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Tech Companies Swimming In Lawsuits
conq writes "A new survey shows that the tech industry places third after healthcare and energy companies in the number of lawsuits it deals with. It states that an average tech company faces 42 lawsuits currently, more than the insurance industry!" From the article: "An average U.S. technology company currently faces 42 lawsuits vs. 37 lawsuit for an average company. The tech industry places third, after healthcare and energy companies, in the number of lawsuits it deals with ... Needless to say, that's quite expensive. Nearly a third of these companies spend more than 2% of their gross revenue on legal expenses, according to one of the largest surveys of corporate counsel in America."
The firm asked 354 companies in various industries about their top legal concerns.
Which 354 did you ask? There are thousands of tech companies! Define "tech company". Or is this just the 354 you could think of who'd pick up the phone?
That probably has something to do with tech companies having by far the greatest number of in-house attorneys managing litigation - an average of nine per company.
Nine lawyers per tech company - w0w! That's amazing considering that the overwhelming majority of tech companies that I can think of don't even have nine employees. Do you have any idea how many startups there are in California alone? Do six PHDs in a small lab working on, say, the next medical laser breakthrough not count?
Nearly a third of these companies spend more than 2% of their gross revenue on legal expenses
Which companies? What about the other two thirds? Are we supposed to think that 2% is a lot to spend on total legal expenses? What's the distribution?
Olga, your numbers are a crock of shit, and they stinketh. If you're going to give us stats, try starting with something like "of the 100 highest-grossing telecom service companies".
I think that there's a much larger problem then tech companies facing 42.
More like, some lawyers see an opportunity to beat Apple up for a settlement, so they find one user to be the named plaintiff, and go down the courthouse to get the class registered. Once they get that far, it's generally cheaper to pay them off (a million for the lawyers, and $20-off coupons for everyone else) than it is to litigate.
There's also a very brisk business of suing the officers of any company whose stock falls, as if they're supposed to be able to control the stock market.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I've heard several comments to that effect, over the years.
Certainly does make you wonder how we got from the US Constitution to some of the crap people used it for today.
A feeling of having made the same mistake before: Deja Foobar
And what else might be done with 2%. An small increase in R&D. Perhaps retail prices would magically decrease 2%. Or drug abuse might marginally increase.
If software companies at a number 3, I think this shows how the entire lawsuit thing has been overblow, and how most of the players are two faced. Even the republican party owes the ambulance chasers. It was they that got all the cig money for texas, which allowed Bush to balance the texas budget while cutting taxes, and helped him get elected to the big house. of course he thanked these lawyer by suing them for excessive billing, even though the billing had been agreed to, and they developed these cases with thier own money in the true spirit of entrepenurism, unlike other people we could mention.
The other issue is how many of these are squabbled over IP, and how many are individual get rich quick schemes. I also have no sympathy for the drug companies. Roche is about to make a killing on Tamiflu, probably several billion in the next few years, much of it direct profit from licensing. Will they have to set some of it aside for lawsuit resulting from charges of gauging and the like. Probably. But if they would sell it to certain countries at cut rate, and deduct the good will, they might be able to save the lawyer fees. But they apparently have made the choice.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Why should there be a lawsuit? Is it Apple's fault you didn't spend the 10 seconds to read an online review of their product before religiously going to the Apple store and buy it?
There are still many competing MP3 players out there, you didn't have to buy the Nano.
I think this is supposed to be true in the US, that the plaintiff in frivolous suits must reimburse the defendant, much like it is also true that prior art should prevent you from obtaining and prosecuting a patent.
Face it, gentlemen, the rule of law is long dead in the US, the ship is sinking, and the rats are gorging themselves before jumping ship.
1. It doesn't have enough manpower to do what it's being asked to do
2. It has quotas
3. It doesn't have the money to expand
1. This comes down to money, see your #3.
2. This comes down to the huge number of patent applications and in particular large number of "continuations" something the Director has said he'd like to see cut down. Approximately 1/3 of all patents last year were continuations. This means 1/3 of the work is "re-work".
3. This is the fault of congress, who only release more of the money the patent office makes if quality improvements are promised. Many millions (if not billions) of dollars are distributed to other government agencies from USPTO earned dollars. I believe part of the Patent Reform Act before Congress involves releasing all the funds to the PTO.
Presently with a few exceptions all patents are published after 18 months. The aforementioned Patent Reform Act addresses publishing all applications after 18 months (with the backlog in many arts this should result in your situation of published pending applications). The public currently can send prior art to the office. There are provisions for it, though it does cost money, and expecting it not to would be insane. If you cannot afford to present obvious prior art to the office, trust me there are probably people who would be willing to pay to do it for you (i.e. Logitech, Apple, etc. for a Microsoft pending patent). Thank you for bringing up obviousness...
There is a big problem many people forget about or just don't know about 35 USC 103(a) obvious type rejections. In order to combine two references the Court of Appeals for the Federal Circuit (CAFC) determined that you must have a motivation for combining the two items. This often increases the burden on the Office to make an obvious type rejection. There is presently a case attempting to challenge the standard before the Supreme Court (KSR International vs. Keleflex). The Supreme Court has asked for the input from the Solicitor General and are currently awaiting his word before deciding on whether or not to hear the case. If the SCOTUS overturns the CAFC then many patents will become more easily rejected, and thousands more will be invalidated if challenged.
On the matter of software and business method patents that mess up falls squarely on SCOTUS. For years the office pushed many business method patents aside by restricting them computers for the software usage and rejecting the others as outside the technical arts under 35 USC 101. This recently will change now that the PTO Board of Patent Appeals and Interferences (BPAI) overturned rejections of this type, basically opening the door for more broad business method claims.
To address the final part of your question about claim broadness, there is not a lot that can be done to limit. I am sure you could ask many examiners and they will tell you they hate broad claims much more then narrow ones, because if you cannot find art for it you risk issuing a very broad reaching patent. However, you cannot limit the broadness because when someone does invent some grand new device then you have to ensure they can earn the maximum projections they deserve.
If you are truly interested in learning more about patents, please reply to this post and I will see what light I can help shed on the subject.
"Some days you just can't get rid of a bomb."
I spend about $2,000 - $3,000 per month on attorney fees trying to explain to people what the First Sale Doctrine is.
Why do you bother? Wait for them to actually sue, then countersue. You can get damages for filing frivolous and vexatious lawsuits.
What the article fails to mention is that most of these lawsuits are business to business. One of the huge fallacies of the tort reform movement is that most lawsuits come from individuals. It is simply not the case. Most lawsuits against a company are from another company. Most companies have more contacts with other businesses than with individuals. A consumer isn't going to sue your company over the $20 that you screwed him out of. However, another business will sue your ass if you fail to take delivery of $10,000 worth of computer parts that you ordered.
I am not saying that there aren't abusive lawsuits by individuals against businesses. They are just few and far between. Nor am I saying that huge class action lawsuits aren't damaging to corporations. Nor am I downplaying the cost for compliance for numerous industry regulations. But for your average business, the owners have more problems coming from vendors rather than their customers.
So, you want to reduce the costs of business litigation? Pass tough laws against companies that abuse the corporate lawsuit system.