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."

Comments

Now We Wait ...

[WrongSizeGlass]

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.

Re:Now We Wait ...

[bobaferret]

You need to pay more attention. According to the NPR story that ran a few weeks back, that's exactly what they do. Little tiny offices with no occupants in some small town in Texas, which are effectively controlled by the company that owns the patent pool every one else bought into. Ugh... makes me sick. Sorry if I missed the sarcasm in your post.

Re:Now We Wait ...

[Artraze]

> But it shouldn't.

But why not? It seems quite reasonable for parties to be allowed to come to an agreement without having to be involved in a court case. After all, it's pretty much fact that court cases (vs fair agreements) only benefit lawyers. What they could strike down is the ability to offer settlements prior to filing a case and proper judicial review to determine if the case has merit. _That_ would be a big step forward and really eliminate all of the 'extortion' aspects. Beyond that though, you're really only tying up the courts, with, I'm supposing, the expectation that it would decrease the rate at which these sort of cases occur. Would that really be better though? Perhaps, but I think that's trowing out the baby with the bath water... Settlements are still useful for non-extortion type cases.

Re:Now We Wait ...

[gstoddart]

The Supreme Court might decide that extortion which is asking for an agreement not to pursue a known legal right--i.e. suing you--is perfectly legal.

Well, if nobody has decided on the merits of the case, but you're immediately providing an offer to settle which is lower than likely legal fees ... I fail to see how this is anything but extortion.

What's to stop this lawyer from filing suit against a bunch of people who you have no evidence against whatsoever? In this case, and from TFA:

In this particular case, it was clear that Flagstar did not infringe on the patents in question. ... snip ...

In addition to finding that Eon-Net filed an objectively baseless infringement action, the district court also determined that Eon-Net filed the lawsuit in bad faith and for an improper purpose... In particular, the district court found that Eon-Net's case against Flagstar had "indicia of extortion" because it was part of Eon-Net's history of filing nearly identical patent infringement complaints against a plethora of diverse defendants, where Eon-Net followed each filing with a demand for a quick settlement at a price far lower than the cost to defend the litigation.

So, this is a completely baseless suit, with an immediate offer to settle, and with NO legal grounds for the suit in the first place.

You may not have read the actual legal case, but seriously, RTFA and you might know why this is happening. These filings were completely meritless, and the offer to settle was intended to exploit the cost of litigation being more than the cost of settling.

This is a case where the lawyer definitely needed to be sanctioned

Wait, what?

[ThisIsSaei]

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.

Re:Wait, what?

[gnasher719]

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.

The point here was that a patent holder says "I have a patent, I sue you, so just pay me a small amount that is much less than you would spend to beat me in court". That is abusing the court system; going to court not because you have a case but because it is cheaper for the defendant to pay you off than to win.

That is surely not what Nokia did to Apple, and what Apple is doing to Samsung now. Apple is saying to Samsung "I have this patent, and I don't want you to do the stuff in the patent". No paying off, no extortion.

And what the RIAA did, while it can be considered extortion, is something completely different again. They at least _believe_ that they have a case. The patent troll here _knows_ they don't have a case. (And copyright cases have been lost with sanctions when the copyright holder _knew_ they had no case, like Righthaven).

This doesn't apply to most patent trolls.

[Anonymous Coward]

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.

Exactly

[pavon]

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.

SCOTUS? That's so expensive!

[Kamiza Ikioi]

Maybe we can settle for a slightly lower amount and call it a day?

Re:It is very rare.

[Oxford_Comma_Lover]

It's about as hard as it is to get a doctor to say another doctor is completely wrong. Industries that purport to self-regulate generally don't.

Bar discipline mostly only occurs in two cases: drug and alcohol related problems and stealing from clients. Lying to the bar during the application process can also screw you. That's about it.

Precedent Against RIAA

[Jason Levine]

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.

Re:Good..

[s73v3r]

Nuke em from orbit. It's the only way to be sure.

Re:It is very rare.

[c]

Bar discipline mostly only occurs in two cases: drug and alcohol related
problems and stealing from clients. Lying to the bar during the application
process can also screw you. That's about it.

I've heard that peppering legal filings with gay porn is a pretty quick way to get sanctioned.