09.17.11

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Impact of America Invents Act on Patent Trolls

Posted in Law, Patents, Red Hat at 5:18 am by Dr. Roy Schestowitz

The Capitol

Summary: A Red Hat perspective on the recently-passed H.R. 1249

RED HAT was recently sued by MOSAID, a patent troll that Microsoft helped pass some patents to, by its very own admission. MOSAID is similar to Acacia, which also sued Red Hat.

According to Erick Robinson, whom we mentioned in March and in April, the lousy patent 'reform' we saw recently may in fact be helpful against patent trolls. To quote Red Hat’s OpenSource.com:

So it has finally happened: a patent reform bill has actually become law. Last Thursday, the U.S. Senate voted 89-9 to send H.R. 1249 to the White House, where it was signed into law today. While I have pointed out in the past that this bill misses out on several aspects of reform that previous bills attempted, it does include some useful aspects.

First, though, let’s discuss what the new law will NOT include. It will not include any provision tying damages in patent litigation to the specific contribution of the patent over prior technology nor will it provide any specific damages limitation. It will also not require bifurcated trials to separate liability and damages issues. It will not allow interlocutory (real-time, during the underlying case rather than post-verdict) appeal of claim constructions by courts. It will also not specifically include a provision restricting venue in patent litigation (but, as shown below, the joinder provision will have an effect on venue for some cases). Each of these provisions were included in prior versions of the legislation and would have helped fix the system.

[...]

The joinder provision included in the America Invents Act, as passed, which Red Hat actively supported, specifically states that there must be another basis for joinder beyond an allegation that the defendants have all infringed a patent. Thus, the new law should prevent the “file around the country, and add a few Texas mom and pops” tactic. In fact, the natural result of this new law should be that patent plaintiffs, especially non-practicing entities (NPEs), will generally have to file as many lawsuits as there are defendants. This will mean that each case will likely be filed either where each defendant is organized (often Delaware or Nevada) or where it has its principal place of business.

At least as important as this effective restriction on venue is the effect on NPEs of having to litigate one case per defendant. First, NPEs have been targeting multiple defendants in a single lawsuit to reduce their costs. More important, though, NPEs have been leveraging such lawsuits against defendants by forcing competitors and other unfriendly parties to either cooperate by sharing confidential documents, expenses, attorneys, and strategy or to spend even more money and resources in defending the case. The new “one defendant-one lawsuit” rule will require NPEs to try cases as many times as there are defendants. Not only is this prohibitively expensive, but it puts the validity of the patent(s) in suit in peril every time the case is tried.

Ultimately, however, patent trolls should not exist; neither should software patents.

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