A recent Federal Circuit decision, In re PersonalWeb Technologies LLC, highlights ways companies can protect their customers against abusive patent litigation. There are various legal doctrines, rooted in fairness and efficiency, that can apply—including to protect startups that are accused of infringement based on buying or using someone else’s product or service.

During these unprecedented times, the U.S. Court of Appeals for the Federal Circuit is one of the many institutions taking steps to avoid the spread of COVID-19: shifting to telephonic proceedings, releasing live audio of oral arguments, restricting in-person access to court buildings, and modifying operations. But the court is continuing its work, issuing new opinions every day.

A recent Federal Circuit decision about fee shifting is important to startups facing patent litigation and has broader relevance for confirming that attorney fee awards can be a tool for deterring abusive patent litigation. Startups facing extortive settlement demands for specious patent infringement claims can ask to have the plaintiff pay their attorney fees if they prevail in court. The availability of fees is valuable, because the cost of defending even a meritless patent lawsuit is expensive. But if plaintiffs who file those meritless cases may have to cover the costs of defense, it can help level the playing field, even before the parties find themselves in court. 

The Federal Circuit’s recent decision in Arthrex, Inc. v. Smith & Nephew, Inc. changes the framework for appointing and removing certain patent office officials—the Administrative Patent Judges (APJs). APJs serve on the Patent Trial and Appeal Board which, among other functions, can take a “second look” at weak or overbroad patents that previously issued, and invalidate claims that should not have issued in the first place. Instead of challenging a low-quality patent in federal court, which takes multiple years and millions of dollars, the Patent Trial and Appeal Board can consider a limited scope of validity challenges in less than 18 months and for a fraction of the cost. Therefore, it is a more accessible place for startups to go to challenge weak patents they are accused of infringing, and has the ancillary benefit of increasing overall patent quality and making the abusive patent litigation business less profitable.