What Patents, Leaky Pipes, and Supreme Court Decisions Have In Common

February 28, 2014 at 9:37 am Leave a comment

It’s an exciting day at the Meier homestead. The bad news is that there is a swamp soon to be an ice rink in front of my driveway and my wife just looked out the upstairs window to see Town employees tearing up the front lawn of my new house.

The good news is that because the pipe broke under the street, the expense of this demolition is on the Town. (Sorry fellow taxpayers) However, with the water in my house about to be turned off any second a whole bunch of great news will have to wait until Monday.

I did want to highlight one Supreme Court argument that took place earlier this week involving the standard to be used by courts in determining when to make Patent Troll Attorneys pay a defendant’s legal bills when they bring unsuccessful legal claims based on — euphemistically speaking — aggressive interpretations of a patent’s scope. See Octane Fitness, Inc. v. Icon Health and Fitness, Inc. (2014).

Right now, a defendant in a patent case is only entitled to attorney fees in exceptional cases. The patent defendant in this case argued that fees should be shifting any time a lawsuit is objectively unreasonable.” Many credit unions feel they have been shaken down by attorneys who threaten lawsuits if the credit union doesn’t agree to start paying a license for the continued use of its ATMs, for example. That’s why this case offers the potential of a modicum of relief from patent trolls.

In fact, the conundrum caused by these fellas was captured nicely by Justice Breyer in Wednesday’s argument. Referring to a hypothetical in which a company gets a letter from a law firm accusing it of violating a broad-based patent claim, he said:

. . ., all they did was say:
We don’t want to go to court and cost you $2 million.
Please sen[d] us a check for a thousand, we’ll license it
for you. They do that to 40,000 people, and when
someone challenges it and goes to court, it costs them
about 2 million because every discovery in sight. Okay?
You see where I’m going?

litigation. What you’ve described. . .

MR. PHILLIPS: Yes.

JUSTICE BREYER: And so I do not see why you
couldn’t have an exceptional case where attorneys’ fees
should be shifted. But if I’m honest about it, I cannot
say it’s objectively baseless. I can just say it’s
pretty close to whatever that line is, which I can’t
describe and look at all this other stuff. Are you
going to say that I can’t shift?
MR. PHILLIPS: I think the problem with the
approach you propose there, Justice Breyer, is you’re
trying to deal with a very small slice of the problem of

JUSTICE BREYER: I know, but I of course
it may be a small slice of litigation, but it is a slice
that costs a lot of people a lot of money.

The Justice is right. Currently, there simply is no downside to casting a patent net as far and wide as possible. In fact, an attorney representing a patent holder isn’t doing her job properly if she doesn’t take this approach.

The ultimate solution is for Congress to mandate that patents be more narrowly and clearly drawn in the first place but that would require Congress to tackle complicated, controversial issues and that is asking way too much of our elected representatives.

Entry filed under: General, Legal Watch. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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