A "Woo" not a "Woo hoo!" for the Supreme Court over patent trolls

By Tim Worstall , written on April 30, 2014

From The News Desk

Half a cheer rather than the traditional three for the Supreme Court's recent decision about patent trolls. It offers judges the ability to force the trolls to pay for their behavior if they should so wish but doesn't actually force them to do so. It's therefore a step in the right direction but it's not a full solution yet. What they've done, in detail, is just define what the word "exceptional" means. I know, it seems fairly trivial, and the ruling's effectiveness will depend upon how many judges decide to use this clarification.

The judgement is here.

(a) Section 285 imposes one and only one constraint on district courts’ discretion to award attorney’s fees: The power is reserved for“exceptional” cases. Because the Patent Act does not define “exceptional,” the term is construed “in accordance with [its] ordinary meaning.” Sebelius v. Cloer, 569 U. S. ___, ___. In 1952, when Congress used the word in §285 (and today, for that matter),“[e]xceptional” meant “uncommon,” “rare,” or “not ordinary.” Webster’s New International Dictionary 889 (2d ed. 1934). An “exceptional” case, then, is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. Cf. Fogerty v. Fantasy, Inc., 510 U. S. 517. Pp. 7–8
Well, like all legal judgements it's full of stuff like that. But the end result of this is that exceptional no longer has to mean truly exceptional, only out of the ordinary. And if you think that's worth the attention of the nine top judges in the land, well, that's the majesty of the law for you.

The basic problem we've got with patent trolls, as I've explained before, is that we have two different groups who might make a patent challenge. The first would be people who have a valid patent and are getting a bit upset at someone stealing that intellectual property (as, say, Apple accuses Samsung of doing). The other group is chancers who have some vague piece of paper who go around suing all and sundry. On the basis that defending against a patent case costs a couple of million dollars, settling one might cost a few tens of thousands and launching one can usually be done for $499. We want to eliminate that latter behavior while obviously allowing the former to continue. And we can't just say that only people who actually make something with their patent are allowed to sue: ARM Holdings doesn't make spit except designs and yet it's clearly and obviously got to be allowed to defend its ownership in court.

The best method is probably to change the economics, or the math, of that decision to sue or not to sue. If, for example, before you launched your IP infringement suit you had to weigh up whether the guy you're suing is going to lawyer up, spend a couple of million defending himself and then, when he wins, stick you with the bill, that economic model the chancers are using rather goes away. That model does so without discouraging, too much, those who think they've got a viable and real suit to win.

The ability for the trial judge to stick the loser with everyone's costs has always been there. It's just very rarely used: this decision loosens the restrictions on judges being apply to impose it. Which is a good thing but almost certainly isn't sufficient. And that's fine, there are lots of things law courts aren't designed to sort out and this is one of them. Legislation needs to be changed (courts, recall, only interpret legislation, not make it) and the Innovation Act from U.S. Representative Bob Goodlatte (R-VA) is my preferred solution. Just make all losers of patent cases pay everyone's legal bills. On the grounds that this is what England does and we just don't have patent trolls: the economics don't allow them to prosper.

But then I will admit to being an extremist here. I think all civil cases should be on the basis that losers pays, not just patent ones.

[Illustration by Brad Jonas for Pando]