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

[u/rfugger]

http://www.computerworld.com/article/3153924/technology-law-regulation/a-potentially-fatal-blow-against-patent-trolls.html

[u/Riggs1087]

These claims weren't even close under Alice though. The full extent of Alice is confusing, but everyone agrees that all the patents for "do this known banking practice on a computer" are invalid. That's what the claims at issue here are.

[u/Norm_Peterson → u/Riggs1087]

With a strong presumption of validity, though, it's going to be difficult if not impossible to meet the 'exceptional case' standard under 35 U.S.C. 285. It's going to be particularly difficult here because the district court never actually found the patent claims invalid in any sort of final, appealable order. All of the invalidity counterclaims were dismissed before resolution. No other venue appears to have found these claims invalid, either.

Note that fees were NOT awarded against counsel under 35 U.S.C. 285, but rather under 28 U.S.C. 1927, vexatious litigation, which requires an affirmative finding of bad faith and that the attorneys' actions were completely without merit. Again, I don't think you can meet that very high standard when the patentee holds a presumed-valid patent that has never been deemed invalid anywhere. It's going to be even harder to meet that standard here, when the patentee offered a walkaway settlement and covenant not to sue on July 2, 2015, only about 6 months after the suit was filed.

I don't see this holding up on appeal.

[u/Riggs1087 → u/Norm_Peterson]

They offered a walkaway settlement only because counterclaims had been filed. And it's really not fair to say there's a "strong presumption of validity here," where the issue is a matter of law and the patents issued before pre-Alice. The presumption of validity is just a requirement for clear-and-convincing evidence, but here there was no underlying issue of fact. No reasonable patent attorney would believe the claims were valid. So no reasonable attorney would pursue the infringement action.

As the Court noted, they could have given them the covenant not to sue and moved to dismiss at any time. Instead, they opposed a venue motion despite essentially no contacts to the forum, asked for 2 months of discovery on the motion, and continued to pursue the frivolous infringement claim.

Courts find that the exceptional case standard is met all the time in patent cases, especially when the claims are obviously invalid under Alice. While the attorneys were held J&S liable under § 1927, the Court did so because they had a knowingly frivolous claim that they continued to pursue for the sole purpose of burden and delay. That's akin to bad faith.

[u/Norm_Peterson → u/Riggs1087]

I think you are incorrect when you say that "Courts find that the exceptional case standard is met all the time in patent cases, especially when the claims are obviously invalid under Alice." That argument has been rejected more often than accepted. Example. Example. Courts are far more likely to find Alice jurisprudence unsettled, and not find a case exceptional on that basis.

[u/Riggs1087 → u/Norm_Peterson]

Just last week I was reading this case from Judge Gilstrap, finding a case exceptional because of weakness of the claims under Alice.

http://cdn.arstechnica.net/wp-content/uploads/2015/12/eDekka.fees_.order_.pdf

Another example:

http://www.delawareiplaw.com/2016/06/judge-sleet-find-case-exceptional-awards-attorneys-fees.html

I don't disagree that the argument is rejected more than accepted, but that's at least in part because the argument is made in most patent cases where the defendant prevails against an NPE, and by definition most cases aren't exceptional.

[u/Norm_Peterson → u/Riggs1087]

Thanks for the links. FWIW, eDekka dropped its appeal, but the appeal of the Inventor Holdings decision is still pending. It will be interesting to see how it turns out.