
Bill would force patent trolls to pay defendants' legal bills - chaud
http://arstechnica.com/tech-policy/2012/08/bill-would-force-patent-trolls-to-pay-defendants-legal-bills/
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cletus
This is a largely pointless gesture.

Patent trolls by definition have no assets (technically they're NPE or non-
practicing entities). This means that if they lose big, they'll simply declare
bankruptcy and move on.

The real problem-- _still_ \--is software patents shouldn't exist _at all_.

If a single device (eg a smartphone) potentially infringes on thousands of
patents then you've gone well beyond the intent or usefulness of the patent
system.

If this were going to do anything at all, any entity that files a patent
violation suit should be required to establish a bond (set by the court) to
cover defendants' reasonable fees before the suit can even go to discovery.

The maths of patent trolling is simple:

\- filing suits, issuing C&Ds, etc = $X million

\- potential payoff for settlement or successful litigation = $YYY million

\- probability of winning = Z%

If Y x Z > X then it's worthwhile suing. Filing a bond with the court then
change sthis to Y x Z > X + B.

~~~
paulsutter
The company may be able to collect ownership of the patent from the shell
company as payment to cover the legal fees.

This means that a troll would lose the set of patents every time they lost a
case. Unless they were willing to outbid the winning party to recover the
patents from the shell, in which case the winning party would recover their
legal fees.

So it's not pointless. It does increase risk for trolls. Although I do agree
that much larger reform would be better. And requiring the posting of a bond
is a fantastic idea.

~~~
Tyrannosaurs
Not necessarily. Some of the companies are structured such that they don't own
the patent, just certain rights to it. Basically they sue on behalf of someone
else which both reduces the risk and also allows the patent owner to claim
that they're not the one behind the suit.

I'd imagine that those rights would just be tied up so they weren't
transferable (so if the company did go under they would no longer be an asset)
and that this structure would become the norm.

What you'd need to do is have the suing company stump up the money in advance
into some sort of escrow account (or some other mechanism for proving they can
pay).

~~~
obtu
Shouldn't this loophole be closed? Something like: only allow the exclusive
owner of a patent to sue potential infringers. That isn't enough to make shell
companies a losing proposition, though, because they still contain the risk of
losing a suit. I prefer the bond idea, it is a simple and more direct route to
making NPEs liable for their actions.

~~~
Tyrannosaurs
Something along those lines might be an improvement but then you have the
issue of a parent company in the US not being able to assign those rights to a
European based subsidiary to defend them there.

I think it's probably dealing with the wrong problem which is the need for
more fundamental reform of IP law.

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RexRollman
Personally, if software patents can't be done away with or at least reduced in
its length, then I would like to see a couple of things happen:

1\. When sued, a defendant has the right to request a review of the patents,
which would automatically stay all proceedings until the review is finished.
Only upheld patents could then be litigated and if all patents were
overturned, then the plaintiff would have to pay all court costs.

2\. Patents holders who sue but do not actually manufacture anything should be
awarded reduced damages.

~~~
dctoedt
Both of these things happen already (well, sort of) under existing law:

1\. A defendant can request reexamination of the patent by the USPTO. There
are pros and cons to doing so. [1]

[EDIT: If a defendant requests reexamination at an early-enough stage in the
lawsuit, the judge is likely to grant a request to stay the lawsuit until the
reexamination proceedings are finished. If the defendant waits too long,
though, the judge might think the defendant is gaming the system to try to
delay the trial, in which case the judge likely will deny a request for a
stay.]

2\. A patent holder that actually makes and sells something can recover the
profits it would have earned if _it_ had made the infringing sales. To do so
it has prove some things it doesn't have to prove to recover a reasonable
royalty. A troll can't do this because it didn't have the capacity to meet an
existing demand at the time of the infringing sales. [2]

[1] <http://en.wikipedia.org/wiki/Reexamination>

[2]
[http://www.finnegan.com/resources/articles/articlesdetail.as...](http://www.finnegan.com/resources/articles/articlesdetail.aspx?news=c29ba550-8c55-4b4f-a9a5-b2c72b1749c4)

~~~
prodigal_erik
A reexam request requires new prior art. You can't use what USPTO evaluated
improperly (rms argued public prior art databases are a bad idea for this
reason) and you're out of luck if it was something so obvious that nobody
bothered writing it down. It also costs thousands of dollars _per patent_ with
no refund for winning.

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makecheck
Wouldn't it be simpler to require that any company suing over patents must
also be an _active practitioner_ in the field(s) that the patents involve?

That would kill the asset-free trolls instantly because without an engineering
staff and a product they can't very well be _building_ anything that uses
their "property", can they?

~~~
dinkumthinkum
I don't think we have to bring down the whole patent system just to stop
software patents. Let's just stop issuing software patents and just deal with
existing software patents however we can? One possibility.

~~~
beagle3
If it is property, tax it like property, at 1% of value per year. All of a
sudden, every trivial patent will be assigned 0 value by its owner, and then
convincing a court the violation is worth $100M is hard.

Also puts old and new patents on equal footing.

~~~
eru
> If it is property, tax it like property, at 1% of value per year.

Where is property taxed like that?

~~~
beagle3
Real estate, essentially everywhere in the western world. The range I have
observed in multiple countries is 0.5%-1.5%, and it isn't always called
"property tax" (e.g., in the UK it breaks between "council tax", and various
other taxes, none of which is specifically named "property tax"; in the
neighborhoods of CA I'm familiar with, it's 1.2% in the last few years)

Car licenses in many places are also essentially a property tax of 1% of the
car value, or so.

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gingerlime
This seems like a step in the right direction. In the UK, as far as I'm aware,
this is standard procedure in ANY legal case. The loser has to pay the legal
fees of the winner. This can be a double-edged sword however. A big legal firm
with lots of resources will mount legal fees that they alone can crush any
small company.

This is one aspect that I see missing from this. The mere _threat_ to sue over
a patent can force a small company to settle or to even close-shop completely.
Sure, if the small company wins, they'll get their legal fees back, but when
would that be?? a good few months of time, energy, lack of sleep, and huge
legal bills until the end of the process, and that's only IF they win.

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brennenHN
The reason that the American government hasn't implemented this broadly in
legal disputes, as is practice in other countries, is that it makes it
dangerous to pursue legal action for any entity. If I am a lone engineer who
has just invented the perfect fuel source and GE rips it off, I have no
recourse, because they can hire $50 million worth of lawyers and if she can't
beat them in court, she's stuck with an impossible bill. These laws unfairly
stifle the little businesses who are "supposed" to have a fair footing in the
unbiased court of laws.

~~~
learc83
Why can't you make the max payout based on a percentage of the total money
spent on the case by the loser.

That way if company A spends $10 million on the case and loses, the winner can
recoup say $8 million.

But if Person A spends $50k on a case and loses, the winner can only recoup
$40k.

~~~
eru
Sounds like you might run into problems similar to US campaign financing law.

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encoderer
I know most people here favor abolishing software patents.

My take is that they shouldn't be abolished. But they should be restricted.
Say, 3 years. Maybe 5.

Software has short development cycles and version iterations. Three years
gives a company a year to bring a product to market, and 2 years of patent
protection after that.

This isn't perfect I'm sure and there are probably more optimal time frames
than 3 years. But I like the idea that if I come up with a truly novel
invention in code, I'll be granted a patent and a couple years at market
before the clones emerge.

~~~
vibrunazo
Why exactly do you think this would solve the problem? In a world where most
(all?) patents being used for trolling are trivial and/or ignores prior art
already. Why won't trolls just repatent something with different wording after
it expires? This is already common in pharmaceuticals where some drugs have
been under monopoly for way over the normal 20 years but under "different"
patents. This is only not too common in software, yet, because the industry is
young.

So wouldn't reducing length just worsen the problem by shifting even more
power into the hand of incumbents who can afford to refill "different" patents
more often than startups? Trolls would just use newer crap patents anyway.

~~~
encoderer
So the answer is to deal with trolls not eliminate patents. Having a shorter
patent grant is about addressing issues like Amazon 1-click. Amazon is not a
patent troll, but having a 20 year patent on 1-click is absurd.

There are a lot of patent trolls outside software. Being against software
patents and being against patent trolls are different issues with different
solutions. I reject that dispensing with patents altogether is the best
choice.

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Zenst
Whilst the motives are good it realy should be a simpler bill:

`If you take somebody to court and you lose the case then you pick up the cost
of the defence and courts time.`

That is what is needed, something simple and fair that covers this and other
area's instead of one law for a specific area which will then need another law
for another area and in essence complicate things by having many laws covering
one simple thing.

Keep It Simple Stupid is a such a great old software term, that applies to so
many things, including this.

~~~
malandrew
TBH the entire court system would be better if money were a non-issue. The
best way I can think of to solve that is to require both sides to be funded
equally. i.e. if Side A wants better lawyers that cost more, then they should
enough money towards a legal pool which is split equally between Side A and
Side B. We will never have a just legal system until you eliminate this
financial asymmetry.

~~~
learc83
That's actually a pretty good idea. I'm sure there are some implementation
problems I haven't thought of yet, and ways for companies to get around it,
but on the face of it a really good idea.

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olliesaunders
Has anyone ever read this? [http://www.amazon.co.uk/Math-You-Cant-Use-
Copyright/dp/08157...](http://www.amazon.co.uk/Math-You-Cant-Use-
Copyright/dp/0815749422)

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jmintz
How would this actually work? Unless a bond has to be posted the troll would
just make sure the trolling entity (almost always a separate company shielding
liability from true owner) has zero assets to pay the legal bills. Or did I
misunderstand something?

~~~
skurry
Wouldn't the troll entity have at least control of the patents it's suing for?

~~~
jmintz
Sure but if they lost the case doesn't that suggest those patents are
worthless? If they can't be enforced they aren't effective patents.

~~~
learc83
At least it would keep them from using them to extort money from other
victims.

A patent troll could lose without the patent being invalidated. It could be
that the patent is enforceable, but not in this particular case (a case where
a jury finds the defendant wasn't actually infringing).

We've seen patent trolls go after victims with nebulous claims that might not
win in court even though the patent wasn't likely to be invalidated.

This may prevent those situations because if they lose and they have to hand
over the patent, it deprives them of future extortion money.

It may at the least limit the scope of companies they go after to actual
likely infringers.

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methodin
I like it. If it works then it should cut down on these stupid spectacles. If
it does not work then it only would further the cry of "See? We need total
reform!"

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mparlane
I like this alot:

In other words: just because we're defining "software patent" doesn't
necessarily mean software patents are necessarily legal.

It's basically a temporary fix.

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etfb
This post was second after the one to Mark Zuckerberg when I clicked it, and
for a second I thought it meant Bill _Gates_ was doing it. I boggled for a
second at the idea of Mr Microsoft being sane about patents, but of course it
was my error. Pity.

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mbell
Maybe I'm crazy but it seems there is a relatively simple solution to all
this: make patents non-transferable.

~~~
wtvanhest
If company A buys company B and company B owns a patent, the patent wasn't
transferred, just company ownership.

So, making patents not transferable only adds a step or two depending on how
complex the law is.

~~~
mbell
What I said was extremely simple, there are a million ways it could turn into
law. A simplistic solution in my mind would be a rule that if your example
were to happen, the patent is transferable in the case that the purchasing
company intended to act on that patent (insert legal shenanigans to define
what that means here).

The general intention is that a company can not own a patent which it does not
have a vested interest in acting on, how that is defined could be an entire
thread of its own.

~~~
vidarh
And now your "relatively simple solution" has turned into a massive legal
quagmire.

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DigitalSea
This is the way things should always have been. If you're going to falsely
claim patent infringement only for it to be discovered you're not the patent
holder or are merely using scare tactics to get money out of people you should
be held liable for all costs associated with the legal threat.

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coob
Why restrict this to just patent trolls?

