Should 'Patent Troll' Reform Be Left to the Judiciary?

, Corporate Counsel

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New legislation aimed at curbing patent litigation abuse by so-called "patent trolls" has been well received by the public and by much of the Congress, but many members of the patent bar are saying it's a task that should remain in the hands of the judiciary.

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What's being said

  • Richard Falk

    The article refers to comments from Judge O'Malley and a part of that speech is very telling:

    http://www.ipo.org/wp-content/uploads/2013/02/IPO-Annual-Meeting-Keynote-Speech-09-17-13.pdf

    “With respect to the Rule 11 proposals and the asserted desire for more sanctions, I believe what you really want is not more sanctions, but more fee shifting. Having been a district judge, I know that, while sometimes you must do it, it is difficult to sanction lawyers. Most of us that have been on the district bench were also practicing lawyers, and we know that people make mistakes, we know that lawyers can be pushed in certain directions by their clients, and we know that they do not usually intend to step over the line. And we know that a sanction can destroy a lawyer’s career.”

    Well, that pretty much prevents any penalties from being assessed on attorneys (sort of sounds like police protecting each other not snitching, but with no CID equivalent in the legal system). Whatever happened to preventing even the appearance of impropriety?

    The problem is that corporate structures allow for plaintiffs to be shell companies with no revenue or assets so any sanctions or fee shifting will be useless. As for the Innovation Act of 2013 bill, the “interested party” provision sounds great until you realize that patent trolls will simply set up foreign subsidiaries (outside U.S. jurisdiction) owning the local shell companies and this will prevent piercing such foreign corporate veils to get to the true owner of interest that has actual assets or revenues from which to pay the shifted fees.

    As the Eon-Net LP v. Flagstar Bancorp case described:

    http://www.patentlyo.com/files/09-1308.pdf

    "But the appetite for licensing revenue cannot overpower a litigant’s and its counsel’s obligation to file cases reasonably based in law and fact and to litigate those cases in good faith."
    "But an attorney, in addition to his obligation to his client, also has an obligation to the court and should not blindly follow the client’s interests if not supported by law and facts."

    Unfortunately, not enough of the CAFC nor the Judicial Conference believe that the attorney is the true gateway for entry into the legal system (except for pro se representation) since that would be the logical place to limit repetitive cumulatively harmful behavior that makes weak cases where 92% settle a business model. Treating attorneys as simply pliable pass-throughs for their client's interests (i.e. the zealous representation model) would be like having accountants cooking the books at some corporations with no outside auditing to keep things in check. If the courts are so fearful to "destroy a lawyer's career" with sanctions, then why don't they use a point system like traffic law that won't be as harsh for a single violation (won't show up on one's public record if one goes to "ethics school"), but if done repetitively with frequency (i.e. a business model) then more severe punishment of fines, suspension, or disbarment would take place?

  • Concerned

    The Federal Circuit has been slow to respond to issues that patent trolls exploit, including issues that make patent litigation significantly pro-plaintiff. Since it is the Federal Circuit's precedent under the current Patent Act that has enabled trolls to exploit the law and the Federal Circuit's hands are tied to some extent by its precedent, the legislative branch should Act. In recognition of this, the Supreme Court has been forced to act more than ever in patent cases. The Supreme Court should not be so burdened. So, Congress is the body that should address the issue. The Patent Act itself is the result of Congress. Hence, Congress is the correct body to make make revisions to the law. The Federal Circuit's job is to interpret the law, and if the judiciary creates a disproportionate burden in its interpretation of the law or Congress left something unaddressed that becomes a burden, Congress should legislate again. The Constitution only mandates that INVENTORS be given time limitied exclusivity to their discoveries, not that patents should be enabled to be exploited by subsequent owners in a manner that essentially becomes a private tax on companies. Hence, Congress should be free to institute any patent law that benefits the country under the Constitution.

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