The term “patent troll” conjures up all kinds of images and ideas, but there is no universally accepted definition of who is a patent troll. This has led many to recognize that, by and large, if you are being sued for patent infringement, it will likely be your belief that you are being sued by a patent troll. But obviously not everyone who sues for patent infringement is a patent troll, and neither is every plaintiff who loses a patent infringement lawsuit. There will be reasonable assertions that ultimately result in a defendant prevailing for a variety of reasons. Thus, a patent troll really should be identified by litigation tactics. A patent troll is one who is abusing the judicial process and leveraging judicial inefficiencies to obtain unwarranted settlement payments.
In determining whether one is a patent troll, I don’t think it should matter how the patents were acquired. If there is infringement of substantial patents, then there should be recourse. Having said that, it would be naive to pretend that there is not real evil lurking in the patent infringement realm. Stories of $500 to $1,000 offers to settle and avoid patent infringement litigation that would cost millions of dollars to defend abound. Some courts have openly acknowledged what feels like “extortion-like” activity. See Indicia of Extortion and Troll Turning Point?
That there are bad actors is hardly surprising, particularly given the lucrative nature of the business model and the fact that many (if not most or even virtually all) companies choose to settle even bad claims instead of fighting. At some point companies are going to have to stop settling bad cases and fight if they ever want to put an end to the troll business model.
During the 1980s, the auto insurance companies would settle everything, just like tech companies do today when faced with bad patent infringement claims. It doesn’t take a rocket scientist to know what happened next. Every unscrupulous attorney with a pulse signed up every client they could who had been in an auto accident and sued. Eventually, the auto insurance companies decided to fight every case and the tide turned, perhaps too much in the other direction. Eventually tech companies will learn this lesson. When they do, they will fight and they should be able to get an award of attorney’s fees if they were really, truly being pursued by patent trolls with frivolous cases.
District Court judges have considerable powers that can be exercised if they really do want to stop the bad behavior. 35 USC 285, 28 USC 1927, and Rules 11, 26, 30 and 37 of the Federal Rules of Civil Procedure, as well as any number of precedential cases, authorize awards of attorney’s fees to address litigation abuses, such as, but not limited to, discovery abuses and knowingly engaging in misrepresentations.
The most direct attorney’s fee provision applicable to patent cases is Section 285 of Title 35:
“The court in exceptional cases may award reasonable attorney fees to the prevailing party.”
The types of conduct that could show exceptional circumstances have been found to include, but are not limited to, willful infringement, inequitable conduct before the Patent and Trademark Office, litigation misconduct, and vexatious or unjustified litigation or frivolous suit. Furthermore, in the wake of the Supreme Court’s decisions in both Octane Fitness LLC v. Icon Health & Fitness Inc. and Highmark Inc. v. Allcare Health Management Systems Inc., District Court judges now have much greater discretion to award attorney’s fees and the Federal Circuit’s ability to overturn such awards has been greatly minimized. See Easing the Standard for Awarding Attorneys Fees in Patent Cases and Supremes Say Broad Discretion to District Courts on Attorneys Fees.
In addition to Section 285 of Title 35, a more generally applicable and content-neutral statute is Section 1927 of Title 28:
“Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
In Roadway Express v. Piper, 447 U.S. 752 (1980), the Supreme Court explained that the general rule is that a litigant cannot recover attorneys fees, but that the general rule “does not apply when the opposing party has acted in bad faith.” Further, the Supreme Court recognized that an “award of attorney’s fees is not restricted to cases where the action is filed in bad faith.” Aren’t plaintiffs bringing lawsuits on dubious patents for the purpose of forcing a quick nuisance settlement clearly bad faith, vexatious litigation?
The time is now for larger companies who say they are plagued by patent trolls to stand up and fight. If they don’t, they will just keep getting sued and the cycle will go on. It is time to break the cycle, just like the auto insurance companies did in the late 1980s and early 1990s.
Tags: Attorneys Fees, attorneys' fees awards, patent, Patent Litigation, patent troll, patent trolls, patents
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