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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.
... 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.
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".)
yet we hardly see anyone but patent trolls and megacorps doing anything with patents, so anything which weakens them is for the best.
That's because patents only make the news when you get sued. I take it that you are not an inventor. Much of the value of a startup technology company is contained in its patent portfolio, and that portfolio is what makes it attractive for purchase by larger companies.
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.
There's no reason why you can't do both. In fact, if you don't do both, you're an idiot who is taking unnecessary risks on behalf of your investors.
Toronto-area transit rider? Rate your ride.
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 suspect that this is an error, and that the real value lies in the expertise and ability of the lone inventor or small company to create the technology in question. 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.
Need a Python, C++, Unix, Linux develop
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.
that portfolio is what makes it attractive for purchase by larger companies.
Back in the day the goal of a small company was to grow until it was one of the larger companies, not lose itself to the highest bidder.
KFG
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...)
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.