Chief Fed. Circuit Judge Supports Fee-Shifting for Patent Trolls

By William Peacock, Esq. on June 06, 2013 | Last updated on March 21, 2019

Terrible, terrible trolls. Two days ago, it was the President’s turn to speak out against the “non-practicing entities” or “patent-assertion entities,” terms that are kind descriptors for the litigants who purchase patents for nearly nothing, then file frivolous lawsuits en masse, hoping for quick settlements.

We were in favor of most of the proposed reforms. Forcing litigants to disclose the true “party in interest” negates the trolls’ tactic of forming dozens of value-less shell companies to hide behind when filing meritless suits. Protecting end-users from patent violation threats when they use an off-the-shelf product as intended is another great idea.

And of course, who would oppose the idea of hiring more judges?

Today, Federal Circuit Chief Judge Randall Rader penned an op-ed in The New York Times in support of one of the suggested reforms, which actually needs no reform at all: fee-shifting.

Judges are already authorized to award fees to the prevailing party under Section 285 of the Patent Act, as well as Rule 11 of the Federal Rules of Civil Procedure. However, Judge Rader points out one remarkable statistic: these provisions were only used in 20 out of nearly 3,000 patent cases filed in 2011.

Does that mean that only 20 of the suits were frivolous, abusive, wastes of court resources?

Probably not. Judge Rader also points out that in 2012, the majority of all patent suits were filed by patent trolls. Even if some of the trolls' claims were legitimate, the percentage of abusive claims is almost certainly higher than the less-than-one percent of cases in which the costs of litigation were shifted to the losing party.

Yesterday, we half-heartedly suggested a shift to "Full English," meaning the loser pays the tab in every patent case. Obviously, that has its own problems. A reader wrote in, concerned over what effect the President's reforms might have on individual inventors asserting their rights. For most of the reforms, so long as the litigation is not vexatious or frivolous, the reforms should have no effect whatsoever. However, if a full English system were adopted, individual litigants would, of course, have reason to be concerned.

The present system, as is, is actually much more preferable. Judges can evaluate the circumstances of the case and award fees when meritless cases and patents are brought to bear against innocent parties. While judges have been reluctant to use this power, hopefully the buzz over patent reform and the Chief Judge of the Federal Circuit's nudge (for those unfamiliar, nearly all patent appeals run through the Federal Circuit) will be sufficient to encourage them to begin doing so.

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