What Made The Trolls Trolls, Anyway?

I know what it was…they were mistreated as children.  Their Mommies wouldn’t let them eat ice cream for breakfast, and made them make their beds and bring their laundry down each morning.  When the Look of Death failed to frighten her into submission, they packed up their marbles and went in search of better living accommodations where they soon realized that they actually couldn’t do much better out on their own and maybe, just maybe, Mom knew what she was talking about but out of spite, settled under bridges and scared passersby into paying them a toll to cross over to the other side.

Actual Look of Death from my actual child.
Be afraid. Be very afraid.

 

But if we’re talking about patent trolls, the road to perdition is a little less clear.  There are lots of different reasons, the way I see it, that the problem has  gotten out of hand.  Here’s a list of where I think things went wrong.  These are just my opinions, of course.

Lack of Court Competition – It’s been posited to me on Twitter that perhaps it isn’t the Federal Circuit, as this article by Timothy B. Lee suggests, that has been a factor.  I disagree.  I think that whenever there’s a lack of competition for something, be it a consumer product or justice, that’s not good and it breeds advantage-taking.  From the article:

 The Federal Circuit Court of Appeals enjoys a monopoly over patent appeals, and it has used that power to shift patent law in a direction more favorable to patent holders, including trolls. Taking away the Federal Circuit’s monopoly over patent law would be a big step toward bringing balance back to the patent system.

Now, maybe they didn’t use their power to shift patent law to favor patent holders.  Patents themselves favor the holder!  But when there’s no check or balance built in, this is a risk you run. That’s an issue, and something that trolls are wont to take advantage of because that’s how trolls roll.

Further, there’s the idea of “pay to play”:

They don’t just hear patent lawyers’ arguments in their courtrooms, they also mingle with them at conferences and social events.

This is what Gene Quinn at IP Watchdog was getting at when he talked about the big corporations rubbing elbows with lawmakers, and about how they didn’t really care about patent trolls so much as they were in bed out playing golf with them.  Timothy Lee makes a similar argument, only with troll lawyers and judges.  If there’s only one circuit of appeals (Supreme Court notwithstanding because we all know very little makes it that far) and those judges are hobnobbing with the lawyers who appear before them, then how impartial are they, really?  This is why I think the Federal Circuit is a part of the problem.

The Death of the ‘Dust Docket’ – Whether it was a result of tort reform or people having had enough of the huge judgments against companies as a result of shady personal injury trial lawyers, the dockets for things like asbestos poisoning began to dry up.  So where’s a sneaky lawyer to go?  Hmmm…patents.

The barriers to entry to file a patent infringement suit, or better yet, simply send out a bagillion demand letters, are low.  All it takes is an attorney with some free time and pretty (or not) letterhead, and there you go.  Some patent attorneys are complicit in the problem, is my point, and I’ve written about that.

Bad Patents – Patent quality matters.  When patents that are overly broad and cover obvious claims are issued by the USPTO, it creates the perfect scenario for troll tactics.  Article One Partners chose an excellent tag line, and they’re going after the problem at the very lowest common denominator.  You have a host of patents related to business methods and software that should never have been issued.  But now that the genie is out of the bottle, how do you put it back in?

Very expensively.  You either file an IPR, fight full-on in court, seek declaratory judgement…whatever you do is going to cost you something.  And that’s just what the trolls are counting on when they seek to buy up these rogue patents and throw them around like daggers.

The issue of bad patents is partially a result of patent examiner practices, which you can read about here, here, and here.  It’s a related problem, and it helps feed the trolls.

Lack of Desire to Fight– Not all companies that are hit with a demand letter or an infringement suit are going to fight.  They have their reasons that they don’t want to be on the Patent Troll Fighter Heros Gallery, and that’s OK.  (It’s not, really, it’s very hurtful to me personally but I recognize that it’s not about me even though it totally should be.)  But every time someone rolls over, it makes the trolls stronger.  It reinforces their business model and they learn that if they just keep trolling, the money will keep rolling in.

Sometimes, victims of troll-ish tactics actually approach another troll for help.  This makes zero sense to me, but I’m not trying to save my company so I try hard not to put on my Judgy McJudgesteron pants.  Although it is very difficult.

It may not be so much a lack of desire to fight as it is a lack of funds to fight.  I do recognize that.  And then there are the companies that just don’t give a rat’s.  They have the money to fight but it’s not really a big deal to them.  If they can pay a license fee, even if it’s higher than it should be because trolls are greedy and awful, then so be it.  It keeps their in-house counsel focused on other issues more germane to the bottom line, so they cut the check and move on.  I hate it when that happens, because it sends exactly the wrong message to the trolls, which is that trolling works.

patent-troll-graphic-final

Image by Alan Schoenbaum.
Awesome.

 

Just like there’s not a single, reliable litmus test for who’s a troll and who’s not, there’s not just one reason that patent trolls troll.  I think these are the most obvious ones, and what started me off on this topic was the push back on Twitter regarding Timothy’s article about the Federal Circuit.

I wasn’t able to articulate my response in Twitter’s 140 characters because, and you may have noticed this, I tend towards verbosity.

No really, it’s true.

JustSayin_small_New

IPTT

{Image of Michael, now age 11 and still scowling like a madman, by me.  Troll drawing by Alan Schoenbaum of Rackspace.}

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One thought on “What Made The Trolls Trolls, Anyway?

  1. It’s not the “Lack of Court Competition” due to Judges and lawyers knowing each other, but rather something deeper in the tenets of the legal system as described below as stated by a Judge of the CAFC (I quote from pp. 9-10 in the following document):

    http://www.ipo.org/wp-content/uploads/2013/02/IPO-Annual-Meeting-Keynote-Speech-09-17-13.pdf

    “With respect to the Rule 11 proposals and the asserted desire for more sanctions, I believe what you really want is not more sanctions, but more fee shifting. Having been a district judge, I know that, while sometimes you must do it, it is difficult to sanction lawyers. Most of us that have been on the district bench were also practicing lawyers, and we know that people make mistakes, we know that lawyers can be pushed in certain directions by their clients, and we know that they do not usually intend to step over the line. And we know that a sanction can destroy a lawyer’s career.”

    It’s not just the “Death of the Dust Docket”, but an event that occurred around the same time as the significant ramp-up in these types of weak cases in patent litigation. Medical malpractice insurance rates skyrocketed in Texas in part due to too many weak cases resulting in settlements to avoid large jury awards. Doctors went on strike in 2002 and legislation was passed in 2003 to cap pain and suffering awards in medical malpractice cases to $250,000 (actual damage awards were not capped).

    http://www.kaiserhealthnews.org/Daily-Reports/2002/April/09/dr00010523.aspx

    As a result, medical malpractice filings dropped by 90%, but many Personal Injury (PI) attorneys found themselves without sufficient work and many moved to Intellectual Property (IP).

    http://mcsmith.blogs.com/eastern_district_of_texas/files/IP.pdf
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1878966

    Prior to the above was the decline in securities class action lawsuits after The Private Securities Litigation Reform Act of 1995 (PSLRA).

    It’s not just the “Lack of Desire to Fight”, but the fact that until recently Courts would not do fee shifting or sanctions for weak cases:

    http://sites.google.com/site/271patentblog/Home/DiagnosticSystemsvSymantec.pdf

    The above is a representative case from 2009 that showed the typical unwillingness of courts to impose sanctions for cases without merit where, after nearly a year, the plaintiff could not produce a Preliminary Infringement Chart that identified “how each accused product’s functionality contributes to infringement” and yet sanctions were denied though “it is a close call”.

    If a plaintiff with a weak case does come across a defendant willing to fight to the end to prove their case in court, risking a finding of patent invalidity, the plaintiff can simply drop the case as has occurred twice against Kapersky Labs.

    http://en.ria.ru/business/20120626/174253507.html
    http://eugene.kaspersky.com/2013/10/02/the-patent-trolls-can-be-defeated-just-never-give-up/

    In that first case, it cost Kapersky Labs 3-1/2 years of distraction and $2.5 million in legal fees being the only one of 35 companies who refused to settle while in the second case it cost them 2-1/2 years of distraction and an undisclosed amount in legal fees (probably at least $1.5 million) being the only one of 55 companies who refused to settle and in neither case were there any fee shifting nor sanctions. This is why many companies settle — it’s simply not worth fighting weak cases when it costs so much compared to the price of settlement. Such settlements are almost always private with NDAs preventing anyone (other than the parties to the case) seeing the terms. By dropping the case, Lodsys is able to continue to sue other companies as its patent has not been seen by a Court to determine validity.

    But that is not the end of the story. On 10/18/13, Kaspersky Labs filed a lawsuit for declaratory judgment against Device Security who had sent them a demand letter dated 9/18/13. Also on 10/18/13, Kaspersky Labs was sued by Uniloc. So now they have two active lawsuits from patent assertion entities. Other companies who have a policy of always fighting back weak cases, such as Twitter and Newegg, have not stemmed the tide of patent assertion entity lawsuits against them (as shown by a Pacer search and correlation of cases against known patent assertion entities).

    All of this results in what pretty much everyone acknowledges. A 2008 survey of trial lawyers was summarized by the task force Chairman who stated that “the costs and burdens of discovery are driving litigation away from the court system and forcing settlements based on the costs, as opposed to the merits.”

    http://www.abajournal.com/files/Survey_Press_Release_Final.pdf

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