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Industry Outlook: Legal
Another tactic to fight a patent troll asserting an unfair patent against you would be to file a declaratory judgment action before they file a lawsuit against your business. The vast majority of patent litigation occurs in the Eastern District of Texas because of specific rules that make it friendlier to the plaintiff in patent trials. By filing in another jurisdiction, you can beat the patent troll to the punch and gain an advantage if they push the case to trial.
In the end, fighting has its benefits. While you may spend more money, it could eliminate the patent troll, possibly invalidate the patent, and gain you the respect of inventors and innovators. You could also be awarded your legal fees in some circumstances. For companies that cannot afford to fight, teaming up with others could make it more affordable.
“There are some associations, like Utah Bankers Association, that have banded together,” says Brent P. Lorimer, president at Workman Nydegger, a Salt Lake City patent law firm. “If you have a troll that is causing a lot of trouble, individual, small branches and banks cannot afford it, but together they can get enough money to fight these people.”
The large growth in patent trolls stems from exponential growth in technology over the last decade.
“Many patents issued over the past 10 to 20 years are likely invalid and some are so broad that almost all businesses today could be deemed to be infringing, or accused of infringing,” says Burton. “That is in part a result of the significant growth during that same time period of software, computer and internet technology where processes that have been done for years are now automated.”
As new concepts were being tested and unrolled by large numbers of companies, like online shopping, Wi-Fi and digital faxes, patent trolls filed for patents on concepts like online shopping carts. While these platforms were used across the industry, patent assertion entities filed for patents that were used as leverage to sue companies for millions of dollars.
While some of these technological inventions might seem original and innovative to industry outsiders, to insiders they were neither. In recent years, many of these patents have been overturned by the U.S. Patent Office.
There is currently legislation being reviewed by Congress and the Senate that could mean good news for those being threatened by patent trolls. The Invention Act is a bipartisan bill that is intended to deter abusive patent legislation while still protecting the intellectual property of true inventors.
However, many are concerned this could cripple innovation by stripping away the rights of patent holders.
“I think it’s good that Congress is looking at some options, but my concern is that the pendulum usually swings too far in the other direction,” says Bateman. “Barriers are added to stop the trolls, but the barriers also stop the small inventor who is just trying to keep someone from ripping off his invention.”
For companies targeted for infringing patents they feel should never have been issued in the first place, filing an injunction with the U.S. Patent Office could cause the patent to be determined invalid. In fact, new legislation that has recently passed has made it much easier to file an injunction to have a patent reviewed by the U.S. Patent Office.
“As part of the America Invents Act, there is a new proceeding available at the U.S. Patent Office that is specifically intended to deal with patents of questionable validity,” says Lorimer. “The first one is an inter partes review, and in those proceedings you file a petition seeking to have these claims invalidated. Right now, the grant rate for petitions is 85 percent and the kill rate for patent claims is between 90 and 95 percent.”
While these rates are expected to level off over time, it provides a view of how many questionable patents are being used by patent assertion entities to troll other businesses.
Plan for the Worst
As innovative companies begin to enter a new market, release their first products or patent new technologies, they can take action to minimize risk of litigation.
“There are things people can do on the front end to protect themselves,” says Lorimer. “There are companies with huge portfolios of patents and sometimes they become commoditized. If companies have technology they feel is really important to their company, the flagship, they should spend a little more time and a little more money to ensure the examination process for that patent application is more thorough.”
According to the U.S. Patent Office, in the United States, for an invention to be patented it must be statutory (distinguishable from abstract ideas or laws of nature, like energy, gravity and music), new, useful and nonobvious to members of the industry. When an inventor files a claim for a patent, it is evaluated based on the information from within the application. If the information is lacking, the patent could be rejected or invalidated if it is ever challenged in court or by the U.S. Patent Office.