It's really too bad that it's so difficult to recoup these costs, especially in patent cases. It would be quite the disincentive to NPEs if they had to make a double-or-nothing bet every time they litigated over a patent they didn't actually use.
That is to say nothing of the insanity of US patents and the concomitant trolls, but it would be a small change for the good if the NPEs/trolls had to pay fees if they lost.
I just wish the court system was faster and less expensive.
It would be fine if you paid a lawyer for a day or two of preparation, walked into the court room about a month after the case was officially brought, and had the stupid patent suits thrown out after a couple of hours in there. "Wow that's a fancy lawyer you brought. Too bad this patent is clearly bullshit. NEXT"
EDIT: also, cheers to Vizio and NewEgg, for never settling
A small part of the problem is non-lawyers not being allowed to offer legal advice. So for trivial cases, you get people paying thousands for a lawyer to tell them what stackexchange would have done for free in any other field.
My understanding about patent cases in Germany, though, is that they are almost wholly decided by technical judges. This removes the costs and uncertainty of having a lay jury making decisions about things they cannot hope to understand.
I agree, although if we continue a thread of trying to identify common sense replacements for expensive and convoluted elements of our legal system, we'll be here quite a while.
It would seem ideal if we could come up with a system in which your activity in court would lead to additional liability when you lose.
In other words: the more you sue the more you will find yourself culpable for fees. The little guy who files one or two claims? He's fine. The trolls? Those guys pay.
If you have loser-pays without spending caps, a big corporation can scare off small litigants by using expensive, inefficient law firms so a loss would be hugely expensive.
If you were a minimum-wage worker injured by unsafe working conditions at a $BIGCORP warehouse, would you sue if you knew you'd have to pay a million dollars if you lost, because they have ten $1000-an-hour lawyers doing photocopying and filing, and there was a 1% chance you'd lose due to random chance?
What you really need is German style fixed fee litigation; neither party should have to pay more than $5,000 in fees of any type.
After all, if the courts can't figure out whether a patent is valid and infringed upon for $5,000 how is anyone supposed to?
FYI even under the current system where the statute or a contract provides the the winner gets their fees paid by the loser (generally called prevailing party fees), the fees must be "proven" to be "reasonable". So a "inefficient" law firm does not simply say my fees are $x and they get paid, the Court holds a hearing in which other lawyers who are certified as experts on fees come in an testify regarding what a reasonable fee would be with the type of case, the lawyer(s) experience, the number of hours, ect...
Your other point is well taken and the potential to be liable for the other sides fees is a deterrent, but that is the purpose of prevailing party fees, to encourage both sides to resolve the dispute without litigation. To some degree they also permit the little guy to get representation when otherwise they could not afford an attorney.
under the current system [...] the fees
must be "proven" to be "reasonable"
According to [1] in 2013 the median cost of litigating a patent with less than $1,000,000 at stake was $700,000. Seems to me unreasonably high costs are already the industry standard.
As in this case, and many others, Intellectual Ventures are the world's leading patent scumbags. One of the financial backers of the said company is Bill Gates; for all the good he purportedly does he really never believed in innovation (and has always hampered it -add).
Joe Mullin has notoriously poor understanding of patents (and I'm being charitable here, else I'd say he writes deliberately misleading language to pander to these types of crowds - his earlier work certainly betrays a more nuanced understanding of patents). Acquiring patents from somebody does not make you a shell company of theirs. The types of shell companies these entities use exist literally only on paper. Apart from their IP assets (which also exist only on paper), the only thing they have is a PO box, which they share with thousands others. They have no offices and no employees, let alone a website.
On the topic of Bill Gates, he literally enabled the computer revolution. Without Microsoft, we'd be in an industry ruled by hardware makers, each a mini-Apple, with their own walled-garden ecosystems that would not interoperate with any others. It's just that he happened to disagree with the most popular religion around these parts that has earned him the ire he gets.
> Without Microsoft, we'd be in an industry ruled by hardware makers, each a mini-Apple, with their own walled-garden ecosystems that would not interoperate with any others
Yes, IBM, the incumbent company with the largest market share, definitely tried to start a walled garden. /sarcasm
IBM actually came late to the PC (or microcomputers as they were known then) game, but the world it entered was full of walled gardens. However due to its lateness, it was forced to make architectural decisions that made future cloning easy. But you do know that the "IBM PC compatible" clones that made the PC a standard and commoditized hardware were reverse-engineered, right? As in, without IBM's approval? If IBM wanted a truly open system, people would not have had to reverse the BIOS.
Microsoft's masterstroke was in foregoing exclusive licensing to IBM for lower royalties, and then making the same software available on all computers, thereby creating a standard platform that more software could be written for. The true value of a machine is in the software, and as more and more software is written, more and more value is created (which MS was perfectly positioned to capture a large chunk of), whereas hardware becomes fungible, causing hardware makers to enter a race to the bottom. This made hardware cheaper and more accessible, leading to even more software being created. I doubt any other company drove that shift as much as MS did. Certainly not IBM, which didn't even realize what was happening at the time, and if it did, it certainly would have fought its own commoditization.
"Loser" here means... >50% liable for what happened? Civil suits don't always have 'winners' and 'losers' in the same way criminal cases do, and even if this specific concept doesn't apply here, it does in other parts of this kind of law, so if we're applying the 'loser pays' notion generally it has to be addressed.
Also, this would make it pretty much impossible for smaller parties to go after larger parties, because there are no sure things in law, and losing a case in a 'loser pays' system could make you liable for whatever the larger party could afford to pay for lawyers. IBM's legal fees don't come cheap.
This trivializes the complexities and uncertainties involved in many lawsuits. I know someone who was a juror on a case where the entire jury agreed that real financial harm was done to the plaintiff, but could not return a verdict awarding any damages because of how certain business relations were structured and how the relevant laws applied to them.
Most lawsuits aren't lost on what people might think of as "on the merits." Statutes of limitations, federal preemption of state laws, etc. Defendants get off on technicalities all the time--that's the bread and butter of defense lawyers.
And even when you lose on the merits, that doesn't mean there isn't any "there" there. I think the Ellen Pao lawsuit is a good example. I think, based on the evidence that came out, the jury decided correctly. But there was clearly enough misconduct to create justification for a lawsuit to dig into what really happened.
I read this and wondered it if we're true so I did minimal research. It is, but only if you believe the verdict you are returning to be true. Which is a small but important detail.
"Because of the importance of preventing undue influence on a jury, jury tampering (like witness tampering) is a serious crime, whether attempted through bribery, threat of violence, or other means. Jurors themselves can also be held liable if they deliberately compromise their impartiality."
This also oversimplifies how things work. Typically what happens in the US is, the judge presents the jury a list of mostly Y/N questions that is essentially a flow chart, which they must answer. This list is determined based on the arguments and evidence provided, and something that the judge works with both, the plaintiff and defense lawyers, to draft.
Jurors cannot deviate from that flowchart. For instance, there may be only one set of questions to which you must answer Yes or No to reach the question that says "What damages do you award?"
But if your answers do not lead you down to the conclusion that you'd like, too bad, the law and the facts don't support your preference.
Juries could return any verdict that is not supported by the instructions, but I'd guess that is grounds for a mistrial.
This is the basis of 'jury nullification'. You can't hold a jury responsible for returning a 'wrong' verdict - that's why they're there in the first place.
What about cases where an individual or small business has been wronged by a big corporation? Then Big Corp. can simply intimidate them into not going to court because of the risk of losing and having to pay the legal fees.
So then what happens to lone inventors or universities or anyone -- business or individual -- who develops an idea, patents it but cannot afford to bring it to market? Should they just forfeit their efforts to a large company without any compensation?
I don't know how someone develops a patentable idea without practicing the related art. I don't think NPE means actual original inventor by any stretch -- but I could be wrong and would be curious if you can point me in the direction of examples where a court or even a reliable pundit has made that stretch.
Here's a scenario for you. Imagine you are an aerospace engineer working for a company such as Boeing. After a nice career, you decide to retire. One day, while in the shower, you imagine a brand new design for an airplane wing and you decide to model it on your PC using the software you'd always used at work. To your shock, you discover that this new design promises a substantial reduction in fuel costs. You obtain a patent for your design. Now what? Are you going to start your own company to manufacture aircraft wings? No, you decide to remain a NPE and license your patent to companies such as Boeing and earn a nice living from it.
Just to put a stake in the ground, I mean patent trolls specifically, when I call out bad NPE behavior. Not all NPE behavior is bad, and I only hope to limit the bad behavior.
Wikipedia says: Non-practicing entities are generally not considered 'patent trolls' when they offer their patented technologies to licensees in advance, such as individual inventors, university research laboratories, development firms, and licensing agents that offer enforcement and negotiation services on behalf of patent owners.
Just to put a stake in the ground, I mean patent trolls specifically, when I call out bad NPE behavior. Not all NPE behavior is bad, and I only hope to limit the bad behavior.
How do you do that, legally speaking? What is the fundamental technical difference between our hypothetical aerospace engineer suing Boeing and some troll suing Vizio? It's not enough to say that the patents of a troll might be invalid; invalidating patents is extremely expensive in court.
At that point you're just saying "trolls are bad", because you're not offering any way for the law to differentiate between a "good" NPE (our lone inventor) and a "bad" NPE (the trolls). How do you limit the bad without also limiting the good?
presumably if the company goes bankrupt and it ows money to someone (i.e. the sued company) the assets of the troll (the patents) should go to the debtor, so hyow would this work?
Or does US law permit you to close a company keeping all it has while not paying debts?
IANAL, but I would think it would be possible to license the patent out to the shell company for relicensing. Something similar to how Microsoft Ireland is able to sell, license and sue companies using MS products without actually holding the copyrights to those products.
They don't hold all of their patents under one company, they split them up. If you prevail against them in the lawsuit, the only patents you'd collect from them are the ones you just overturned.
You'd be surprised how hard it is to convince people to risk a 10-20% chance of losing literally everything you have in order to sue. Even with the strongest case no litigation is a sure thing, and if being unlucky in your case means your business ceases to exist no one is going to take that risk, no matter how right you are about your case.
"Speculative" lawsuits are an intentional feature of the legal system. That is why, after a lawsuit is filed (which requires a somewhat lower standard of proof), they allow for the process of "discovery", where you can subpoena for records you don't already have that may prove (or disprove) your case.
I'd argue that the total damage to society done by allowing speculative lawsuits where the intention is just to scare or defame someone into settling, by far outweighs the benefit done by also allowing speculative lawsuits done for more noble purposes.
I consider myself a radical patent reformer, but I still can't agree to your assessment of relative harm. There is definitely room for improvement in defense, as well as repairs in cases where the suit was not merited. However it is also important not to cut too far in favor of patent defense, because small guys still need to be able to collect from big companies. In short, this is a system that needs some tweaks to punish abusers, but not a complete overhaul. IMO.
Are you aware of the number of speculative lawsuits done for more noble purposes? I'm not, but it seems like you'd have to know that if you were to claim that they aren't worth it.
I think it would be better if legal expenses were put into a shared pool and divided equally between the parties, with some minimum contribution based on means.
The article says Pragmatus is a shell of Intellectual Ventures, and assumes so because it acquired its patents from IV. Being familiar with how shells are used by patent assertion entities, I highly doubt that is the case. For one, these sort of shell companies don't bother with websites:
http://www.pragmatus.com/
While that was entertaining and accurate at a high level, John Oliver repeats the same mistakes other media outlets make regarding the finer points of this issue:
1. He references the roundly debunked "Patent Trolls cost X trillion dollars" study and accepts it as fact.
3. He shows a video clip of that M-CAM guy, who's famous for claiming there's a "patent on toast" (there's no such thing) in that NPR episode on patent trolls. Which, BTW, had journalism worse than this clip. M-CAM is a laughingstock of the IP licensing world as they appear to have no idea how patents really work.
4. The whole "trial lawyers killed patent reform" thing is a red herring if you just stop a second to think about it. As Oliver himself says a few minutes earlier, the whole patent troll business model is avoiding trials by settling for less than the cost of a lawsuit. In fact 97% of patent lawsuits, patent troll or otherwise, settle without trial. Statistically, trial lawyers have very little skin in the game. I don't know what really killed this patent reform bill (my guess is the pharma lobby), but I'm really curious why people decided to blame the trial lawyers.
US District Judge Mariana Pfaelzer published an opinion (PDF) detailing Oplus' "overly aggressive" and "uncooperative" style of litigation that was "outside the bounds of professional behavior."
"At each step of the case, Vizio's credibility increased while Oplus gathered rope to hang itself," she wrote. Yet Pfaelzer denied Vizio legal fees. Now, the Federal Circuit has ruled (PDF) that Pfaelzer needs to reconsider that decision.
Why, after such observations, would she deny Vizio legal fees?
She ruled that despite its behavior, Oplus' infringement allegations were not baseless and the case "followed an expected course of motion practice." As a result, "there is little reason to believe" that Vizio incurred significantly more litigation expenses than it would have otherwise, she said.
"Oplus alleged sufficient facts to support its claims, gathered limited discovery, and lost on summary judgment, as it would have even without its misconduct," so attorneys' fees are not appropriate, the judge concluded.
FWIW, my Vizio TV applies firmware updates without asking me first (and tells me about it on next boot), and their ToS is similarly liberal in what they might collect: "including but not limited to the identity of your broadcast, cable, or satellite television provider, the television programs and commercials you view".
If the can't pay, then they should assign their patents to Vizio. Really, the big law firm footing the bill on contingency is just as bad as the patent troll shell companies. They have an identical profit motive.
The patent system is bankrupt of value. It needs nothing less than a complete gutting. The amount of resources wasted by legitimate companies on patents is atrocious.
Why not require companies pursuing claims such as this to put money in escrow, up front, if they cannot concretely show that the company behind the suit has sufficient assets? If the company pursuing the claim has no assets, then there is little chance of accountability.
When you're sued, you often have to put aside money to cover the potential cost due to losing. So, this seems reasonable.
Because the default in the US is for everyone to pay their own way. It is so that poor can access the legal system. Otherwise only people with big pockets could engage in litigation.
That is to say nothing of the insanity of US patents and the concomitant trolls, but it would be a small change for the good if the NPEs/trolls had to pay fees if they lost.