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    :: Tuesday, December 24, 2013 ::
    Crastina erit vobis salus, dicit Dominus Deus exercitum. - From Nones for the Vigil (day before) Christmas

    :: David M. Wagner 4:53 PM [+] ::
    :: Wednesday, December 04, 2013 ::
    Goodlatte Patent Troll bill - dubitandum

    Friends who know my penchant for cross-ideological coalitions (wail til I bring you the news of the glorious Scalia-Kagan alliance on the Confrontation Clause!) have called my attention to H.R. 3309 the Innovation Protection Act, introduced by the reliably conservative Rep. Robert Goodlatte (R.-Va.) and supported by the Obama administration.

    The goal is to crack down on patent trolls. Though such persons and firms have come up with anodyne names for themselves ("non-practicing entities," "patent-assertion entities" - the latter is more candid), there remains, rightly, widespread opposition to what they do: buy up patents with no intention but to send out threat letters to companies that may (or then again may not) actually be using those patents. Patent trolls make billions in settlements that could otherwise go into job-creating, life-enhancing products. Patent nerds, of which I am not one, must correct me, but as I understand the matter, current legal rules allows patent trolls to state a claim without even specifying their patent or describing how the defendant is infringing. So it's a big but unproductive business.

    Mr. Goodlatte's bill was voted out of the House Judiciary Committee on Nov. 20 with a 33-5 majority and a standing ovation. (Note to non-ironists: I made the ovation up. It's a Brit-polit thing; picked it up from a Britcom called "No Job For a Lady.")

    But a funny thing happened on the way to the Floorum. Several conservative groups (e.g. AEI, through its tech-law blogger, Michael Rosen) have noticed that its reforms of legal procedure are somewhat radical. If my patent-nerd friends will tolerate an explanation by someone not of their brotherhood - but who does care about procedure - the problems are something like this.

    1. Currently, patent plaintiffs (or trolls, if you insist) need not be very specific at the pleadings stage; that comes later, after discovery. Under the Goodlatte bill, extraordinary specificity about the patent, and about the defendant's alleged infringement, is required at the pleadings stage - i.e. to "get into court," as layfolk not-inaccurately put it. This is said to be necessary to keep out the trolls. It'll do that all right - and it will also keep out a lot of small inventors who are indeed making good use of their patents, thank you very much, but who can't afford to defend them against deep-pockets infringers.

    2. "Loser pays." On Planet Tort Reform, there is a continent dedicated to the debate over whether American jurisdictions should adopt the "English rule," whereby the losing party bears court costs and, gulp, attorneys' fees for both sides. Nothing like it to filter out all but the most slam-dunk plaintiff cases, goes the argument in favor. But, goes the opposite argument, it also filters out (cue the "Slam the Courthouse Door" Blues) plaintiff cases that are meritorious yet not so lopsidedly so that they can easily be won on motion on the pleadings, or even at summary judgment (and of course discovery is costly). There should be room for a middle range of cases that actually have to be argued about (preferably in front of a jury). The English rule of course does not prohibit this, but makes getting there very high-risk.

    That debate goes on; the Goodlatte bill settles it in favor of the English rule (loser pays) in patent infringement cases, as the strongest possible deterrent to the trolls. But, again - in patent infringement as in other causes of action, not all plaintiffs are trolls or opportunists, though some are. Perhaps more importantly, the Goodlatte bill doesn't quite go all the way in its adoption of the English rule: it allows courts to vary the statute's presumption of cost allocation under a "substantially justified"/"special circumstances" test.

    What could be more reasonable than that? In litigation, almost anything. What this will do is guarantee post-verdict judicial review of cost-allocation in nearly every case (as AEI's Michael Rosen points out in the link supra); the emergence of a judicially-made law of "substantially justified" and "special circumstances" just for patent litigation cost allocation; and eventually, an entire section of the organized bar specializing in just this, with its own ABA section and its own annual conferences in exotic locations.

    Really, it's public-spirited of the American Association for Justice (formerly ATLA) to oppose the Goodlatte bill: it could lose out on patent litigation in the short run, but in the long run, it could make out like bandits on the cost-allocation follow-up litigation. Except - the losers would be innovative firms too small to afford to fight big infringers over cost allocation, and such firms need lawyers. On this one, I'd take those lawyers' advice.

    :: David M. Wagner 12:56 PM [+] ::

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