Tech Transfer University Reporter

Avoid Litigation When Patent Trolls Come Knocking

By Debi Melillo
Published: March 13th, 2014

Trolls, NPEs, patent assertion entities; they go by many different names, and these entities have received a lot of interest of late.  Did you know that 60% of all patent cases now involved such entities?  In 2012 there were 4,700 patent suits, and over 2,400 of those cases were filed by NPEs or patent trolls. 

In this week’s post we’ll discuss the dynamics involved with a troll case and talk about ways you can avoid litigation when faced with an infringement lawsuit brought on by an NPE.  For starters, you can expect about four entities to be working together on a troll case against you:

Patent Troll 
They hold the patent. They may be the entity who sues as well or funds litigation, but sometimes not. 

Licensing Company
The patent licensing company will help a patent troll assert their patent, and sometimes they act as a broker connecting the patent troll to a law firm who’s going to actually handle the litigation.  The patent licensing organization for connecting both the patent troll and the law firm is going to get a percentage of the recovery as well. 

Law Firm
A law firm will usually takes these patent troll cases on contingency. 

Investment Fund
Believe it or not, there are funds dedicated solely to investing in intellectual property cases.

While you can have up to four entities on the other side of the table, what’s key to the whole patent troll business model is that it’s set up to get near-term revenue.  They’re not set up to withstand long-term, multi-year litigation that may risk the patent.  It brings their whole business model to a screeching halt, and that’s what the new proceedings under the AIA do: inter partes review, covered business method patent review, and post-grant review. 

AIA is working, and these new trials are successfully resolving and fast-tracking resolutions.  Right now, the PTAB is the busiest patent court in the country; much more popular than inter partes reexaminations.  So the question is: do we need further reform?  We have the industry pretty much resoundingly jumping onboard and filing these contested cases, and ever since the proceedings started September 16th of last year, you’ve seen a straight upward trajectory. 

This is a first true alternative to litigation.  These proceedings are fast, they’re easy, they’re cheap, and they’re lethal. 

They’re fast because you go from trial institution to final written determination in a year. 

They’re easy because the claim construction that the PTAB uses is the broadest reasonable construction, not the Phillips standard that a district court uses.  It is a broader standard.  Also in front of the PTAB, the burden of proof is preponderance of the evidence.  It’s not the district court’s clear and convincing, and there’s no presumption of validity before the PTAB.  So it’s easy to invalidate a patent.

It’s cheap, because when you think of a typical patent case in a district court, it runs between $3 million to $5 million. These cases come in at the $300,000 range.

They’re lethal. The PTAB has no problem invalidating a patent whatsoever. In fact, the SAP case dealt with section 101, and they showed no deference to the examiner’s determinations during prosecution  and showed no deference to the patent office itself.

So how high this will go remains to be seen, but inter partes review really is a true option to litigation, and a great weapon to use when the patent trolls come knocking.

More in-depth advice is provided in the recorded distance learning program, Patent Trolls Under Fire: Strategies, Tactics and Legislation Impacting University Patents & Licensing, which is available on DVD, On-Demand Video and PDF Transcript. For complete details and to order, CLICK HERE.

Technology Transfer Tactics would like to thank Michael Kiklis and Kevin B. Laurence from the law firm Oblon Spivak for their valuable insight and leadership in the distance learning program.

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Posted under: Tech Transfer University Reporter

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