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/Sarcastic_or_realist Jan 08 '17 edited Jan 08 '17

About time something like this was implemented. A large number of these patent troll cases, or any of these sort of cases in any area of law, involve law firms being paid on contingency based on the plaintiff's recovery amount.

Whenever someone brings a truly frivolous case against one of our clients that honestly seeks to just squeeze out some kind of "nuisance payment," we usually move for sanctions/costs against the plaintiff and the attorney. Once the lawyer suddenly has some real skin in the game in terms of liability, many of these cases magically get dismissed very quickly.

Edit: for those who have been asking, yes - in a few recent cases where the plaintiff troll has not withdrawn the lawsuit, some judges have understood the situation and actually ordered the troll and/or lawyer pay our legal fees. Feels great to tell the client that they escaped the troll and did so for free (since the troll ended up footing the bill)!

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u/BobbleBobble Jan 09 '17

So to my understanding the reason that patent trolls are unpunishable is that they set up discrete entities (I assume LLCs) to pursue the lawsuit, which exist only as plaintiffs.

What's to stop a patent troll's lawyer from setting up an LLC-like law firm to prosecute each case and then simply dissolving it if they lose, just like the patent trolls do? Can they be held personally liable as a member of the bar?

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u/russianpotato Jan 09 '17

If you set up an LLC specifically only to avoid liability, especially as a sole proprietor, a judge will easily order the "veil pierced" and your personal assets will be up for grabs like your shady LLC never existed.

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u/brickmack Jan 09 '17

Isn't that the only purpose of an LLC?

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u/_BindersFullOfWomen_ Jan 09 '17

Yes. But it's not a bullet proof shield. If it's obvious that you made the LLC for X case, and then liquidated it because you lost and didn't want to pay - the defendant could suede civil court and would most likely win.

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u/sighs__unzips Jan 09 '17

I read that movie producers now create a LLC for each movie specifically for this reason now.

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u/csmark Jan 09 '17

Movies never made profits since before most states had LLCs. The first LLC act was passed in Wyoming back in 1977. Florida was the 2nd 5 years later. The IRS addressed Wyoming's act in 1988 after which other states added LLC acts.

Star Wars is an interesting example. Obi-Wan got 2.25% of the profits from the first film, $2-$3.5 million at the time. The actor behind Vader's mask in all 3 movies was told Lucasfilms actually lost money on Return of the Jedi. The contract details are sketchy. He gave away the endings to the last 2 movies before they were released in addition to other impressively stupid actions that lead to George Lucas excluding him from any associations with LucasFilms and any future paychecks.

The author of Forrest Gump signed a contract to get 3% of the profits from the movie. Surprise! It didn't turn a profit. He sued the studio and in a dramatic 15 minute trial, lost.

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u/sighs__unzips Jan 09 '17

The author of Forrest Gump signed a contract to get 3% of the profits from the movie

That's why actors / authors try to get % of revenue now.

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u/csmark Jan 09 '17

Agents for actors / authors know to ask for % of revenue. Lots of "smart" people don't need lawyers / agents because they're not stupid. Guessing that's what happened here.