New 96-page paperback available from the Independent Institute. I wrote a blurb:
In clear and non-lawyerly language, Patent Trolls spells out why patent trollery is so loathed and so lucrative: its rapid rise (with lawsuits quintupling in the past three years), the havoc it’s wreaking from Silicon Valley down to your local restaurant and hotel; and the reasons it can be so hard to distinguish trolls from legitimate patent claimants. He lays out remedies worth considering.
– Walter K. Olson, Senior Fellow, Cato Institute; author, The Litigation Explosion and The Rule of Lawyers; editor, Overlawyered.com
Speaking of restaurants, the latest business to speak out about its bad experience with patent trolls is the venerable hamburger chain White Castle.
Is this patent asserter seriously overestimating the persuasive validity of its claims to own the process of scanning a document to email? Or is there a rash of inappropriate resistance by small businesses nationwide? “MPHJ has sent letters to approximately 16,465 small businesses nationwide. … it only received 17 (yes, 17!) licenses. Yet the price of these 17 licenses was thousands of small businesses going through the stress and expense of facing a threat of patent litigation.” MPHJ is said to believe that if a business has more than twenty employees and operates in various fields such as “professional services,” it very likely infringes on its patent and owes a royalty of $1,000-$1,200 per employee. [Julie Samuels, Electronic Frontier Foundation; Joe Mullin, ArsTechnica, more and related last year on patent asserters in the office scanning field]
The vote was 325 to 91, with Reps. John Conyers (D-Mich.) and Mel Watt (D-N.C.) leading the opposition. Timothy Lee discusses in the Washington Post. While I haven’t tried to get into the details, the general drift looks quite good to me. One major provision requires those filing suits to plead with some specificity what the infringement is; another provides for losing parties to compensate prevailing parties toward the cost of the litigation in more cases; yet another attempts to forestall expensive discovery in cases destined to fail on other grounds. Readers who recall my first book, The Litigation Explosion, will recall that I recommended procedural reform as the most promising way to address the incentives to overlitigiousness in our legal system and in particular identified lack of fee shifting, anything-goes pleadings, and wide-open discovery as among the system’s key deficits. So, yes, developments like this make me feel I was on the right track.
Equal time dept.: Richard Epstein takes a different view.
So how exactly did it wind up in the hands of a patent troll? [Mike Masnick, TechDirt]
Prevailing parties in patent suits can win attorneys’ fees from losing opponents in cases deemed “exceptional.” “Under the test used to identify exceptional cases, cases must be objectively baseless and brought in bad faith.” That is already a painfully narrow exception, allowing for large volumes of poorly founded litigation, but two cases before the Supreme Court this term may provide clarity on when courts can deem cases “exceptional” and suitable for a fee shift. Broader use of fee shifts — presumably by way of deeming at least some swath of losing cases “exceptional” — would be one way of addressing the patent troll problem that would not call for new legislation. [ABA Journal, related, Corporate Counsel (arguments that judiciary can deal with trolls on its own]
In other developments, the Federal Trade Commission has voted to proceed with an inquiry into the patent troll problem [New York Times] and the Government Accountability Office has released a long-awaited report on the issue [Mike Hogan and Gregory Hillyer, Legal Intelligencer]
A buzzed-about scheme for state AGs (of all people) to wade into the patent troll controversy might have hit a snag in Nebraska. [John Steele/Legal Ethics Forum, earlier]
– against patent trolls. But Kevin O’Connor, CEO of a startup named FindTheBest, went ahead and did so [Joe Mullin, Ars Technica] Exploding and escalating-on-response demands, threats of criminal prosecution, demands for “sequestration” (removal from service) of his company’s computers to prevent evidence spoliation, and promises of burdensome discovery are all part of the story.
The owner of IPNav, which has sued 1,638 companies charging patent infringement, explains his methods to the New York Times. “Mr. Spangenberg has been called ‘a costly nuisance,’ ‘one of the most notorious patent trolls in America’ and many unprintable names in the comments sections of Web sites like Techdirt. He has achieved a certain infamy,” as well as an annual estimated income of $25 million a year. And from Timothy Lee at the Washington Post: “Here’s what it feels like to be sued by a patent troll.“
We’re previously noted the activities of ArrivalStar and related entities, which have filed numerous suits against enterprises over alleged infringement on vehicle-tracking technology. Now one of its frequent targets, public transit systems, is striking back: the “American Public Transportation Association (APTA) has teamed up with the Public Patent Foundation (PubPat) … [and] have sued to knock out the ArrivalStar patents.” [Joe Mullin, Ars Technica] Also: “F.T.C. Is Said to Plan Inquiry of Frivolous Patent Lawsuits” [New York Times]
The White House report (“Patent Assertion and U.S. Innovation,” PDF) is here. Reactions: Bloomberg, Ronald Bailey, Andrew Sullivan and more, Daniel Fisher, Business Insider. Background: NPR “This American Life.”
Lawyer in Apple’s law firm turns out to have been secretly advising and investing in patent-holding entity (repped by Hagens Berman) preparing a legal onslaught against Apple. “Why didn’t Morgan Lewis … see an ethical problem in letting one of its partners invest in a patent troll, especially one specially designed to target one of the firm’s big clients? And how many other big-firm lawyers are entwined with ‘start-ups’ that are actually holding companies, created to attack the very corporations they are supposed to be defending?” [Joe Mullin, Ars Technica via @tedfrank]
… get “I Beat Trolls” t-shirt. [Ditto.com]
In other news, “Vermont Declares War On Patent Trolls; Passes New Law And Sues Notorious Patent Troll” [Mike Masnick, TechDirt]
The president has some opinions on the subject [TechDirt]:
Obama: A couple years ago we began a process of patent reform. We actually passed some legislation that made progress on some of these issues. But it hasn’t captured all the problems.
The folks that you’re talking about are a classic example. They don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them. Sometimes these things are challenging. Because we also want to make sure that patents are long enough, and that people’s intellectual property is protected. We’ve got to balance that with making sure that they’re not so long that innovation is reduced.
But I do think that our efforts at patent reform only went about halfway to where we need to go. What we need to do is pull together additional stakeholders and see if we can build some additional consensus on smarter patent laws.
Also: RICO claim can’t shoot down Wi-Fi patent troll [Joe Mullin, Ars Technica]