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EFF: Open Letter to House Judiciary - Investigate Patent Trolls
Electronic Frontier Foundation Media Release For Immediate Release: Wednesday, February 27, 2013 Contact: Julie Samuels Staff Attorney and The Mark Cuban Chair to Eliminate Stupid Patents Electronic Frontier Foundation julie@eff.org +1 415 436-9333 x112 Rebecca Jeschke Media Relations Director and Digital Rights Analyst Electronic Frontier Foundation press@eff.org +1 415 436-9333 x125 Open Letter to House Judiciary: Investigate Patent Trolls EFF and High-Tech Innovators Demand Hearings on SHIELD Act Washington, D.C. - A coalition of entrepreneurs, investors, and innovators have joined the Electronic Frontier Foundation (EFF) and Engine Advocacy today in requesting that Congress schedule hearings on patent trolls and the SHIELD Act, introduced in the U.S. House of Representatives to quash the rash of patent lawsuit abuse. In an open letter to the House Committee on the Judiciary, the coalition--including investor Mark Cuban and Reddit co-founder Alexis Ohanian--explains how patent trolls are chilling innovation, which in turn stifles job growth in the expanding tech sector. Researchers estimate that the U.S. economy took at least a $29 billion hit in 2011 due to patent trolls, which make no products but instead assert patents as their sole business model. "We have a shameful situation in this country, with patents and patent litigation hurting both competition and innovation. That's bad for both consumers and small businesses," said Cuban. "The time for Congress to act is now." The letter expresses the coalition's support for the SHIELD (Saving High-Tech Innovators from Egregious Legal Disputes) Act, a bipartisan bill from Rep. Peter DeFazio and Rep. Jason Chaffetz that would create real and appropriate consequences for patent lawsuit abuse. Under the Act, if a patent troll loses in court because the patent is found to be invalid or there is no infringement, then the troll pays the other side's legal costs, which often reach into the millions of dollars. "It's time to force these trolls to take responsibility for the damage they cause with their bogus claims," said Julie Samuels, EFF Staff Attorney and the Mark Cuban Chair to Eliminate Stupid Patents. "The introduction of the SHIELD Act sends an important message to patent trolls: their business model is dangerous and their days are numbered." In addition to Cuban and Ohanian, managing directors of prominent venture capital firms the Foundry Group and Union Square Ventures also signed the letter. They're joined by David Cohen, founder and CEO of Techstars, as well as Paul Sieminski, general counsel to Auttomatic, which is the company behind the popular blogging platform Wordpress, among other signers. For the full open letter: https://www.eff.org/document/open-letter-shield-act For this release: https://www.eff.org/press/releases/open-letter-house-judi... About EFF The Electronic Frontier Foundation is the leading organization protecting civil liberties in the digital world. Founded in 1990, we defend free speech online, fight illegal surveillance, promote the rights of digital innovators, and work to ensure that the rights and freedoms we enjoy are enhanced, rather than eroded, as our use of technology grows. EFF is a member-supported organization. Find out more at https://www.eff.org. -end- _______________________________________________ To unsubscribe or manage your email options: https://mail1.eff.org/mailman/listinfo/presslist (Log in to post comments)
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 27, 2013 19:51 UTC (Wed) by yodermk (subscriber, #3803) [Link]
How about differentiate whether or not the plaintiff has an actual commercial product involving the patent? If not, they have to pay *three times* the other side's legal fees.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 27, 2013 20:26 UTC (Wed) by JoeBuck (subscriber, #2330) [Link] I would guess that the trolls would respond by creating shell corporations that have no assets other than the patent, so that if they lose they can just declare the corporation bankrupt rather than paying. But the patent would necessarily be an asset so they'd have to sell it for what they can get.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 27, 2013 21:02 UTC (Wed) by mpr22 (subscriber, #60784) [Link] Which might well be zero, since one of the loss modes is "patent invalid".
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 27, 2013 21:23 UTC (Wed) by Wol (guest, #4433) [Link]
Under UK law, I suspect such behaviour would pierce the corporate veil - just make sure that the legislation says that - if the purpose of the corporation is to enable the lawsuit to proceed with no downside, then the downside is that the corporation's officers are liable for the corporation's debts ...
Cheers,
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 27, 2013 21:55 UTC (Wed) by dlang (✭ supporter ✭, #313) [Link]
I believe they are already doing that, so it wouldn't change anything.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 13:27 UTC (Thu) by HenrikH (guest, #31152) [Link]
Is it not customary for the court to require both sides to put a certain amount in escrow before starting the trail on cases where the loosing side will pay all the costs?
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 19:46 UTC (Thu) by dlang (✭ supporter ✭, #313) [Link]
it's extremely unusual for the loosing side to pay the costs of the winning side (it usually requires significant misbehavior from the loosing side), so no, it's not usual to require amounts in escrow before a case.
In fact, winning a case is only the beginning of the collection process, if the loosing side doesn't pay up, you may have to go to a significant amount of expense to get your money.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Mar 2, 2013 1:38 UTC (Sat) by HenrikH (guest, #31152) [Link]
Yes I know that this is unusual in the US (over here all civil trials is looser pays all costs) but if this proposal would be law then it would of course be usual :).
And would it be such a stretch to imagine that in such trails when the defending side argues to the judge that they don't think that the other side would pay due to being a shell company, that the judge would order an escrow?
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 0:27 UTC (Thu) by dwmw2 (subscriber, #2063) [Link]
We are talking about fraud, plain and simple. In the egregious cases (and of those there are many), those who filed the offending patents and whose name appears on them, along with those who sue or threaten to sue based on them, should all be jailed for fraud.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 9:38 UTC (Thu) by micka (subscriber, #38720) [Link]
I wouldn't limit that to patent troll. I would also extend it topatent bullies like Apple, Microsoft and Oracle that use patent because they can't win over real products.
But my thoughts on the subject can probably be dismissed as I think patent shouldn't exist at all (even non-software patents).
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 12:52 UTC (Thu) by tao (subscriber, #17563) [Link]
In the longer run I agree with you (I too would like to banish all patents), but if you'd add that kind of suggestion to this, it won't happen.
Legislation that penalizes patent trolls, however, might stand a realistic chance to pass.
Next up should be some nationwide patent and copyright court; it just doesn't make sense that everyone who wants to be sure to win a patent trial just takes it to Eastern Texas and *bam!*, case won.
Third would be to remove the financial incentive for the patent office to pass patents and to have more stringent requirements.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 13:42 UTC (Thu) by micka (subscriber, #38720) [Link]
Actually, I think that 'first step' (the defendant legal costs paid by the troll) seems, in my uninformed opinion, to be close to what we call here (in France) "comdamnation aux dépens" where the loosing side (attacker or defendant) may be sentenced to pay the winner's costs (added to the main sentence).
I didn't event realize that may not exist in other countries. But of course, it's a bit of a double edged sword.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 19:44 UTC (Thu) by dlang (✭ supporter ✭, #313) [Link]
Part of the problem right now is that there IS a nationwide patent court, and they have come to support patents too much.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 16:51 UTC (Thu) by fandingo (subscriber, #67019) [Link]
I seriously doubt that SHIELD will be even the least bit useful.
Almost all patents are "valid" in the legal sense, and there isn't much present work to change the criteria.
I hate the "abuse" of the patent system, but let's be honest, trolls are not "abusing" the system in the legal sense. They have valid USPTO patents that generally stand up during review.
The solution is to change the USPTO patent process. Leaving this to the courts is nonsense. Most patent disputes are settled out of court, and SHIELD wouldn't fundamentally change that. A defendant primarily considers two things when deciding to litigate or settle: 1) likelihood of winning (either no infringement on a valid patent or no infringement because the patent is invalid), or 2) likelihood of decreasing liability by settling vs. litigating (i.e. will it be cheaper for a settlement or litigation + judgment).
I don't see how SHIELD changes either situation in any meaningful way.
Defendants in patent suits generally lose or settle. It's that simple. If there isn't a drastic change to the likelihood of a not guilty verdicts, I don't see more suits going to trial, and consequently, any chance for SHIELD to make a difference.
In my opinion, this is a typical useless lawyer solution. The idea is to increase the number of patent suits that go to trial and increase the incentive (i.e. money) for lawyers to pursue such trials. We'd make lawyers even richer, but the actual defendant won't be much better off.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 21:00 UTC (Thu) by redden0t8 (guest, #72783) [Link]
It changes the situation because as it is now, if you go to court against a patent troll, you're out money regardless of whether you win or lose.
At least with this, you're not out a penny if you win. It's more incentive to fight it. Actually, the harder you fight it, the more legal bills you rack up and the more the could have to pay
It's also a disincentive for patent trolls - right now even if they lose, they're only out their own legal costs.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 22:33 UTC (Thu) by fandingo (subscriber, #67019) [Link]
I have not seen any definition of a patent troll in this proposed legislation. Apparently, troll is synonymous with loser in patent litigation. The unintended consequences will likely be severe.
Let's say that I have some awesome product that implements one of my patents. I am making real money off the product, but it's a small company, so profits are relatively small -- let's suppose $100,000 per year. Some giant company -- let's suppose Microsoft -- makes a product that infringes my patent and destroys my business. I have a bona fide complaint against Microsoft, and it needs to be resolved through the court system or a private settlement.
Yet, I have a significant disincentive to sue Microsoft. Not only could I be out my own legal expenses, which I can rationally limit since I control the legal team, but I could be on the hook for Microsoft's *reasonable* (emphasis) legal expenses. That can still run into the millions of dollars. Suddenly, it's unfeasible to bring a suit against a large company.
In this instance, I'm not really acting as a troll, but I am just as disincentivized as trolly-mctroll-corp.
That's my entire problem with this approach. The pendellum swings both ways. Any ligitant is disincentivized from filing a suit.
I don't want to fix the litigation aspect of patent law, except perhaps, to make patent review during litigation more adversarial. I want
I believe that reform expends political capital. Once something is reformed, people generally believe that item is fixed and move on to something else. Look at major legislative issues. We don't typically make drastic alterations repeatedly over a short period. There's almost a sense that we can only reform some systems once a decade or generation.
I think that SHIELD has unintended consequences that will not make the system substantially better, and that "we" will exhaust all of the political capital for patent reform, which will delay more substantive reform later.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 22:42 UTC (Thu) by fandingo (subscriber, #67019) [Link]
To extend on my point, I have no problem if the tenants of SHIELD are combined with real patent reform (see parent comment for my idea of real reform).
I just worry that people that don't follow patents closely, and particularly, the software patent field, will think that the patent system is fixed if only SHIELD were passed.
We'd lose another few years trying to convince legislators and voters that the underlying problem still exists.
EFF: Open Letter to House Judiciary - Investigate Patent Trolls Posted Feb 28, 2013 23:17 UTC (Thu) by raven667 (subscriber, #5198) [Link]
> I have a bona fide complaint against Microsoft, and it needs to be resolved through the court system or a private settlement.
> Yet, I have a significant disincentive to sue Microsoft.
If you have a bona-fide complaint than you are expecting to win and have your expenses paid, you would only expect to lose and pay expenses if your claim was tenuous or outright bogus. It seems that if this is considered a bad thing then it seems like it is being is assumed that the courts are incapable of ruling on patent issues in a reasonable manner.
SHIELD has been useful Posted Feb 28, 2013 21:43 UTC (Thu) by man_ls (subscriber, #15091) [Link] I seriously doubt that SHIELD will be even the least bit useful.Well, they have been quite effective against HYDRA, haven't they? (Don't look at me this way, I cannot have been the only one to scratch my chin at the acronym.)
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