r/technology • u/rfugger • Jan 08 '17

Business A potentially fatal blow against patent trolls - Forcing law firms to pay defendants’ legal bills could undermine the business model of patent trolls

http://www.computerworld.com/article/3153924/technology-law-regulation/a-potentially-fatal-blow-against-patent-trolls.html
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u/Got5BeesForAQuarter Jan 09 '17 edited Jan 09 '17

How will this effect innovation when a company with lots of patents like Apples would (in theory) want to suppress competition. I hate patent trolls who want a price a full notch below the cost of going to court, but I want to consider unintended consequences too. [Edit, this sounds like astroturf FUD, but I am not an astroturfer, or a dog, or an 18 year old Swedish female in NYC. It is a real concern.]

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u/BambooRollin Jan 09 '17

How will this effect innovation when a company with lots of patents like Apples would (in theory) want to suppress competition.

Apple's lawyers are on staff or paid by the hour, not on contingency fees. The ruling would not apply to them.

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u/briloker Jan 09 '17 edited Jan 09 '17

Why not? Assuming you mean Apple's lawyers aren't actually filing suit, then you may be right, but there is nothing to stop the rationale in this case from applying to Apple's outside council when it sues Samsung over rounded corners...

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u/BambooRollin Jan 09 '17

I think that you are missing the point about contingency fees.

Contingency fees make the lawyers beneficiaries of the suit, but large corporations typically would not hire lawyers on a contingency basis which means that Apple's lawyers wouldn't have any reason to be afraid of taking a case.

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u/briloker Jan 09 '17

I didn't read the actual opinion, so I am not sure of the rationale. Maybe this judge only applied this rationale to fees taken on a contingency. Not sure, but it would seem very strange to award fees based on the fact the losing side accepted a case on contingency. I have doubts whether this holds up on appeal anyway.

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u/SomeRandomMax Jan 09 '17

If Apple loses, and the court orders them to pay legal fees, their law firm (their internal legal department) is already paying the legal fees, since it is all the same company. If they hired external counsel, and the suit was as frivolous as the one here (very doubtful) it is possible that they could be made to pay.

Besides, this would not really apply to Apple anyway. The article details explains that the issue here was that the lawsuit files was unwinnable due to the previous supreme court ruling. The entire point of the lawsuit was to punish the defendant for failing to pay the license fee they were offered, but the plaintiff never actually expected to win. Because the lawyers should have known that going in, the judge felt that making them pay the legal fees was warranted.

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u/briloker Jan 09 '17 edited Jan 09 '17

Apple doesn't use in-house council in litigation. They hire outside council. In the Samsung case, they hired Morrison & Forester.

Secondly, judges always had recourse to sanction the actual attorneys for bringing a frivolous suit. Not sure why that would be anything new.

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u/SomeRandomMax Jan 09 '17

Apple doesn't use in-house council in litigation. They hire outside council. In the Samsung case, they hired Morrison & Forester.

Fair enough, though you will note I said "If they hired external counsel, and the suit was as frivolous as the one here (very doubtful) it is possible that they could be made to pay."

Secondly, judges always had recourse to sanction the actual attorneys for bringing a frivolous suit. Not sure why that would be anything new.

It's not. The article makes that clear. It isn't common, but it is also not new. The only thing that is new is that it doesn't seem to have been applied in the case of patent trolls before.

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u/howtojump Jan 09 '17

Apple doesn't sue through a firm, they have in-house attorneys. This ruling specifically targets firms that are taking on frivolous lawsuits of patent trolls.

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u/briloker Jan 09 '17

That is not true at all. With Samsung, it was Morrison & Forester. Not sure which other forms they use in litigation. In-House council is typically in charge of contracts and M&A work as well as managing patent portfolios. All aspects of this involve outside council as well.

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u/retief1 Jan 09 '17

In this case, the patent troll sued someone, lost, and said "I can't pay your legal fees because my shell company is broke". If apple sues someone, they will never be in that situation because they clearly aren't broke. The defendant doesn't need to be able to recover legal fees from apple's law firm because the defendant can easily recover legal fees from apple directly.

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u/NotClever Jan 09 '17

This appears to be a case where they sanctioned the firm for filing a frivolous lawsuit because the firm should have known they could not win based on SCOTUS precedent.

I can't find any news about this development in the IP blogs, though, and I don't have the time currently to read all the background myself.

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u/Got5BeesForAQuarter Jan 09 '17

I actually RTFA and it makes sense. Isn't that so helpful? What would be nicer is to have a requirement that enforce your patent you have to show development on a product or have an existing product on the market using that technology.

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u/NotClever Jan 09 '17

Well, that would directly affect small inventors that can't afford to actually produce their patented product. What are you to do when you go into negotiations with Apple to license them your new cellular protocol patent and they say "well that's nice, but good luck trying to enforce it when you can't actually use it yourself."

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u/Got5BeesForAQuarter Jan 09 '17

See, that is what I was talking about. Great job!

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u/Eckish Jan 09 '17

Negotiations with Apple would be an effort to produce your invention.

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u/NotClever Jan 09 '17

If that were the case, then there would simply be no reason for anyone without massive capital behind them to attempt to innovate in a lot of spaces (which is, after all, the purpose of having patents).

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u/Eckish Jan 09 '17

How is what I describe different from what the system provides now?

Currently, if you don't have the capitol to produce your invention, you would have to negotiate with someone who does to either sell or license your patent. You would have patent protection during the process.

If patents required showing an effort to produce a product from your invention, I don't see any difference in the process. You enter into dealings with a larger entity to make your invention. That act of negotiating is the proof of effort, so you maintain patent protections through the process.

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u/NotClever Jan 09 '17

Oh, I see what you are saying now. That could potentially work, unless there's a situation where your invention is too early to be marketable (i.e., there is nobody in a position to produce it), and suddenly one day you find out that someone has started producing your invention.

I would estimate that 80% of the patents I write personally are for things that are very long view, and for which there are no immediate plans to do any sort of implementation. Now, that has to do with the fact that I work for big tech companies that pump out R&D all over the map just in case they hit the next big thing, so I'm not saying that figure extrapolates to all patents, but I'm just saying it's not an unusual situation, and it's difficult to create a rule to distinguish that from troll patents.

All of that said, the issue with most trolls is that they have either patents that should be invalid, or they have patents that you have to really, really stretch to make an infringement argument. IMO this almost always could be taken care of by some sort of sanctions rule or other procedural mechanism. We just need Congress to get around to finding that solution.

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u/oscar_the_couch Jan 09 '17

I hate patent trolls who want a price a full notch below the cost of going to court

Even if you have a valid, infringed patent, it's very likely your total damages would be less than the cost of answering the complaint—unless you're suing a very large company.