Another Bad Day for Patent Trolls

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By Guest Contributor  Doug Kim | McNair Law Firm

 

Patent trolls have been coming out from under the bridge in increasingly larger numbers. The following chart illustrates the sharp increase in the number of patent infringement lawsuits filed by patent trolls:

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This trend may have just changed. On April 29, 2014, the United States Supreme Court handed down the decision in Octane Fitness LLC v. Icon Health & Fitness Inc., and Highmark Inc. v. Allcare Health Management System Inc. In this pair of cases, one common issue that directly affects patent trolls is the ability to recover attorney fees.

Under prior case law, the recovery of attorney fees was only awarded when:

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These were difficult standards to meet, resulting in the rare recovery of attorney fees. Now, however, the standard is to allow the recovery of attorney fees if the case “stands out from others,” a lower standard. Today, one may recover attorney fees if the case is “simply one that stands out from the others with respect to the substantive strength of a party’s litigation position.”

At the core of these two cases is the fee-shifting provision of the patent laws that says that the “court in exceptional cases may award reasonable attorney fees to the prevailing party” [35 U.S.C. § 285]. The question is focused on what is an “exceptional case,” and the tests above are used by the trial judge to determine if the case is “exceptional.”

Another important holding in these cases is that the trial judge’s decision is given deference by the appellate court which, in theory, makes it harder to overturn the trial judge’s determination.

The impact on the patent troll with these holdings is that it is now easier for the trial judge to (a) award attorney fees to the target of the patent troll if the patent troll is engaged in undesirable or abusive behavior, and (b) a determination of attorney fee awards will be harder to change on appeal. This is a step in the right direction to curb the overly aggressive and unsavory behavior of patent trolls and get the patent litigation system back to being a system to legitimately enforce intellectual property rights and not a vehicle for a “stick-up-job.”

These cases could not have happened soon enough for one local business. BMW North America LLC finds itself a victim in a patent infringement suit filed in early May by Antennatech LLC, an organization with all the signs of a patent troll. Antennatech alleges the carmaker is infringing its patents that allegedly protect technology that uses radio frequency antennas to connect a mobile device to a wider communications network.

Researching Antennatech reveals little available information on this new company. The Delaware Secretary of State shows that a company called Antennatech LLC was formed Feb. 18, 2014. Its address of 3131 McKinney Ave., Suite 600, Dallas, Texas 75204, is a Meridian Office Business Center; an indicator that Antennatech is renting temporary offices and does not have much in the way of operations. The attorneys representing Antennatech are known to have represented patent trolls in the past. And Antennatech has also sued the following companies – all indicators pointing to a patent troll:

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This story is not complete, as there are multiple bills pending in Congress and at the state level that are targeting patent trolls – bills that include fee shifting, forced identification of the real party bringing the lawsuit, a requirement of detailed pre-filing investigation, detailed explanation of alleged infringement and more. While these bills have very recently stalled in the Senate, (postponed four times in April), Sen. Charles Schumer (D-N.Y.), supporter of patent reform and member of the Judiciary Committee, has stated that the bills would have to be presented by the end of May to get a vote in 2014. Given that August vacation is only weeks away, the window is quickly closing. Chairman of the Judiciary Committee Patrick Leahy (D-Vt.) states that the opposition is principally the fee-shifting provisions where the losing party would have to pay the winner’s court fees.

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DougKimDoug Kim is an intellectual property (IP) attorney and head of the IP practice of McNair Law Firm. He concentrates on counseling companies concerning the protection and enforcement of IP rights.

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