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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.
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 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!
The danger that the courts may rule that the licensee can't sign away his right to challenge the patent, thus that clause is unenforceable. You can see the equivalent of that all the time: the clauses that disclaim all warranties, followed by "Some states do not permit the disclaimer of the implied warranties of merchantability and fitness for purpose. In those cases, the law trumps our disclaimer.". And from the tone of the Supreme Court on recent patent cases, I get the feeling they don't agree with the Federal Circuit on a lot of things and are getting about ready to do some wholesale striking down of Fed Circ precedents.
It's not a totally stupid point. The courts do not like "what if" lawsuits. If your issue is "maybe" or "what if", the courts will in general tell you to get lost - and, in my opinion, rightly so. The courts are clogged enough as it is.
But I think the application of that principle to this particular situation is in error. If I'm having to pay royalties to use a patent that I believe is bogus, and my options are to expose myself to severe liability (by stopping payment but still using the patent), or stop making the product, or continue to pay the extortion, that's a pretty unjust situation that has been created. And the law, as another principle, doesn't like to create unjust situations by stupid application of rules. (Though I must say, for something that it tries to avoid, it seems to do it way too often anyway...)