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Patent Troll Ordered To Pay For the Costs of Fighting a Bad Patent

Posted by timothy on from the once-in-a-while-justice-peeks-through dept.

We mentioned last year that FindTheBest CEO Kevin O'Connor had taken an unusual step, when confronted with a demand by patent troll company Lumen View that the startup pay $50,000 for what struck O'Connor as a frivolous patent: He not only refused, but pledged to spend a million bucks, if necessary, to fight Lumen View in court. Now, as Ars Technica reports, O'Connor has succeeded on a grand scale. Before trouncing Lumen View in court, Ars reports, "FindTheBest had spent about $200,000 on its legal fight—not to mention the productivity lost in hundreds of work hours spent by top executives on the lawsuit, and three all-company meetings. Now the judge overseeing the case has ruled (PDF) that it's Lumen View, not FindTheBest, that should have to pay those expenses. In a first-of-its-kind implementation of new fee-shifting rules mandated by the Supreme Court, US District Judge Denise Cote found that the Lumen View lawsuit was a 'prototypical exceptional case.'"

16 of 191 comments (clear)

  1. Sounds awesome except.... by Anonymous Coward · · Score: 5, Insightful

    The Patent troll will probably just declare bankruptcy and reform under a new name, all in the same day.

    Not even looking at how it is structured I'd blindly wager that they are held by no fewer than two shell companies. So the problem is that the people pulling the strings never suffer any real repercussions.

    1. Re:Sounds awesome except.... by jythie · · Score: 3, Insightful

      That is part of the reason that these 'looser pays' rules make me nervous. Truly bad actors like patent trolls have lots of ways around actually paying out, but small shops or inventors generally do not, so all it does is increase the risk associated with taking on companies with more resources.

      When filing a lawsuit you generally only have to consider spending what you can afford, but having to consider what the other party can afford changes the equation dramatically.

    2. Re:Sounds awesome except.... by Anonymous Coward · · Score: 4, Insightful

      The Patent troll will probably just declare bankruptcy and reform under a new name, all in the same day.

      Not even looking at how it is structured I'd blindly wager that they are held by no fewer than two shell companies. So the problem is that the people pulling the strings never suffer any real repercussions.

      What's more important than whether or not this particular company actually pays, is that the precedent is being set and the tides are shifting, hopefully making others think twice before filing frivolous lawsuits.

    3. Re:Sounds awesome except.... by fuzznutz · · Score: 5, Insightful

      The problem is also that the USPO granted the patent in the first place :/

      Amen. The "experts" who are supposed to know better are accepting these bullshit patents all the time. The courts have to sort it out while the victims get to pay. How about we personally make the patent examiners financially liable for the costs involved in defending one of these bullshit patents. I'd bet that they'd be looking at these patents with a much more critical eye then...

    4. Re:Sounds awesome except.... by alen · · Score: 3, Insightful

      you need money to litigate a patent suit. if you had cash in the bank to pay the bills and it vanishes the day before you file chapter 11, the court is going to start asking questions and auditing your books

    5. Re:Sounds awesome except.... by StripedCow · · Score: 4, Insightful

      The problem is that USPTO is getting paid *more* for every approved patent than for every rejected patent application.

      Like it was said before here, this is like paying fishermen for the fish they *didn't* catch.

      --
      If Pandora's box is destined to be opened, *I* want to be the one to open it.
    6. Re:Sounds awesome except.... by swillden · · Score: 4, Insightful

      The problem is that there are not enough examiners. Apparently as an examiner you have about 2 minutes to look at a patent and say yay or nay.

      Which means we either need more examiners... or fewer patent applications. What's really bad is that the current state is a vicious cycle. If any patent application is likely to be approved, then people will submit more applications, which increases the workload on patent examiners, reducing the time they have to look at a patent, and increasing the likelihood that any patent application that appears on its surface to be novel and to have referenced the appropriate prior art will be approved.

      Further exacerbating the problem is the fact that patent portfolios so often do battle by "weight". If company A has 10,000 patents and company B only has 5,000 patents, it's much easier for B to pay A some money and both to enter a cross-licensing agreement than to actually determine which of the 15,000 patents has value and is relevant. So, companies incent their technical people to patent all sorts of silly crap. More applications, more applications per examiner, less time per application, lather, rinse, repeat.

      IMO, we need to take a big step back and re-examine the whole system. I've been arguing for a long time that there's a very simple test we should be using to evaluate the effectiveness of the patent system which is supposed to be encouraging progress (not paying inventors, note. If that happens, well and good, but it's not the goal). The way patents are supposed to promote progress is by publishing details of the inventions so that other inventors can use the ideas and build upon them. The licensing fees patent owners can receive as a result are their incentive to publish, rather than keeping their ideas as trade secrets.

      So, to see if the system is working well, we just need to look at how often the patent database is used by inventors as a resource when they're looking for solutions to problems they have. If the patent system were working, we'd see the database being mined for ideas, and companies happy to pay licensing fees for useful inventions that help them build their products more cheaply than if they'd had to invent it all themselves.

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    7. Re:Sounds awesome except.... by ConfusedVorlon · · Score: 4, Insightful

      Whilst I agree that a lot of bad patents are certainly granted, I actually think the systemic problem here is actually the review process after the initial grant.

      Even if USPO was a lot better, then it is safe to assume that some crappy patents would get through when an examiner was having a bad day.

      It's ok to have errors like that if you have a decent fast review process to fix mistakes.

      This might be something that a judge could request before a case went to trial.
      The patent would be re-reviewed by a senior patent examiner who would make an new judgement:

      1) this probably should not have passed. (Inventor can appeal, but legal process assumes that patent is invalid until the appeal).
      2) this is a solid patent that probably should have passed. (the infringer can appeal, but legal process assumes the patent is valid until the appeal).

      given that only a tiny fraction of patents will ever get taken to court, this isn't adding a huge amount of re-work to the USPO, so they can handle this stream as a high priority.

      This does somewhat reduce the certainty of the initial patent grant, but that is no bad thing.

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    8. Re:Sounds awesome except.... by stealth_finger · · Score: 5, Insightful

      You're also expected to be a subject-matter-expert on every application that crosses your desk. And remember, you have 2 minutes to review an application written by lawyers paid to write confusing applications.

      Well if the examiner cant understand it immediately, they should deny it, if in doubt dent. Yeah I know they get paid for approvals and all that but really, the whole system sucks, it needs pulling out, burning, having the ashes jumped on then started again using common sense.

      --
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  2. Sounds awesome except.... by Anonymous Coward · · Score: 5, Insightful

    The problem is also that the USPO granted the patent in the first place :/

  3. Re:but by GrumpySteen · · Score: 2, Insightful

    re I live, it costs more in permits than materials to build a two-bedroom house.

    Bullshit.

    Even in the most expensive parts of the country, you could barely manage to build an uninhabitable, unfinished shell of a house for the price of a building permit.

  4. Re:but by dbIII · · Score: 5, Insightful

    Before you blow your own trumpet too much consider the very bad US example of moving copyright from civil to criminal law which has spread like a cancer around the world. It would be very nice if it went back to Hollywood lawyers suing people instead of SWAT teams through people's windows for copyright violations.

  5. Re:My favourite sentence by Anonymous Coward · · Score: 5, Insightful

    My favourite sentence from the summary in the first link:

    The patent troll's attorney also made the claim that calling someone a 'patent troll' was actually a 'hate crime' under 'Ninth Circuit precedent' and threatened to file criminal charges — unless they settled the civil case immediately, apologized, and gave financial compensation to the troll.

    That is the worst thing I've ever read!!! It's the kind of thing a lawyer should be disbarred for. The kind of thing that would make me willing to bankrupt myself and my company just to punish the company and attorney. Ugh that's the worst!!!

  6. Re:but by Truth_Quark · · Score: 3, Insightful

    Quite.

    The lady's labia melted to her thigh.

    It was not a frivolous law suit.

  7. Re:but by Hotawa+Hawk-eye · · Score: 4, Insightful

    So John Smith files suit against MegaCorp Inc. (with a legitimate claim) but MegaCorp's army of lawyers buries Smith in motion after motion, draining his coffers dry. When he loses (because he doesn't have enough money left to continue) he's on the hook for the millions of dollars in expenses MegaCorp's army of accountants can somehow link to the case.

    There needs to be some protection for this situation, but there also needs to be consequences for "spaghetti suing" -- filing lawsuits against anyone and everyone and seeing which ones get settled and which ones stick. Maybe a superlinear increase in the cost to file suits based on the number of suits you've filed? If you want to file suit in a given issue against two or three people, you're not going to pay much extra, but if you want to sue a hundred people separately you're going to pay through the nose. [And you're not allowed to "lump together" people without showing a good reason to lump them together.]

  8. Loser pays...criminal gets away by AutodidactLabrat · · Score: 1, Insightful

    If this had been in force between 1976 and 1988, no one would have dared to expose Ford in the Pinto " death for profit " scheme for fear of Ford extorting huge 'costs' onto the losers.
    Loser pays is just another way of insulating the wealthier party in any dispute from any civil justice whatever.
    A patent troll falls. Tomorrow it is the old lady GELDED by McD's 210 F coffee who gets screwed over for the last time.
    Let's not cheer this more than it is worth. Let's think about what the Supreme Court has just done to civil justice in America.
    There are perfectly good ways to nail the patent trolls without this