Trial Tactics, Boundaries, and Penalties

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6 Responses

  1. IP Litigator says:

    IP litigators — esp. in patent litigation — often do this. Just about every major law firm that has a large patent litigation practice does this. Unless judges are going to start sanctioning everybody, I don’t see your point…

  2. Deven says:

    The point is that one may get sanctioned for such tactics. In addition, if this trend continues, attorneys and judges may have to argue about these questions.

  3. IP Litigator says:

    Well, I’m not sure what there is to argue about. The only way to change this is to change the business model of the clients. Companies that make their moolah breaking other people’s patents do this for a living.

  4. Deven says:

    You claim to be a litigator. The future arguments are easy to see. Do fees get cut off at the point where the judge arguably ought to have stopped the case but did not? I would think if you or your firm were hit with the sanction you would argue or hire representation to argue that the judge should have stopped the case (as was done here) and no fees should be awarded or at least the fees must be reduced.

    A possible more general argument would be that lawyers should not engage in such behavior. As I noted and I think you agree that is unlikely given the clients. But I include the attorneys and the money at stake. But putting it all on the clients ignores attorneys’ role in this game. The general statement about patent breaking is nice but fails to appreciate the court ruling. Sure one can be aggressive but explicit instructions being ignored or frivolous lawsuits being brought can have repurrcussions. They are small for now. Maybe they will grow larger.

    So another discussion for someone to have is what if anything in the patent system could be changed to alter the behavior. In a paper where my co-author and I look at genericism we argue that of course there are real interests in trademarks but part of the problem is system that encourages or supports frivolous law suits because of bad law. I do not know patent law’s details such that I can say whether such issues exist.

  5. IP Litigator says:

    Deven,

    As you know, the future arguments in this case are one thing. My point is that future clients will simply incorporate this risk into their business models and law firms will up their rates to accomodate the possible sanction.

    I read the ruling. But you ignore that firms representing companies that break patents for a living, e.g., generic pharmaceutical manuacturers, bring frivolous lawsuits and find creative ways around restrictive claim construction on a daily basis.

    The central premise of intellectual property doctrine is that intellectual property laws protect the profit-motive of innovators, by granting them a limited period during which they may exclusively recoup their investment costs. (Even the Founders knew you had to spend money to make money.) Given the power of a patent — the ability to penalize others for profiting from your innovation, there are two main variants of abuse: patent-trolling and patent-breaking. Patent-trolling occurs when a company stifles innovation by having the Patent and Trademark Office (“PTO”) approve a vaguely worded patent that can be enforced against a variety of unforeseen technological advancements at a later date. Patent-breaking occurs when a company stifles innovation by flooding the PTO with an array of applications based on substantially similar facts, each with a different scientific description or legal theory to support the claim that a certain patent should not have been granted. To explain further, let’s say Brand Name invents and patents Cancer Cure. Generic Manufacturer will take the same chemical compound, trademarked under different names, and use different scientific experts and legal theories to file several applications to break the patent for Cancer Cure. Multiple applications are filed to increase the chances of success, like buying multiple raffle tickets. Once the Cancer Cure patent is broken, Generic Manufacturer enters into a licensing agreement, cutting into Brand Name’s monopoly and misappropriating their rightful profits. This deters investment in research and development for Cancer Cures. Worse, each application becomes a different generic form of Cancer Cure, which enables Generic Manufacturer to price discriminate (one price for rich seniors; another for inner-city hospitals). Add a bit more sugar to this pill, and little more salt to another; one is sold as Cancecurinol; the other is sold as Cancerfixin. What the Unethical Law Firm will do is facilitate the entire patent-breaking process, racking up fees in exchange for stifling innovation for the entire nation.

    I agree that the sanction is a good thing. But the sanction will not spur on the kind of internal deliberation at law firms and between law firms and clients you want to see; it will simply result in increased lawyers’ fees. The real problem is that there are no criminal sanctions for this behavior, no criminal sanctions for lying to the PTO, no criminal sanctions for what amounts to theft and is conceptualized as theft by those who do it, no systematic response to the parasitic law firms that perform this work. This one case is not enough.

    Perhaps legislation that gave judges more leeway to impose such sanctions or punished firms with piratical business models that stifle innovation would work. But I see no such legislation on the horizon.

    Part of that may be due to the fact that as demonized as the plaintiff’s bar is, the defense bar is not particularly villainous in the popular imagination unless the subject matter is tobacco or some notorious criminal mastermind. Any thoughts?

  6. Deven says:

    And now the problem is clear. You have attributed to me a goal that I do not claim. I am well aware of the strategic patent use. The post never says it does not or will not exist. Of course one can run to the standard explanations of patents but that does not address the point in the post. Again: aggressive business tactics and lawyerring are the norm. BUT when a court explicitly says this is the order, one may want to think hard about the repercussions. I think you agree with that. Will any of these sanctions change behavior? Not likely. The fact that some judges are hitting firms for extreme behavior is interesting in part because of the practice you note. As I stated, the money incentive will likely have clients and firms rationalize the behaviors (though I do nto think having the whole case thrown out and picking up sanctions is a math firms and clients want to do up front, I do think you are correct such analysis will occur).

    On the innovation angle, the discussion of trooling and breaking although interesting conflates several behaviors so I cannot respond to it directly. Still I think the description seems to think only those who wish to take advantage of another’s patents engage in such behavior. Yet many companies use the same behavior to try and extend the monopoly by making insignificant changes to keep the control and kill competition.

    That being said, thanks for the extended discussion. My guess is you are at a firm and do indeed litigate patents. It would be great to know where you are or how to contact you as I think students should hear from practioners and I may want to get into these questions more offline. If you are up for it, please send me an email. If not, well thanks anyway.