Two researchers at the famed London School of Economics & Political Science, Christian Helmers and Luke McDonagh, have released a thought-provoking study of “Patent Assertion Entity” litigation in the UK. From the summary here are the two key findings:
“Firstly, the majority of patent cases which reach a judgment in the UK result in a ruling invalidating the patent. Secondly, the costs regime in the legal system of England and Wales requires that the losing party pay the costs of the other side. In other words, even if its own costs are kept low, a PAE which loses a case may have to spend a substantial amount of money in order to cover the costs of the other side.”
So, will this study increase the snowball rolling downhill to introduce a “loser pays” policy for NPE’s in the US?
This study has other intriguing elements to it as well:
“We also offer interesting insights to the wider debate concerning whether it is likely that in the near future there will be a similar increase in PAE litigation in Europe as has already occurred in the US over the last decade. This article also discusses potential implications for the design of the proposed European Unified Patent Court.”
To read the entire study (and you should) please go to this link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2154958
The Website motherboard.vice.com has a post by Michael Byrne about NPE Sorensen Research and Devevlopment Trust. Byrne is not a fan of the Trust or Mr. Sorensen (or NPE’s):
“The Sorensen Research and Development Trust is what’s known as a non-practicing entity. It doesn’t make anything or do particularly much of anything outside of courtrooms (at least anything that I can find). Instead, Sorensen sits on his patent(s) and sues people. Patent trolling is a boom industry and Sorensen is at the top of it. According to a paper just out from Lex Machina (the descendant of Stanford’s Intellectual Property Litigation Clearinghouse) and requested by the United States’ GAO, patent trolling has risen to be 40 percent of all patent litigation, nearly doubling in a five year period. And of that 40 percent, Sorensen has been the most furious litigator (of a 500 case sample), beating even Monsanto.”
And, he further blasts the Trust with this missile: “Sorensen’s business model likely revolves around licensing shakedowns: a threat is made to an operating company and, rather than undertake the risk and expense of defending against Sorensen, said company will pay off the patent-holder.”
“Licensing shakedowns”? That is a new but descriptive term.
FOr much more information about the Trust, its patents, and its litigation, please go to this link: http://motherboard.vice.com/2012/10/17/patent-trolling-is-draining-the-blood-from-the-idea-economy-and-it-s-just-getting-worse–2
The Website insidermonkey.com has an interesting post by Marshall Hargrave about NPE Vringo and its patent infringement action against Google, which has resulted in a trial that began this week. Included in the post is a discussion about whether Vringo is a reasonable investment based on its patent portfolio. Hargrave’s conclusion:
“Vringo has a lot riding on this trail (SP), with the company operating with a negative equity of 1.4 million as of 2Q. There’s no doubt that if Vringo wins the lawsuit they will see quite the boost in stock price, but the question then becomes what does Vringo do with its winnings, go sue another company over patents? The fundamental with this way of operating is that patent suits tend to be very unpredictable. We believe that the potential upside does not make up for the potential downside that the stock will face if they lose the lawsuit to Google Inc.”
Please read the post in its entirety to learn more about Vringo, its patent portfolio, and the recent acquisition of Nokia patents which could lead to interesting downstream actions: http://www.insidermonkey.com/blog/should-google-inc-goog-be-worried-about-this-tiny-tech-company-24350/
Distinguished Judge Richard Posner has written a short article on Slate.com regarding patents and Patent Trolls, and it is clear that he is not happy with the current patent system and Patent Troll litigation.
He offers 3 key remedies:
1. “….make the granting of a patent contingent on producing the product or process that incorporated the invention, within a specified time. This would reduce the troll problem, by clearing out patents that are obtained to extort license fees rather than to produce products or processes.”
2. ” Vary the length of patent protection…from industry (or industrial sector) to industry, ranging from no protection at all to 20 years of protection, or even more, for pharmaceutical drugs.”
3. Seek and train “…volunteers among federal district judges to take on more than their share of the patent cases filed in their districts.”
But Posner admits that these remedies are not a complete answer to the Patent Troll problem.
What do you think?
Here is a link to the complete article which is well worth a read: http://www.slate.com/articles/news_and_politics/view_from_chicago/2012/10/patent_protection_how_to_fix_it.html
Wilson Sonsini has issued a Client Alert reporting a most interesting decision from District of Nevada decision in Email Link Corp. v. Treasure Island, LLC et. al holding “…that a patent subject to a terminal disclaimer was unenforceable against the alleged infringers because it was not commonly owned with the related prior patent, even though both patents were owned by subsidiaries that were wholly owned by the same parent company.”
The Alert concludes:
“This holding clarifies that two subsidiaries wholly owned by the same parent do not count as “commonly owned” for terminal disclaimer purposes. The decision underscores the importance of looking to the assignment history of the asserted patents and the relationships among the assignees in a patent family that are subject to terminal disclaimers when preparing a patent litigation defense.”
Note that the entities involved are Acacia and two of its subsidiaries. With the proliferation of NPE’s and their subsidiaries, and the confusing transfer of ownership rights among them, this decision could raise a new defense against such mass patent aggregators.
Expect this decision to be appealed to the Supremes.
Here is a link to the WSGR Client Alert with more information and background: http://www.wsgr.com/wsgr/Display.aspx?SectionName=publications/PDFSearch/wsgralert-terminal-disclaimers.htm
BTW, who sues a casino? Wouldn’t one worry that a bloody horse’s head is going to end up in your bed? Just saying…………..