Legal Geek No. 11: Patent Trolls Lose Another Battle at Supreme Court

This week, the subject is whether the tide is turning against patent trolls in the Federal court system.

https://archive.org/details/LegalGeekEp11

The Supreme Court issued two related opinions this week that related to patent law, and specifically how to apply the fee shifting provisions applied for so-called "exceptional circumstances."  This is one of the ways that frivolous litigating parties like patent trolls can be held in check, as paying the legal fees of the other party can be a deterrent when risking litigation against big pockets who have expensive legal counsel.

But how important will these decisions be in solving the patent troll problem?


The Supreme Court is giving far more discretion to the District Courts to determine what are exceptional circumstances meriting a loser pays all legal fees situation. This is not quite so far as some Congressional proposals have been, up to and including fee shifting to the loser in all patent cases, but it does make it more risky to force alleged infringers into court, especially when the case for infringement is shaky.

Another interesting part of the ruling is that the Supreme Court explicitly said an unreasonable manner in which a case is litigated can lead to fee shifting, which means patent trolls must play a little nicer or else run the risk of incurring the wrath of the court. Furthermore, the Supreme Court increased the standard fro review at the appeals court level is to look for abuse of discretion in shifting fees to a losing party, which is very different than the de novo standard that the Federal Circuit has been using (which allows for a fresh look and determination rather than giving deference to the District Court).

At the District Court, the proof now needed to show that the exceptional nature of the case is a preponderance of the evidence, not clear and convincing evidence. In other words, it is much easier for the District Court to shift fees to a losing patent litigation party and much harder for the court of appeals to overturn such fee shifting.

Although not explicitly targeted at patent trolls, these two decisions will likely affect some of the more egregious litigating parties that threaten lawsuits just to try and collect settlement paydays. Furthermore, this keeps legitimate inventors who cannot practice an invention but want to stop infringement or protect their own licensing rights from being harmed by overly harsh fee shifting rules. If you are litigating or threatening litigation and acting with poor tactics to disadvantage the opponent, that will eventually bite you when a court applies the fees from a winning party.

Bottom Line: The patent troll problem of companies buying up patents just to monetize them by threatening litigation is not going away with any one change, but making the courts more of a risky proposition for these entities should help in the long run. The patent troll may be slayed sometime soon!

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