US Supreme Court reverses patent judges again in 9-0 decision on lawyer fees

Trolls still always have the option of filing in East Texas.

As long as they can rely on a nest of less than objective judges eager to serve troll interests, they don't have to worry about fee awards. The decision left a lot of power to the discretion of district judges so a single predictably biased district can corrupt the whole national system.

The Rep. Goodlatte bill that was passed by the house would make fee awards routine and then East Texas judges would have to justify not awarding fees. That would be a much better reform.

The Leahy senate bill will probably be a very tiny change in the existing language because Leahy's trial lawyer supporters don't want to loser pays principle to gain a foothold. Leahy -- and most trial lawyers -- have said that patent cases are an exception the the general principle, but they aren't ready to let any wholesale reform happen on this point. Usually trial lawyers argue that loser pays disadvantages vulnerable victims; most federal civil plaintiffs are much poorer and smaller than defendants. In patent cases, the opposite is true; patents are the tools of trolls and big companies to extort and destroy innovative small businesses. Most patent cases are brought by established wealthy troll agglomerators against companies that could not conceivably afford a full trial.

See here for how biased cases are to E Texas already: http://patentlyo.com/patent/2014/04/district-courts-patent.h...

This is an excellent summary of the Octane Fitness decision. I'll quote two bits of relevant language that lay out the standards the Supreme court has established.

"Under the standard announced today, a district court may award fees in the rare case in which a party's unreasonable conduct-while not necessarily independently sanctionable-is nonetheless so 'exceptional' as to justify an award of fees." (Slip. Op. at 5).

"Something less than 'bad faith,' we believe, suffices to mark a case as 'exceptional.'" (Slip. Op. at 6).

In other words, the court interpreted section 285 to allow fee-shifting in cases that are not so weak that the court would be justified in sanctioning the plaintiffs under Rule 11 for pursuing a frivolous claim, or in cases where plaintiffs use tactics that do not quite rise to the level that would be sanctionable for bad faith.

However, the Court did not give as much guidance to lower courts as one might have hoped. The Court stated that a case that is weak to a degree short of "sanctionable" may be the subject of fee shifting. It has not said how much stronger than "sanctionable" a case can be before awarding fees is an abuse of discretion on the part of the District Court. This is a question that will probably be raised to and resolved by the Federal Circuit in the coming years.

I just want to point out that the party who lost (Icon) is not a NPE. Although they litigate extremely aggressively against other fitness players.

In addition it should motivate more defendants to go to trial instead of settling which should (hopefully) speed the judicial changes to the patent system and gain more legislative attention to the issue.

Why do the two courts have such different opinions? It seems surprising to me, especially since Supreme Court justices and Federal Circuit judges are both appointed by the President.

The legal system cannot be considered in isolation. It's part of a broader apparatus for protecting peoples' rights. Other countries have higher bars for getting into court, but they also have other mechanisms for enforcing peoples' rights. For example, European countries generally have more elaborate and burdensome regulatory regimes, and use administrative proceedings to accomplish things that in the U.S. are handled through court proceedings.

A good example is products liability law. The EU products liability directive is implemented in Germany as the Appliances and Product Safety Act. It does not create civil liability to injured consumers, but instead is part of an administrative enforcement regime. Authorities actively monitor the products on the market, and have the power to issue recalls, fines, and even criminal penalties.

For most areas of the law that see significant litigation (products liability, employment, etc) the U.S. either lacks such administrative entities or has undersized ones compared to what is common in Europe. In the American system, more of these issues are, consciously, left to be handled in private litigation. Essentially, in Europe you have more bureaucrats, and in America we have more lawyers.

Also, note that "loser pays" countries aren't usually literally "loser pays." In France, for example, losers pay court fees, but attorney's fees are awarded by a judge in an amount that usually doesn't cover actual amounts spent.

I have mixed feeling about it, having grown up in a country where it's the norm. Yes, it does seem to reduce barratry, but it can also be used to deter legitimate plaintiffs who don't have an open-and-shut case, because a loss in court against a wealthy defendant can easily result in bankruptcy.

'Faraway hills look green,' as the proverb goes.

If you're a small innovator facing off against IP theft by a large company, it might not look like such good news. Now you have to worry about their lawyers racking up huge bills and convincing the judge you should pay them.

I think a lot of people argue that the "English Rule" makes sense. The only people I've seen argue against it are... lawyers. Unfortunately, the lawyers do have a small point, in that "loser pays" means that a less-wealthy plaintiff will probably be less likely to even file.

IANAL, but I think this is more a political comment: the motivation for the upcoming patent bill was (partially) that existing law is too troll-friendly and needs to be fixed; but if the SC has clarified the existing law to be less troll-friendly, then it's not as important to reform the law.

I'm reminded of an Atlantic article I recently read about the Warren Court in the 60s---by deciding one case on extremely narrow procedural grounds rather than on the merits, the court left a "this needs to be fixed" motivation that gave political room for the Civil Rights Act.

The best way to get the Senate to make patent reform a priority is a Samsung-induced sales injunction on iPhones. The outrage would be immediate, and we'd have this resolved in weeks instead of years or decades (if we ever do "resolve" it).

Unfortunately, I don't think such an injunction is in the cards. It would hit home enough in that it'd inconvenience them personally, which would spur immediate action.