This week, Engine filed a brief urging the Supreme Court to allow businesses that fight back against patent trolls and win to hold their abusers accountable. A misinterpretation of Section 285 of the Patent Act has resulted in an inappropriately high bar for attorney fee shifting, so we joined together with EFF, the App Developers Alliance, and Public Knowledge to take a stand.
The Innovation Act for patent reform passed the House of Representatives last week, but there is still a long way to go to fix all the problems with the current patent system. In addition to new laws in front of Congress, the courts have a role to play in enforcing existing law in accordance with original intent. The latter is the case with Octane vs. Icon.
Fee shifting, or "loser pays," is already in the Patent Act but the current wording -- only in “exceptional cases” can the court award attorney fees to the prevailing party -- left the door open for the Federal Circuit to define exceptional so narrowly that fees are only granted in a fraction of cases.
As we wrote in our brief:
The consequence of the Federal Circuit's withering of Section 285 protection is the creation of an industry of patent abusers, decimating the very small businesses and startups that drive American innovation. The intimidating cost of patent litigation is often sufficient to defeat those small parties before they even enter the courthouse door. These costs are not just legal fees: they are also the stress associated with litigation; employee time lost in deposition, discovery, and trial; and the stifling of productive output during the pendency of litigation. Thus, facing the threat of a lawsuit, a potential defendant finds itself with virtually no choice but to settle, even if it believes it has a meritorious noninfringement or invalidity case. And the proverbial analogy continues full-circle: feeding a troll just emboldens that troll to act again, while blighting the innovators upon whom the trolls feed.
Properly applied, fee shifting can be another important tool in the fight to disarm patent trolls, and enable the businesses that suffer at their hands to fight back. As we know all too well, these non-practicing entities use the incredible -- and growing -- cost of patent litigation to extort quick settlements from small and growing companies that cannot afford to fight. And their success in using this model only prolongs the vicious circle, costing US businesses billions of dollars per year.
Now, if these businesses thought they could fight and win more than just a pyrrhic victory -- in other words, win and recover the extensive costs -- we might see more businesses that choose to fight.
Since the Innovation Act also includes a provision that would strengthen fee shifting, and the White House has explicitly endorsed its expansion, stay tuned for this decision from the court that might yet set the path for all further discussion on the issue. We will be watching closely in the coming months and will continue to petition courts and policy makers to level the playing field by giving those who face the threat of patent trolls the tools to fight back.
