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Patent Troll Lawyer Sanctioned Over Extortion Tactics
An anonymous reader writes "For all the stories of patent trolls and copyright trolls, there haven't been too many stories of either being sanctioned for abusive or extortion-like practices... until now. The Court of Appeals for the Federal Circuit (one level below the Supreme Court) has approved over $600,000 in sanctions against a lawyer for a patent troll, saying that filing over a hundred lawsuits, each of which was followed up almost immediately with offers to settle at fees much cheaper than it would cost to fight, has the 'indicia of extortion.' Now if only judges started doing that more often."
This is a Federal Circuit court, so the next (and last) step would be to appeal it to the SCOTUS. Let's hope it gets on the docket so this type of egregious misuser of the legal system (the patent trolls) can get the press coverage only a Supreme Court case can give it.
Just like we discourage speeding with fines... Abuse of the legal system can and should also be discouraged with fines.
... Now, start shooting the patent trolls.
Religion: The greatest weapon of mass destruction of all time
Here's hoping that actions like this will continue, these dirtbags need to feel the pain they constantly shove onto others.
What do I know, I'm just an idiot, right?
I hope I'm just being pessimistic, but it seems like there has been too much good news about the legal system starting to wise up about this sort of thing lately. I keep expecting to see some kind of backlash in the other direction.
So, Apple can sue over patents, and the RIAA can extort money, but if you combine the two it's suddenly over the line? Don't get me wrong, this guy had it coming, but let's not pretend that somehow the issue of patent trolling and extortion is being dealt with on any decent level. Had this guy worked for any large company, he'd be in the clear.
Most patent trolls don't sue entities who "it was clear [] did not infringe on the patents in question". They sue entities who might have infringed on the patents in question, or who definitely infringe on patents that are overly vague and that we think should be invalid, but that USPTO granted and the patent troll holds.
I predict this court case will mean very little.
for a system by which you file thousands of complaints based on bogus patent infringment and receive an assload of cash in settlements because it would be less expensive than fighting you in court. I'm think about filing for a few hundred injunctions if I get it.
Did anyone else mis-read the title as "There is a God!"?
If what I just said sounded like a troll, it was probably just a failed attempt at humor.
How close to this to being a precedent which can be used or cited?
Flagstar spent over $600,000 to defend itself against a baseless lawsuit and the judge awarded them a little over $600,000, hardly a big win. And, nothing has happened in the other 100 baseless lawsuits.
I was actually just listening to This American Life a few days ago. Their podcast talking about how much the patent system is abused is extremely enlightening. For example, did you know there is a patent on "Thermally refreshing bread" (IE, toasting)? Not only that, but it was issued in 2000!
http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack
From what I have seen, Rule 11 sanctions are very rarely imposed. I have several cases improperly removed to federal court, and the code provides for attorney fees and costs for improper removal. The Court consistently refused to impose those costs.
This is similar to the rules which prohibit attorneys for committing perjury. I had seen one case where the tentative ruling, written by the law clerk, state that there was no 998 offer sent, despite the sworn statement by defense counsel. The final ruling was unchanged except the finding that the attorney lied.
It takes a lot for the Court to rule against an attorney.
On the other hand, is a legal position frivolous, or is it novel? Where does the line gets drawn?
Fight Spammers!
Forget patent trolls...how about the hundreds of suits handed to the local municipal courts daily from debt collection/recovery firms? Notice how many of these debt firms are also physically located near the local courthouses as well so representatives may show up for hearings? Coincidence?
The total judgement was $600k with $142k for Rule 11 sanctions and the rest awarded for attorney's fees.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Given the other 100 defendants settled for the amount they were asking, then Eon-Net made $2.5 - 7.5 million dollars as a result of their trolling. The consequence they had to pay only amounted to 9 to 25 settlements, and it took the defendant $600k to make that happen. Unless it becomes much easier to counter these people, it is still much cheaper to settle, and it is still very profitable for them to continue.
Maybe we can settle for a slightly lower amount and call it a day?
I8-D
Intellectual Ventures?
Yours In London,
Kilgore Trout
A public letter to the lawyers:
Sue for damages that most courts would find "rational" if the person were clearly guilty. Not thousands of dollars per song, but more like 3x the retail price of the track plus legal fees. 500 songs @ $2.99 = $4,500 plus legal fees. Adjust upwards so you are over the "small claims court" limits - you REALLY want to make a point this is NOT a small claim. Repeat x 200,000.
Do NOT make any initial offer to settle, wait for people to respond to the suits. Get default judgments for those who do not respond. Do your fellow troll industry a favor and and sell default judgments for pennies on the dollar to judgment trolls.
Make an INITIAL offer that is basically the amounts to the amount you are suing for minus your projected legal costs minus some reasonable discount to reflect the risk that an "honest" lawsuit would not succeed.
If the person claims poverty, youth, or you are suing a middle class person for $10K+ (that he'll never be able to pay) because he downloaded 1,000 tracks, or the defendant is otherwise "sympathetic" in any way make a counter-offer to get the defendant to be your spokes-person in exchange for lowering the claims - the more they do for you and your client the less they have to pay.
Save the "big bucks" lawsuits for people who can afford to pay the judgment and for people who are making money off of resale (likely a very small fraction of the defendants).
Do this and you can make some money, send a message/provide some deterrence, and not be accused of being off-the-scale-greedy.
A public letter to the music industry:
Remove both economic incentives to piracy (too-high prices) and non-economic ones (DRM and other inconveniences) and you will see piracy go way down.
View piracy as an untapped market not as an evil to be squashed.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Seems like an easy path to riches to me.... (or maybe it would shut it down entirely, either way....)
Here's how to deal with a patent troll:
1) Point out that settling will make you go bankrupt.
2) Point out that after that you have nothing to lose.
3) Ask how's the family.
Is being offered a $200 fine in exchange for a court hearing for a traffic ticket "extortion"? How about $500? You build up enough precedent and it just might be.
I would think there would be no bar against a much wider applicability of this sort of decision and pushing things along the line of saying that settlements and fines in exchange for opting out of a legal proceeding in court are all extortionate.
This sort of thing didn't use to exist at all. You filed suit against someone and their were no real options other than proceeding. Similarly, no prosecutor before maybe 1950 would ever offer a defendant an opportunity to just pay a big fine rather than go through a trial, even for a traffic ticket. If the ticket demanded a court appearance, that was what you got. And the cop had to show up and testify. Today, this mostly never happens - people just pay the fine and accept the extortion.
I can easily envision a legal environment where there is no possibility of pre-trial settlements. Both parties have to show up, personally - no lawyers without clients. Now this does have the effect of making a lawsuit of any kind start to get really, really expensive and painful. But maybe that is what is needed.
The RIAA has been using similar tactics only with copyright instead of patent. They file a bunch of John Doe lawsuits, get the people's names, contact them and say "Hey, you can settle with us for a low, low (but not too low) fee or we will sue you for a ton of money." Of course, this patent troll isn't as big as the RIAA is, so the chance that they would be found to be extorting money out of alleged infringers is much lower.
My sci-fi novel, Ghost Thief, is now available from Amazon.com.
The article reads much like the tactics used by the RIAA as well. File suit with instant offer to settle for way, way less than the cost to fight.
Someone correct me if this analogy on patent trolls is wrong...
1-The troll buys the street in front of his house from the government. I don't know how, the government just thought it was a good idea.
2-The troll then sits in front of his house with a shotgun, and shoots anyone that walks down the street for trespassing. He empties their pockets and then calls the police, which dutifully takes away the bodies.
3-If anyone asks why he doesn't build a wall or a locked gate, the troll answers that his land is clearly marked in the city hall map and people should check it before daring to walk around.
It is insanity.
The only thing that will change is the patent trolls will look a little more closely to make sure their targets can't defend a lawsuit. I wonder: could the previously settled parties use this judgement as the basis of separate legal action against the troll, seeking damages for extortion? Not that it would be that much cheaper than defending the patent suit in the first place.
Ok, well, the first letters of the first and last names have been transposed,
but all you folk who paid attention to the extortion performed by the RIAA
know exactly who I am referring to, and you know he is a subhuman piece of waste.
From TFA
Separately, the court clearly noted the "non-practicing entity" part of the business in pointing out that, "As a non-practicing entity, Eon-Net was generally immune to counterclaims for patent infringement, antitrust, or unfair competition because it did not engage in business activities that would potentially give rise to those claims."
By this ruling, It would seem that all companies that are just patent holding companies are not allowed to do anything with them unless they produce a product. That would appear to be too good to be true, so going to just file this article away in the "yeah right, that's a good one" file.
----- - The beatings will continue until morale improves
got something right for a change?
Disbarment by the fed means disbarment across the country woot!
Of course if the teabagging libratards had their way, the fed wouldn't have that, or really any kind of authority except to maintain the army and navy; states rights and such.
file hundreds of semi-bogus law suits and extort millions from hard working business owners: $600,000
download a few songs from bit torrent: $1,900,000 (http://www.switched.com/2009/06/19/woman-fined-1-9-million-for-downloading-24-songs/)
sounds reasonable.
That's only because red states don't make movies or music that's actually worth pirating.
As long as we have a system where anyone can just sign a few papers and automatically obligate any other person to potentially ruinous legal costs, this sort of thing will continue.
A first step in the right direction would be to have a judge review all suits before the defendant even hears about it. Unless the judge finds that the likely damages would exceed the legal costs, it dies right then and there.
No more spending $20,000 in legal fees over a $100 dispute. (or more to the point, no more forcing a $5000 settlement over a $100 damage to avoid a $20000 legal bill).
Note that any suit that has some merit but legal costs would exceed the damages is a great candidate for something like a small claims court where the costs are much lower. Rather than small is in a low maximum, small is understood to be as compared to the likely legal bills.
On a side note, we have more lawyers per capita than any other society. Why hasn't the glut in supply driven costs down?
... if they crank up the penalty so that it is 10 times the reward for trolling in the first place and take away their law license on the second offense. The risk of getting caught is low, so the penalty needs to be high so people notice.
Currently hooked on AMP
IS this supposed to be the CAFC saying "we're not so bad" after everyone heard the This American Life broadcast on patent trolls? CAFC virtually INVENTED software patents and the upholding of software patent lawsuits. This is a joke and a PR move no the part of this should be interpreted by any observer as a move towards reasonableness on the part of CAFC>
A little history may be in order. It's not a normal circuit like the 4th or the 9th Circuits. The CAFC was invented by the Reagan administration in 1982 to implement the Reagan administration's policies across a wide swath of law, including thethe liberalization of IP.
Unlike every other circuit court before it, its jurisdiction is not geographically bound; it takes cases based on subject matter. This is as if all patent cases were directed to be heard by the Eastern District in Texas .
This is not an unbiased judiciary; this is and has been a judiciary with a mission.
Their subject matter" jurisdiction includes stuff like appeals regarding international trade, petroleum and gas policies, trademark law, federal employment and employment benefits, veteran's benefits etc etc.
Get it?
Through their controversial, shortsighted and destructive decisions, they have single handedly ushered in the age of Software Patents.
So now they're trying to make a public spectacle of one small, unlucky company (who must be wondering what they did wrong) for he purpose of projecting a false image of balanced jurisprudence.
What a joke.
I like the court's "indicia of extortion" standard; if defined in greater detail, it could prove helpful. Maybe one effective way of clearing the courts of the more nefarious "patent troll" activity would be for the courts to develop specific standards (e.g., multi-pronged tests and the like) that will serve effectively to identify the true "bad actors" and define unacceptable behavior. After all, since Congress looks unlikely to do anything about the worst trolls, then we will probably have to rely on the courts to weed out a substantial measure of them.