In part 1 of the interview we discussed the definition of a patent troll, a pro bono program to help those facing patent troll lawsuits and more. We left off discussing how defendants really need to make patent trolls spend money rather than cave. We pick up our conversation discussing woefully inadequate patent infringement complaints.
QUINN: I agree and I think that Judge Rader is trying to do something to address this problem. I asked him at the AUTM Conference, you know, we’ve got this problem with these complaints that are just — they’re terrible. I mean, maybe they satisfy the Federal rules of procedure.
QUINN: They don’t seem to satisfy the Supreme Court’s last two swings at how much detail you have to have in the complaint. I said, “Why don’t you require more in the complaints?” And his response was, well, he was a bit uncomfortable with that but he was very comfortable with requiring claim charts and a whole lot of other details to be provided maybe within three to six months after the filing of these cases, which I think would be a big step in the right direction. And but it’s frustrating to me that the Federal Circuit can’t mandate this. I don’t think that they feel like they can mandate this on the district courts because it deals with the administration of their courtroom and how the cases move forward, so where they do have a lot more flexibility is with those judges who have bought into the patent litigation pilot program. Perhaps with the model orders we get some traction there.
LAMKIN: I think you’re dead on, Gene. In that vein, here’s, it seems to me, an interesting questionIn most patent litigations, the parties are required to exchange mandatory disclosures, like claim construction positions and infringement contentions. Why aren’t these disclosures made public? Why aren’t they filed with the court and available on PACER? ? Right now mandatory disclosures are just exchanged party to party, attorney to attorney.
LAMKIN: Instead of doing that, let’s make them public. This would provide public notice of these positions and bind the Trolls to their positions.
QUINN: I agree and I think that you look at the Patent Office and their rules now with the expanded Board of Appeals you can file these things now indicating that a different position was taken in a court proceeding somewhere. They want to know about that but how do you know about it if it’s not public. I — I think there’s a lot of the real nefarious actors have been flying under this radar and getting away with just murder and they can do it for a number of reasons. One, like what you say there is no coordinated efforts on our side on the — I say our side, I’ll say the side of the angels here, right? Because — because there’s some real evil out there, right?
QUINN: These real nefarious actors, they file these cases and then before it gets anywhere near the judge and it becomes clear that it is extortion they will settle for $25,000 or $50,000 and the CEO or CFO’s who has just been pounding on the desk saying “we will not settle under any circumstances” can’t say so who do I make the check out to fast enough, you know.
QUINN: And it’s frustrating. They’re just manipulating every last little part of the process and it seems to me that the district court judges are the ones who have the inherent power to fix this.
LAMKIN: You know, every time you speak my brain blows up, but let me follow with three thoughts. The first one is don’t settle, don’t settle, don’t settle, don’t settle. We need to shout that from the rooftops — don’t feed the Trolls.
QUINN: I agree! Amen!
LAMKIN: The primary advantage aTroll has is costs asymmetries. We turn that on its head, they die.
LAMKIN: They’re taking advantage of the financial and information asymmetries and we need to flip the script on them.
QUINN: Right. I think that’s a brilliant idea because I do think once the district court judge clues in that this is just really nothing more than extortion then the tide turns because I think you’re starting to see some district courts in the Federal Circuit is certainly comfortable with it are issuing sanctions in that space and if – but if the companies, the defendants are caving too quickly for it to be realized that it is an extortion ploy then there’s no hope. I mean, I don’t know how you can continue to solve these cases. I just don’t think it’s a smart business decision, and I’ve said for years that until such time as the industry finds a way to make these cases expensive for Trolls —
QUINN: — they keep coming because let the truth be known the best business to be in right now is the patent troll business, you have nothing to lose and everything to gain. People are paying, I mean, this is like when I first started my career back so many years ago more than I can believe it. I was doing general civil litigation. We did everything, and one part of what people in our firm were doing was basic car accidents, slips and falls and all that kind of stuff. And I can tell you for sure that in the 90’s, in the early 90’s, the insurance companies figured out the problem they had created because all throughout the 80’s if you were in any kind of car accident and sued they settled to get rid of it because they didn’t want to go into juries. They didn’t want to pay big bucks and they didn’t want to pay defense attorneys to litigate, so then what happened was every lawyer got the message no matter how crappy the case was you could have somebody that was drunk completely run into somebody else and sue and get a settlement. And the insurance companies just decided, well, this is ridiculous we can’t do this, so they uniformly across the board they refused to settle. There may have even been some collusion. Whatever the case may be, every insurance company decided they were not going to settle these cases period the end. And that really had a dramatic impact on these kind of automobile cases and I — so there were an awful lot of actually good cases where people were really injured and innocent and did nothing wrong, couldn’t get any recovery, and that’s not good. But the insurance companies found a solution to their problem which was not to cave, and I for the life of me don’t understand why the technology companies don’t get that because really it would only take a couple of lessons and high profile lessons, and frankly, I think, and I’d like to hear your thoughts on this. I’m starting to hear stories where these patent trolls are working together and if they’re working together and they’re engaging in this kind of extortion like activity as the Federal Circuit calls it then why doesn’t somebody go after them for RICO and really try and make an example of these people?
LAMKIN: There are some really, really good thoughts there. The first thing you were talking about is why they settle. I have great compassion for founders. Founders are running their dreams on financial fumes, they don’t have money to hire an attorney to even file an answer, which alone is going to cost them $15,000, forget the millions the lawsuit is going cost them. So I don’t blame them for settling.Frankly, in part, Iblame the IP Litigation Defense Bar –of which I am a member–because we hold the keys to the kingdom. We know how this is done and we, in my opinion, are not doing enough to solve the problem.. We have benefited, we have gotten fat from the spoils of this and it is time we gave back, such as with Troll Bono. And, when I say Troll Bono, I’m not talking about working for free;I’m talking about not working for so much. I’m talking about restructuring the way we fight these litigations so that a founder of a startup can obtain guidance and, where necessary, an affordable defense.
QUINN: Right. I know, I agree. And, you know, I hope you have some luck with it. I’ve been writing about this issue for quite a while and at times I have offered people what were extremely low hourly rates to try and help them and they just cave. They want to cave, I mean, they don’t want to be involved or the one thing I hear a lot from small companies is that, well, you know, big company X is being sued in this case as well, so I think I’ll just jump on and ride along for the ride.
LAMKIN: I did want to touch on this notion of the patent system because I invite and I encourage the media to get smart and I invite and I encourage IP professionals to help get the media smart, right, so we can start to work together a little bit. So, and I think, this is just a rough draft, and I was just thinking about this last night when we were going to talk but at a very high level I think you can break up the patent system into acquisition, enforcement and public notice, right, and under acquisition you would have the R – you know, the whole R&D that Trolls obviously don’t do except for maybe an international venture, I think they do some R&D. You have the whole R&D, then you finally get the patent and the product near where you want to file a patent, you prosecute that patent, you have — then pre-impose issuant under AIA and without AIA and even under that, right, under acquisition you can start the — find some problems like patent quality, right, and all the different ways that we might work on patent quality. And then if you move on to enforcement at a high level, right, you’ve got cease and desist letters, then you’ve got court, you got the ITC, you’ve got the USCPO and under each of these headings sub category you can identify problems and solutions. And then under public notice you’ve got ownership, the metes and bounds of the patent, and then the recordation at the USCPO, so I think the reason I just raised these categories is I think it would be useful if you and I did a series of education pieces on the patent system that actually broke each of these things down and highlighted at least to us and all the people willing to participate in the dialogue and comment section, problems and solutions under sub category. ‘Cause I think if we can help get the media and founders and VC’s a little smarter we can start to climb on top of some of this this.
QUINN: I think you’re right,we need to get better, higher quality information out there so that the people who really want to be informed can be. Currently,most of what is written in the popular press about these issues is simply flat out wrong at best and often dangerously misleading. There are certainly exceptions to that rule, EFF being one that immediately comes to mind, but most writing I see, especially on the tech blogs, is creating more confusion and thus delaying or even preventing real solutions from reaching decision makers and influencers.
LAMKIN: Yeah, yeah, I couldn’t agree more. I mean, when I, you know, when first started trying to articulate the Troll Bono project and you actually have to think about problems like, okay, because we know from studying there’s really good papers out right now, Robin Feldman does great work on this, Aileen Chen. We know that Trolls for example have a methodology and they send out cease and desist letters in waves, right, and they collect all they can until they have to start filing suit. By the way the defendants we should be praising, the defendants in any Troll lawsuit means they told the Troll to take a jump so they’re already a hero, right, but we know that these Trolls work in waves with these cease and desist letters and most people who get these cease and desist letters figure they’ll just keep quiet. The problem with that is they’re giving up key advantages like forum choice so they can all talk with each other without talk — speaking publically you might be able to figure out how to pull funds and go have one company step forward or find the best DJ Jurisdiction and have that company step forward and bate the Troll into giving him another correspondence to trigger DJ Jurisdiction, right? That’s one way where you might really start to push back on these 8 Symmetries, but there’s no way, there’s no forum, there’s no secret forum for the recipients of these letters to even speak with each other.
LAMKIN: I mean that would solve a massive problem.
QUINN: I think that the fact that something like that doesn’t exist is –is—is frustrating.
LAMKIN: That’s why I have to give entrepreneurs a little bit of a dig, too, ‘cause part of this is their fault,. Many founders are yelling and blaming and begging Congress to come save them, but think about it, what do lawyers, and founders and entrepreneurs actually do all day? They solve problems. There are dozens of inefficiencies, dozens of problems to be solved with market solutions, new innovations, the very thing entrepreneurs do.
LAMKIN: It takes a village to kill a troll, right. We’ve all got to do our part.
QUINN: I really like that, it takes a village to kill a troll. I think that’s probably going to have to be the title of our conversation.
LAMKIN: Yeah. Well, and it’s true.
QUINN: I’m not sure if we’ve come to any kind of an agreement of what a patent troll is — I mean, I agree with you it’s like obscenity you know it when you see it and I would just hope, and I know that folks like you and folks like Judge Rader — the heart is in the right place and you try and focus on this definition of patent troll because you’re trying to do it in a way that takes into account the contribution that’s being made, and I think that’s an enormous step in the right direction. I would just be more comfortable having it take even another half step or maybe a full step backwards and be less inclusive because I think we can be a lot less inclusive and get rid of 90 to 95% of the folks that are really the atrociously bad actors and then let’s just see where we’re standing at the end of the day.
LAMKIN: Yeah. I agree with that, Gene,, and I think a more narrow definition is critical. I also thinkbefore we can get there we need more information about Trolls and the patents they assert, like ownership and real party in interest information for each of these lawsuits?
QUINN: Yes. And the Patent Office is working on that hopefully they’ll — they’ll get back and I think that is going to be critical. And I think that’s going to let people see that there’s an awful lot of under the table dealing in and among these patent trolls and there may even be some dealing with some people you don’t even expect are involved. So we’ll see what winds up happening. I mean, you know, for years the story had been with Intellectual Ventures that they were selling things off to patent trolls and so forth and would then bring litigations and stuff, and it’s so hard to follow the ownership path to a patent because you don’t have to record. There’s so many inefficiencies in this system that are being exploited and if you plugged up any one of them you would at least make it more difficult. If we ever looked at it with a concerted eye towards solving the problem I don’t think it would be all that difficult but, again, you would need to have some decision makers with some guts in the room.
LAMKIN: Well, we need a village, right?
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3 comments so far.
Paul F. MorganJune 25, 2013 10:08 pm
If widely asserted patent claims are really invalid in view of prior patents or publications, why not share the costs of an IPR for a small fraction of litigation costs? Or, in egregious cases, even request the PTO Director to exercise his or her statutory authority to request a reexamination? [Why don’t more judges ask defendants such questions?]
Gene QuinnJune 24, 2013 01:29 pm
It is clearly the wrong decision to settle with one who is extorting you using a dubious patent where there is no infringement. Until Silicon Valley learns this obvious truth they will continue to be sued in record numbers and pay on ridiculously bad patents. It is their choice, but it is hardly appropriate for them to complain when they are unwilling to expose the problem.
BemusedJune 23, 2013 11:03 am
I believe the discussion on not settling (caving in) to patent trolls is more nuanced that “just say no”. Arguably, when faced with a patent troll asserting a patent of dubious validity or where settlements are clearly in the nuisance value range, that is the correct approach.
However, what I’ve seen starting to happen is that defendants (largely based upon the advice of defense counsel) are starting to band together and resist any settlement – regardless of the quality of the patent being asserted against them. I’m starting to seen this phenomena start to occur more and more frequently where I’m in settlement discussions with a defendant and that defendant’s general counsel tells me that other members of their joint defense group (which is often being represented by one or two defense firms that are giving group discounts to their clients so they can sign up multiple defendants) are pressuring them NOT to settle and to fight. In that scenario (where the patents being asserted are high quality patents), no one wins except the defense counsels. In other words, let’s be honest and lay the blame on one of the other “bad actors” in this drama – defense counsels that have a vested interest in protracting the litigating in order to continue to bill.
Don’t misunderstand me: I largely agree with many of the proposals being touted by the White House and Congress to get rid of these “bottom feeders” (the patent trolls that are looking for nuisance settlements) but I think we have to keep in mind that the defense bar has a vested interest in propounding the “don’t settle at any cost” mindset (regardless of the quality of the asserted patent) that is currently starting to take hold with many defendants.