Federal Circuit Slams Patent Troll

http://ipwatchdog.com/2011/08/04/indicia-of-extortion-federal-circuit-slams-patent-troll/id=18568/

by grellas • 15 years ago

88 16 15 years ago

awaz• 15 years ago

Should we consider this a ray of hope or an exception? Also, as per the article, the case concluded last week. I am surprised that other tech media did not cover this given the buzz around patent trolls these days.

JamesBlair• 15 years ago

Seems to be neither:

Indeed, the written description of the patents in question expressly refuted the claim construction of the patentee-plaintiff. As a result, the district court properly found that EonNet pursued objectively baseless infringement claims.

If this set a precedent it wouldn't be against vague patents, or against suing implementations of the obvious, etc.

chc• 15 years ago

It sounds potentially about as true of Lodsys' claims as this patent troll's.

Pointsly2• 15 years ago

Nah - this is a ray of hope! Like the old days when they would take Pirates and hang them at the ports 'Pirates beware'! Hopefully it:

1) Brings light to the situation

2) Discourages this behavior from others in the future

I guess we shall see :)

bfe• 15 years ago

Although Gene seems to discount the inhibitory effect of a patent troll getting fined over $600,000, I think this case will focus the minds of overzealous patent owners, as well as the patent attorneys involved, for whom a Rule 11 sanction carries a burden beyond the dollar amount of the plaintiff's fines.

And while a broad variety of litigious patent holders sometimes get unfairly lumped together as trolls, this outfit clearly seems to deserve the epithet, and in this case the system, in its current form, ultimately seems to have worked.

impendia• 15 years ago

Newbie legal question: Can the companies who have already settled with Eon-Net now simply stiff them on the license fees?

Pointsly2• 15 years ago

Yes. The old contracts are similar and kinda like the 'fruit of the poisonous tree' doctrine.

Though.

I doubt Eon-Net is going to 'take them to court' and face a similar result (that is if the companies can afford the law suit and/or if Eon-Net can NOW afford the law suit).

felipemnoa• 15 years ago

>>Defendants also need to unite and bring a RICO action actions these bad acting non-practicing entities. Extortion can be captured by RICO and that is exactly what these bad actors engage in. It would do the federal government well to investigate as well. The Federal Trade Commission should go after these nefarious actors for engaging in unfair business practices.

This is the best part of the article. Now, how do we get the Federal government to prosecute them for extortion?

wtallis• 15 years ago

Fortunately, RICO also provides for civil action. If a good case can be put together, RICO's provisions are strong enough that even a civil suit should be able to bankrupt a patent troll and their backers.

rlpb3• 15 years ago

"As a result of the misconduct found, Judge Martinez of the United States Federal District Court for the Western District of Washington slapped the patentee-plaintiff with Rule 11 sanctions totaling $141,984.70 for failure to perform a reasonable pre-filing investigation. The district court also awarded the defendant $489,150.48 in attorneys fees and costs pursuant to 35 U.S.C. 285."

So the sanctions were only about a quarter of the half a million dollars in legal costs the defendant had to put up to fight the case? I understand that the plaintiff had to pay the costs in the end, but this is hardly going to deter trolls.

It seems to me that with sanctions such a small proportion of legal costs, trolls can just carry on doing what they are doing and the defendant's fear of being sunk in legal costs will far outweigh the troll's fear of the sanctions for the troll (which after all are probably smaller than his legal bill!)

In what way is this a deterrent?

athom• 15 years ago

Wait a minute. You said the defendant had to put up half a million dollars? And the district court awarded the defendant $489,150.48? Half a million is $500,000. Unless I've picked out the wrong numbers, the award looks pretty close to the costs.

Can you clarify?

rlpb3• 15 years ago

I assumed that the award for costs ($489,150.48) is at least what the defendant's actual costs actually were. Was this a mistake?

ScottWhigham• 15 years ago

I'm with on the idea that, on the surface, it feels lopsided - $142,000 in sanctions vs. $489,000 in defendant's legal fees - but AFAIK sanctions are not related to defendant's legal costs. You're trying to tie two unrelated concepts and getting twisted that they aren't more inline with each other. Sanctions, in most cases, are regulated - there's a minimum and maximum - whereas defendant's legal fees are not. The judge hopefully gave the maximum sanctions available.

rlpb3• 15 years ago

I understand that sanctions are not related to defendant's legal costs.

I think they should be, because I think it's a joke that sanctions can be far less than what the defendant had to risk to fight the behaviour that caused the sanctions.

krschultz• 15 years ago

The total cost for the plaintiff is the $631,100 listed in the article, plus their own legal fees. Obviously the owners of the company are lawyers, so that screws up the numbers a little, but let's say their own legal fees were $370,000. That is really only 2 or 3 lawyer salaries for a year so it is probably a safe bet.

They might be making a decent cash flow off previous settlements, but a million dollars is still significant. The article made it sound like their previous settlements are in the low 5 figures. If you are making $50k per settlement, and spending $1 million per court case, it only takes 1 in 20 actually calling your bluff to make it a losing proposition.

talmand• 15 years ago

I don't know how it would be handled but something has to be done about such blatant abuse of the legal system. If any company files suit but offers to settle for lower than the cost of defending and states it that way in the offer, then I fail to see how that is not extortion. It would seem that you should be able to go before a judge and show the settlement offer to have it ruled so. To me, with this case the defendant's legal fees shouldn't have been as high since the judge should have tossed it almost immediately.

This type of thing is going on across the country and not just in patent infringement cases. You have people all over the place clogging up the courts with suits that are essentially extortion using the law in unintended ways. This has got to stop before we've all lost total confidence in our legal system.

Of course, it's almost a joke now as it is...

Federal Circuit Slams Patent Troll

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