Patent Law Practice Center

EDTX Closely Scrutinizes Nuisance Value Settlement Strategy

The following article discussing the increased scrutiny serial patent litigation against large numbers of defendants is receiving in the Eastern District of Texas comes courtesy of our friends at DLA Piper, John Guaragna and Brian Erickson.

A trend is emerging in multi-defendant patent cases in the patent-heavy docket of the Eastern District of Texas – at least in the numerous cases assigned to Judge Leonard Davis in Tyler. Over the past several months, Judge Davis has repeatedly expressed concerns surrounding plaintiffs who assert questionable patents to extract “nuisance value” settlements. In a recent patent case brought by Raylon LLC, Judge Davis summarized his views:

[T]his Court has some concerns about plaintiffs who file cases with extremely weak infringement positions in order to settle for less than the cost of defense and have no intention of taking the case to trial. Such a practice is an abuse of the judicial system and threatens the integrity of and respect for the courts. Often in such cases, a plaintiff asserts an overly inflated damages model, seeking hundreds of millions of dollars, and settles for pennies on the dollar, which is far less than the cost of defense. Where it is clear that a case lacks any credible infringement theory and has been brought only to coerce a nuisance value settlement, Rule 11 sanctions are warranted. (more…)