
US Supreme Court reverses patent judges again in 9-0 decision on lawyer fees - acgourley
http://gigaom.com/2014/04/29/supreme-court-reverses-patent-judges-again-in-9-0-decision-on-lawyer-fees/
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jaredhansen
This is a landmark decision.

The patent statute has always allowed courts to compel losers to pay winners'
attorneys' fees, but only in fairly rare circumstances. The specific term used
is that the case must be "exceptional" \- which until yesterday, meant
something very, very narrow, and fee awards were consequently very rare.

Yesterday's decision in _Octane Fitness_ (along with the companion case
_Highmark v. Allcare_ , also decided yesterday), did three useful things for
patent defendants:

1) Ended the requirement that fees can only be awarded when the case is BOTH
"so unreasonable that no reasonable litigant could believe it could succeed"
AND is actually known by the plaintiff to be baseless.

2) Ended the requirement that defendants prove by "clear and convincing
evidence" that the case is "exceptional" (saying instead that there's "no
specific evidentiary standard" defendants must meet).

3) Clarified the standard for appellate review of fee awards, finding that
district court awards can be overturned only for "abuse of discretion"

As a result, district court judges have substantially more latitude to grant
fee awards in patent cases, combined with significantly reduced fear of
reversal. The outcome should be immediate, and will have a chilling effect on
new frivolous litigation -- while simultaneously providing an incentive to
current frivolous plaintiffs to drop their cases sooner or on better terms.

BTW, one other thing to note: most of the chatter is about non-practicing
entities, aka patent trolls -- but the decision isn't limited to cases brought
by NPEs. Frivolous patent plaintiffs, even if they're active competitors in
the market, are in a much weaker position thanks to this decision.

This is a great step toward a more sane patent system, and many startup
founders should be delighted.

~~~
WildUtah
Trolls still always have the option of filing in East Texas.

As long as they can rely on a nest of less than objective judges eager to
serve troll interests, they don't have to worry about fee awards. The decision
left a lot of power to the discretion of district judges so a single
predictably biased district can corrupt the whole national system.

The Rep. Goodlatte bill that was passed by the house would make fee awards
routine and then East Texas judges would have to justify not awarding fees.
That would be a much better reform.

The Leahy senate bill will probably be a very tiny change in the existing
language because Leahy's trial lawyer supporters don't want to loser pays
principle to gain a foothold. Leahy -- and most trial lawyers -- have said
that patent cases are an exception the the general principle, but they aren't
ready to let any wholesale reform happen on this point. Usually trial lawyers
argue that loser pays disadvantages vulnerable victims; most federal civil
plaintiffs are much poorer and smaller than defendants. In patent cases, the
opposite is true; patents are the tools of trolls and big companies to extort
and destroy innovative small businesses. Most patent cases are brought by
established wealthy troll agglomerators against companies that could not
conceivably afford a full trial.

See here for how biased cases are to E Texas already:
[http://patentlyo.com/patent/2014/04/district-courts-
patent.h...](http://patentlyo.com/patent/2014/04/district-courts-patent.html)

~~~
brownbat
Judges in Texas are elected. (Which is pretty ridiculous considering
prosecutors, defenders, and litigants can contribute to judicial campaigns...
during the course of a trial.)

I'm surprised no one has run as a Judge in East Texas while soliciting
campaign contributions from tech companies.

~~~
koenigdavidmj
Patent cases are handled in federal court, so they are appointed, just like in
other federal courts.

This is the infamous East Texas court:
[http://en.wikipedia.org/wiki/United_States_District_Court_fo...](http://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas)

~~~
brownbat
Ugh, stupid mistake, I feel like a 1L again.

Thanks for correcting the record. :)

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necubi
You get a sense of increasing exasperation from the Supreme Court with the
incredibly pro-patent antics of the Federal Circuit. See the good discussion
at SCOTUSblog here: [http://www.scotusblog.com/2014/04/opinion-recap-justices-
wan...](http://www.scotusblog.com/2014/04/opinion-recap-justices-want-federal-
circuit-out-of-loop-on-fee-disputes-in-patent-cases/).

One hopes that this series of unanimous reversals will chasten the court, but
the past two decades has demonstrated that the federal circuit feels that
patent protections can never be strong enough or overly broad.

~~~
eurleif
Why do the two courts have such different opinions? It seems surprising to me,
especially since Supreme Court justices and Federal Circuit judges are both
appointed by the President.

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sandstrom
It should be noted that in most countries 'loser pays' is standard, rather
than an exception.

[http://en.wikipedia.org/wiki/Attorney's_fee#Who_pays](http://en.wikipedia.org/wiki/Attorney's_fee#Who_pays)

I'd argue this is a sound principle, which reduces the number of
abusive/frivolous cases taken to court.

~~~
rodgerd
If you're a small innovator facing off against IP theft by a large company, it
might not look like such good news. Now you have to worry about their lawyers
racking up huge bills and convincing the judge you should pay them.

~~~
Kliment
In that situation, you're already fucked beyond all hope, and you cannot win.
Typical strategy is to countersue you for infringement of something else.
Patents afford exactly zero benefits to a low-resource party in all cases
except acquisition (of patent or patent-holder) in which case they become
weapons wielded by the bad people again.

~~~
rayiner
> Patents afford exactly zero benefits to a low-resource party in all cases
> except acquisition

In many (most?) acquisitions, patents are incorporated in the valuation of
companies that are to be acquired, even when the purchaser is a giant entity
that could probably beat the target in a patent litigation by countersuing for
something else.

~~~
Kliment
Yes, precisely, at which point the low-resource entity has just given them an
extra weapon to terrorize the world with.

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ambler0
I'm confused about this part: "While Tuesday’s rulings appear to be good news
for patent reform advocates, they also raise the question of whether they
might undercut a major patent bill that is slated to be debated in the Senate
on Thursday."

Anyone with knowledge of this care to explain?

~~~
gtaylor
The best way to get the Senate to make patent reform a priority is a Samsung-
induced sales injunction on iPhones. The outrage would be immediate, and we'd
have this resolved in weeks instead of years or decades (if we ever do
"resolve" it).

Unfortunately, I don't think such an injunction is in the cards. It would hit
home enough in that it'd inconvenience them personally, which would spur
immediate action.

~~~
Robadob
Didn't a lesser version of this already happen and Obama decided to let Apple
have a free pass?

[http://www.cnbc.com/id/100937213](http://www.cnbc.com/id/100937213)

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chenster
The key is this sentence if you don't want to read the whole article:

..."For practical purposes, the two cases mean that lower courts will have
more latitude to use legal fee shifting as a way to punish and deter companies
that abuse the patent system."

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netcan
Fee-shifting seems to me like weird and unpredictable solution to a general
problem in law, it's so expensive. It's a big part of what makes legal
blackmail work, and hence the worst cases of patent trolling.

It's a big part of the reason so many criminal cases are settled out of court
with defendants and prosecutors haggling over which crime a defendant will
plead guilty to instead of a prosecutor charging a defendant with a crime who
defends his innocence in court.

So much of what's wrong with law is a function of the incredible cost.

How is it possible that the system is such that it requires millions to
hundreds of millions to defend a case.

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higherpurpose
I wonder if this is actually the _minor_ decision about patents that the
Supreme Court will take this year. It seems they are quite aggressive against
companies who abuse patents, which could mean they may not favor patents in
that other trial that's supposed to decide the fate of software patents, too.

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wil421
This is great but I still feel like the elephant is still in the room. The
elephant being the patents themselves.

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johnvschmitt
Great results.

If only we could somehow rephrase other critical issues into something the
SCOTUS could 9-0 agree with.

This one got 9-0 because it phrased it as:

1) Trolls lose

2) Whoever wins, wins bigger.

Some of the Supremes are known for liking the morality of "Might is Right".
(If God let this person attain power, by whatever means, then God must favor
this winner.)

Can we phrase Net Neutrality this way? Perhaps we need to phrase it as
"Winner/Billionaire's next startup needs to get online without paying fees?"
We're not getting as far with the "scrappy startup needs to get online without
fees" bit.

