If they're a shell company, I wonder if they'll actually end up paying the fee or just declare bankruptcy and start another shell company. Can the owners be made to pay the fee?
* The entity suing should set aside a budget in case they are gonna lose. If the "presumption of innocence" is extended to the case of patent infringement this would be not such an awkward demand towards the plaintiff.
* This fee should not just be to cover lawyer costs of the defendants. If a company is wrongfully sued, it's 1.) a type of defamation, 2.) incurring internal costs regarding time/resources to set up the defense apart from just the third-party lawyer costs, 3.) incurring immaterial costs regarding the sued party who are forced to worry about matters that have nothing to do with running their business. It can be seen as a legal DDOS attack of that business, 4.) incurring future costs w.r.t. setting up defenses against these practices. You don't need to buy locks if there are no burglars. (I personally file patents as a defensive action and it would be great if sharks like these pay for that, because they are the reason I've to do so).
Requiring plaintiffs to maintain a budget to pay fees would shut a lot of people out of the legal system, like individuals, for example. It would make it easy for large companies to violate the rights of IP holders.
And if a lawsuit really defames a defendant, after winning they can always turn around and file a defamation lawsuit.
Your point about plaintiffs with small budgets is an interesting one. Do you have examples of a David (individual) successfully suing Goliath over patents?
Burdening the system with more lawsuits isn't necessary if you immediately get a yellow card when committing a schwalbe. :-)
Not sure why you ask though. Are you getting at that looking out for small plaintiffs is a waste of time if they never win anyways? Because I don't think that's a good road to go down.
To address your last point, defamation is something that has to be proven in the US, and the standards for it are quite high (compared to the UK, for example, at least). A defendant can't attempt to argue and prove damages caused by the plaintiff without filing a countersuit, so I'm not sure how courts could go about handing out "yellow cards."
Of course patent trolling always becomes a discussion of corporate shielding instead of the conversation we need to have: a radical reform of the patent system and a re-thinking of what should be patentable, especially in the software world.
This conversation always gets derailed by the tort reform crowd on the right or the anti-corporate shield crowd on the left. Those are just symptoms to a larger problem and both of those things (torts, shields) exist for valid reasons. Fix patents instead.
But you're right, piercing the corporate shield is difficult.
IANAL, just a wikipedia reading engineer.
https://en.wikipedia.org/wiki/Piercing_the_corporate_veil#Un...
Some laws are clear and unambiguous, for example no one uses a corporation to shield themselves from a murder investigation.
Others laws can be fuzzier, like the laws that separate harassment and real intellectual property lawsuits.
It's a bit hard to see how patents promoted anything - they mostly seemed to retard progress. The airplane patent wars were so bad that aircraft development shifted overseas out of reach of US patent courts. The movie industry packed up and left for Hollywood to evade patent courts. Industry progress on the TV happened only when the patents expired. And on and on.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2355673
As for the movie industry moving to Hollywood, it's not like they were building competing or advancing technology that was blocked by patents: they were just consumers that straight-up refused to pay for the technology they took advantage of.
> Industry progress on the TV happened only when the patents expired.
Hmm, hadn't heard of this. Source?
Note also that current patent litigation hasn't exactly retarded the computer industry, but it has imposed huge costs on it, and it's hard to see any evidence that such patents have promoted the arts and sciences in any way.
Because all the manufacturers were using the technology they had invented, the very technology that made controlled heavier-than-air flight possible at a time when people were starting to doubt that it was possible. Many chose to fight the patent, but courts time and again found it to be valid and infringed. The Wrights may have gotten a bad rap for being litigious, but only because many like Curtiss tied them up in court for years to avoid paying royalties on technology they clearly owed.
> It is also pretty clear, despite the paper's claims, that the leaders in manufacturing and innovation were in Europe.
Not so sure about that. Most historical accounts still show America as being more innovative than Europe. Things like the seaplane were invented by Curtis in America.
>... hard to see any evidence that such patents have promoted the arts and sciences in any way.
There are a number of studies showing how patents help the arts and sciences. For instances, there are studies showing a direct increase in r&d expenditures and increase in strength of IP laws. Patents have been shown to increase the chance of finding from VCs and other sources. This has also been shown to apply to the tech and computer industries. It may be hard to see because few think of the huge role money plays in the vast majority of innovation.
Shell companies whose sole purpose is to shield the owners from lawsuits that they're planning to make seem like a different matter, though. It would be dangerous to limit them while preserving the usefulness of the first case, but I was mainly asking if there was already something in the law for this. It sounds like there isn't?
The court will have to work extra hard to make the distinction, but that might be the acceptable compromise in dealing with shell companies.
I'm certain that all three things can be done in parallel.
Your company folds. Company y then requests your corporate shield be taken down. Now you personally have to pay his $5 million in legal fees which are now on you. You lose your house, you get your wages garnished forever, etc.
You want this?
If a court finds a defendant meets this high burden as to the plaintiff's actions, then yes I think the real parties in interest behind the corporate veil should be on the hook. What's the alternative? That defendants who were the victims of frivolous lawsuits have to pay hundreds of thousands of dollars out of their own pockets? Who knows what assets had to be sold to raise that money or whose livelihood was destroyed? How is that an equitable outcome?
But what you touch on is a more fundamental issue that the "justice" system in the US is more often than not a competition between who has the most money on hand, and as a means for lawyers to profit generously, rather than anything righteous or just.