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Supreme Court Clears Patent Invalidity Suits
The Empiricist writes "The United States Supreme Court has cleared the way for entities to sue over the validity of a patent — even while paying user fees to the patent holder. The eight-to-one Medimmune v. Genetech decision, written by Justice Scalia, held that by paying royalties to a patent holder, one does not necessarily waive the right to challenge the validity of the patent."
that it is obvious that the Supreme Court would reach this decision. Any other decision would defy all logic.
Hopefully this will spell doom for patent trolls. I'm sure some people will say "but what about the small inventors?" yet we hardly see anyone but patent trolls and megacorps doing anything with patents, so anything which weakens them is for the best.
If you're just a lone inventor and you have that good an idea, you're probably better off making a prototype and marketing the idea directly, anyhow, rather than getting patents.
... bully the little-guy patent holder by suing even while paying license-fees. Little-guy can't get an injunction because fees are being paid, so it costs the big-corp nothing except their staff lawyers time. Little-guy then either has to pay to defend the patent out-of-pocket, or lose their patent (and any future license fees). Of course, this situation only plays out if the little-guy is a patent-troll and can't be counter-sued for patent infringement. And of course, in the end, the lawyers win.
Should be "GENENTECH"...the mega biotech/research company.
At least this is one small step toward reforming the ridiculous patent system in this country. Yes, we need patents. They can be a good thing. However, when companies patent everything they can no matter how ridiculous or small, it's time to start fixing a broken system.
For average Joes like you and me, if I tell you that you owe me money, and you fear damage to your credit report if you don't pay me but you don't actually think that you do owe me, you can write "paid under protest" underneath where I would endorse the check, and then sue me to get your money back. The court won't hold it against you that you paid the bill if you make it clear to the court that you never considered yourself to be liable for the debt.*
The fact that we're talking about multi-bazillion dollar corporations doesn't mean this concept shouldn't still apply.
(* As a side note, the new electronic bank records for checks makes this a lot more viable as proof, because the fact that the bank has on record that they cashed the check with "paid under protest" already written on it means that the defendant can't claim you wrote it after the fact. Also, banks have to send you an official copy of their record of the check upon request - the copy you get with your bank statement may get accepted in small claims court, but it's not what the law considers "official".)
Effective immediately, all patent-licensing deals will have a covenant not to sue or challenge the validity of the patent as part of the licensing agreement, enforceable by a payment of "lost royalties" through the expected life of the patent.
If you won't sign away your right to sue, then you don't get a license.
If anyone figures out a way around this, the patentholders will figure out another workaround for future cases. Cat and mouse, spy vs. spy.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
A free shot? I can't recall a time involving lawyers where anything was free. It gives them a shot instead of the alternatives, which include getting sued for violating the patent without a license or just staying out of the marketplace because of a stupid patent while you wait for it to be overturned.
I thought that you always had the right to be heard in court..
Blar.
tm
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Thomas? Ginsberg? Kennedy?
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
I have patented the process by which melanin allows an individual's skin to become darker in pigment color when UV light is applied. I will enforce my patent and thus require all individuals that appear to be tan, to pay the appropriate royalty fee. Tanning salons may receive group discount rates.
~ In Trust, We Trust ~
Changelog for Version 2007.01.10
+ Added increased protection against patent trolls
-- lol pwned
Before this decision, if you wanted to challenge a patent, you had to violate the patent. That would expose you to triple damages because you obviously knew the patent existed. Also, patent holders get almost automatic injunctions. That means the court slaps you with an order that you can't sell your product. That's how RIM ended up paying $600 million to NTP even though the patent office was about to pitch out NTP's patents as bogus.
The patent system has problems but this decision seems to solve one of them.
So what's to stop patent licensing agreements from having an anti-invalidity clause? The instant you sue to invalidate a patent, the licence is void. Then the patent owner can sue for patent infringement.
I think this makes sense. It's a recognition that monies are sometimes paid under duress and under protest.
Look at it this way: Handing over your dinner money to the playground bully doesn't necessarily mean you think he has a right to it -- just that you'd rather miss a meal than take a severe beating and probably end up missing a meal as well when he steals the money off you.
In the same way, some people choose to pay royalties they know full well to be bogus just so as to be able to ship product and earn some money, rather than challenge the bogus patents in court straight away during which time they are likely to be barred from selling product. This ruling just recognises that paying royalties does not necessarily mean acceptance that the patent is valid.
Je fume. Tu fumes. Nous fûmes!
http://www.paulgraham.com/softwarepatents.html
"...Most innovation in the software business happens in startups, and startups should simply ignore other companies' patents. At least, that's what we advise, and we bet money on that advice.
The only real role of patents, for most startups, is as an element of the mating dance with acquirers. There patents do help a little. And so they do encourage innovation indirectly, in that they give more power to startups, which is where, pound for pound, the most innovation happens. But even in the mating dance, patents are of secondary importance. It matters more to make something great and get a lot of users."
Ok, how big was youtube's patent portfolio when google bought them for $1.3 billion?
gee, what's in this for the right-wing conspiracy?
For those who are talking about auto-revoke clauses in lawsuits (of which I've seen a number post), read the article:
During arguments in October, Chief Justice John G. Roberts Jr. suggested there may be some way to structure a licensing agreement to diminish the threat of a lawsuit. Best predicts companies will likely try including contractual provisions prohibiting filing suit, potentially charging lower fees for those who agree to waive that legal right. But it's unclear whether such measures are legal. Courts generally hold that the right to sue should be retained - a sentiment that came out in this case.
Simply because a clause is within a contract/agreement, doesn't make it legally valid. As the courts have established through decisions, the right to sue should be retained and it's likely that clauses stipulating the prohibition of filing suit would be deemed legally unenforceable. A contract/agreement could be structured to make it undesirable to file suit or more desirable to persuade a licensee not to, but clauses that seek to waiver that right most likely will fail.
This decision has a more profound effect then simply the right to sue. It also raises the bar in the establishment of knowingly violating a patent. If a person/company sues to invalidate a patent, then only if the lawsuit is unsuccessful and the person/company continues to violate the patent can it be established they "knowingly" violated the patent. So this will also have an effect of making it more difficult to seek treble damages. Any person/company with the foresight and resources would file an invalidation lawsuit for that very reason, I suspect.
I agree with the Supreme Courts interpretation that just because you license, doesn't mean "Actual Controversy" requirements for filing an invalidation suit are voided. Previous court decisions established that you had to violate a patent first in order to file suit to fulfill "Actual Controversy" requirements. The Catch-22 of this is that by the very act of violating the patent, you are doing so "knowingly" in order to pursue an invalidation suit. Which means that should the suit fail, you'll automatically be nailed for treble damages since you've already established you knowingly violated the patent in order to pursue the invalidation suit in the first place.
The previous logic was flawed. It was like saying that if someone portends you owe them money, you would have to acknowledge you do owe them money before you could file a suit to establish you don't. The refusal to acknowledge a patent as valid should be grounds enough to fulfill the actual controversy requirements.If Microsoft has the Courts in its back pocket, this is clearly the best thing they've done with it.
...may cause you to read this as "Supreme Court Patents Clear Invalidity Suits". Mmmmmm... Clear Invalidity Suits. I want one of those.
It's really interesting how business shies away from valuing people and expertise over some sort of even very nebulous, intangible and somewhat imaginary asset. I think there are some powerful blinders in operation somewhere.
Deplorable, but easy to understand. The idea is to take all of the fruits of the lone inventor's labor. Patent trolls and big dumb companies alike do this with nebulous and imaginary patents. When they win, they not only get the advantage of the inventor's life time of effort, they also get to keep any would be competitors out of the market. Big dumb companies also like to buy smaller companies, often after destroying their market share and value though bogus lawsuits. "Who wants to buy thing from a company that's about to get creamed?" whine the kind of weenies who run XP because it's "supported." All of it is theft and all of it is made possible by nonsensical patent laws.
The only real solution is to restrict patents to real and useful inventions. "Business method," software and other abominations can eliminate the advantage real patents give and are no more worthy of a patent than an efficient way of alphabetically organizing paper files.
Friends don't help friends install M$ junk.
We're talking the legal system. Apparently a number of well respected lawyers have noted that
Justice is just, sometimes, coincidental.
Sometimes boldness is in fashion. Sometimes only the brave will be bold.
see this as a window for Novell to make nice with the linux world again? Correct me if I'm wrong, but it sure looks like Novell can now sue MSFT (without destroying the terms of their agreement) and force their hand on this whole 'you stole my code' FUD they can question the validity of the patents/IP that MSFT *claims* thay are using (now legally/in agreement with MSFT) or is this a 'too common sense' approach to law?....
My Sig Sucks
Disclaimer: I know only the basics about patents.
I think the licensee who disputes the validity of the patent should have to petition the Copyright Office (the legal authority who issued the patent in the first place) to revoke a bogus patent. Why would the patent holder , big guy or little guy, be subject to a lawsuit for attaining then collecting fees for a patent they obtained in a totally legal process?
Of course if it was discovered after the patent was issued that the patent holder used fraudulent means to obtain the patent, then I could see a reason for litigation.
The image of some one handing me a check, smiling to my face while at the same time wrecking my company with lawsuits just doesn't sit well with me. The fact that in the past you had to break the license and risk triple penalties seems like a good check/balance against some one with simply more money and/or lawyers than you. But I also agree that may be too draconion a penalty. You would have to have a darn good case to break and challenge a patent license before you decide to go that route. Now it seems, if LittleCorp patents a new mousetrap and Megacorp doesn't want to pay, they just need to crush LittleCorp with legal fees. I don't think we've heard the last of this issue.
How dare you mock the very important constitution-ignoring techniques our Dear Leader uses to keep the Homeland safe!
Blar.