.

          This might be something that a judge could request before a case went to trial.
          The patent would be re-reviewed by a senior patent examiner who would make an new judgement:

          1) this probably should not have passed. (Inventor can appeal, but legal process assumes that patent is invalid until the appeal).
          2) this is a solid patent that probably should have passed. (the infringer can appeal, but legal process assumes the patent is valid until the appeal).

          given that only a tiny fraction of patents will ever get taken to court, this isn't adding a huge amount of re-work to the USPO, so they can handle this stream as a high priority.

          This does somewhat reduce the certainty of the initial patent grant, but that is no bad thing.

          • This could all be fixed by issuing the original patent provisionally, and mandating a second, more thorough review by the patent office when the decorative sabre is first unsheathed.

            Maybe the target of the action files an application for second-stage examination and ponies up a small fee on the order of $1000, then the patent office adds the patent to their public "notice of re-examination" board for sixty days to solicit any other public input. After the examination, the target recovers from the patent ho

      • by Duhavid (677874)

        Another problem. If the patent troll has already threatened litigation against others, and those others caved & paid, there is ( in my opinion ) undeserved income.
        If it is shown in a subsequent court case that the patent troll's claim was unsupportable, it was unsupportable to begin with, any monies paid should be reimbursed.

      • The problem is also that the USPO granted the patent in the first place :/

        Then they should pay the legal bill.

    • by jythie (914043) on Monday June 02, 2014 @08:25AM (#47145839)
      That is part of the reason that these 'looser pays' rules make me nervous. Truly bad actors like patent trolls have lots of ways around actually paying out, but small shops or inventors generally do not, so all it does is increase the risk associated with taking on companies with more resources.

      When filing a lawsuit you generally only have to consider spending what you can afford, but having to consider what the other party can afford changes the equation dramatically.
      • by fuzznutz (789413) on Monday June 02, 2014 @08:43AM (#47145925)

        That is part of the reason that these 'looser pays' rules make me nervous..

        Would you feel better if it was 'tighter pays'?

      • by ruir (2709173)
        For sure, and when you have very well known companies that are more than happy to "negotiate" with trolls for them to make more difficult to small players doing their business, you really dont have any ideia how much "the other party" can afford.
        • by ruir (2709173)
          How that plays with off-shored companies? Here small, family owned, incorporated companies play that game all the time, specially in the construction and textiles sector, and often both the IRS and their suppliers do not see a dime.
      • by bobbied (2522392)

        That is part of the reason that these 'looser pays' rules make me nervous. Truly bad actors like patent trolls have lots of ways around actually paying out, but small shops or inventors generally do not, so all it does is increase the risk associated with taking on companies with more resources. When filing a lawsuit you generally only have to consider spending what you can afford, but having to consider what the other party can afford changes the equation dramatically.

        Good point. But looser pays has good aspects too. How about we modify it by requiring an escrow account where the filer is required to either put up a percentage of expected legal fees, or allow leans on the personal property of the principles of any corporation that files? Claims on personal property would require court action to prove who the person or persons who made the decision to sue was, but this would put a huge damper on marginal lawsuits.

        They do this kind of thing in other countries, so Loos

    • by Anonymous Coward on Monday June 02, 2014 @08:30AM (#47145863)

      The Patent troll will probably just declare bankruptcy and reform under a new name, all in the same day.

      Not even looking at how it is structured I'd blindly wager that they are held by no fewer than two shell companies. So the problem is that the people pulling the strings never suffer any real repercussions.

      What's more important than whether or not this particular company actually pays, is that the precedent is being set and the tides are shifting, hopefully making others think twice before filing frivolous lawsuits.

    • by Attila Dimedici (1036002) on Monday June 02, 2014 @08:36AM (#47145891)
      If FindTheBest is willing to spend the money on lawyers and court costs, that will not protect the patent troll. There exists a legal basis for "piercing the corporate veil". Dissolving the corporation and forming a new corporation with the same assets(in this case, patents) is a classic example of where that can happen and what that very concept was created for.
      • by rapturizer (733607) on Monday June 02, 2014 @09:03AM (#47146047)
        FindTheBest probaby will spend the money. The good part of this ruling is that there are law firms that will seek out small businesses to defend them from deep pocketed patent trolls. They will develop the methods to aggressively pursue the money, and will even be happier if they find trolls that send out nearly identical letters to multiple companies and can achieve class action status. In my opinion, this may be one of the few good reasons for these law firms to exist.
    • by alen (225700) on Monday June 02, 2014 @09:00AM (#47146035)

      you need money to litigate a patent suit. if you had cash in the bank to pay the bills and it vanishes the day before you file chapter 11, the court is going to start asking questions and auditing your books

    • by Greyfox (87712) on Monday June 02, 2014 @09:28AM (#47146141) Homepage Journal
      If you have a claim to their assets, you could probably still go after all the patents that company owns and presumably any of the licensing fees they had managed to collect. Denying the people pulling those strings as much money as possible still has some value. Now that the precedent has been set, more companies might elect to pursue this course of action, which could put a serious dent in the patent troll business plan. And if you suspect a corporation has just been formed to serve as an alias, you can still go after the assets of the individuals holding that corporation.
    • by aurizon (122550)

      At first this will happen, but then judges will request a fee bond from these numbered companies, which will pay the fees to the winner if the troll loses.

    • I'd wager that the judge is fully aware of that and has issued appropriate orders freezing assets until such time as it is determined which assets should actually be seized permanently. This judge DID just rule that Lumen View is a patent troll who is abusing the court system. Judges don't like it when you do that. Three years from now, the people involved might ultimately get their bank accounts released, but the judge knows how to make it an expensive pita to get the order overturned.

  • by Anonymous Coward on Monday June 02, 2014 @08:58AM (#47146023)

    My favourite sentence from the summary in the first link:

    The patent troll's attorney also made the claim that calling someone a 'patent troll' was actually a 'hate crime' under 'Ninth Circuit precedent' and threatened to file criminal charges — unless they settled the civil case immediately, apologized, and gave financial compensation to the troll.

    • by Anonymous Coward on Monday June 02, 2014 @09:35AM (#47146175)

      My favourite sentence from the summary in the first link:

      The patent troll's attorney also made the claim that calling someone a 'patent troll' was actually a 'hate crime' under 'Ninth Circuit precedent' and threatened to file criminal charges — unless they settled the civil case immediately, apologized, and gave financial compensation to the troll.

      That is the worst thing I've ever read!!! It's the kind of thing a lawyer should be disbarred for. The kind of thing that would make me willing to bankrupt myself and my company just to punish the company and attorney. Ugh that's the worst!!!

    • Here you simply kill this type of lawyer.
  • How long before Lumen View ask for this to be removed from search engines in Europe?

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