Blogs

Posted on Monday, May 12, 2014

Winning Attorneys’ Fees in Patent Trolling Cases Just Got Easier

Patent trolling, the latest abuse of the laws enacted to protect intellectual property, occurs when a “patent troll” (sometimes euphemistically called a “patent assertion entity” or “non-practicing entity”) tries to generate revenue by enforcing patent rights against accused infringers, but does not manufacture products or provide services based on the patents it holds. Because patent trolls try to take advantage of businesses, an increased ability to recoup fees in litigation against trolls is an important development for any companies that productively use valuable intellectual property.

In most instances, the troll reaches out to the accused infringer, demanding a licensing fee for the use of its patent and threatening litigation if such fee is not paid, despite the fact that it has no intention of productively using the patent. Additionally, trolls sometimes stretch the limits of patentability, seeking to protect intentionally vague processes to maximize the number of would-be infringers and, consequently, the amount of revenue to be derived through licensing fees and litigation.

While patent cases traditionally followed the “American Rule” where parties paid their own attorneys’ fees regardless of outcome in all but the most “exceptional” cases, the Supreme Court’s recent decision in Octane Fitness, LLC v. Icon Health & Fitness, Inc. seems to have strengthened a company’s ability to obtain its attorneys’ fees from patent trolls. In its decision, the Supreme Court rejected the Federal Circuit’s old standard for what constituted an “exceptional” patent case, noting that it was “overly rigid” and “inflexible.” The Octane Fitness decision not only defined an “exceptional” patent case as one that “stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated,” but also lowered the requirement of proving one’s entitlement to attorneys’ fees from “clear and convincing” to a “preponderance of the evidence” standard.

The first company to gain an edge in litigation following Octane Fitness is startup FindTheBest, a website that allows you to find a topic, compare your options, and select the best choice. FindTheBest was sued by Lumen View Technology, a patent troll seeking a $50,000 licensing fee for FindTheBest’s use of allegedly patented matchmaking technology. FindTheBest has argued both that it hasn’t infringed upon Lumen’s patent, and also that Lumen’s patent was invalid in the first place. Although a ruling has not come out in the FindTheBest case just yet, we may see the first application of the Supreme Court’s new definition of an “exceptional” patent litigation case, as well as an award of attorneys’ fees to FindTheBest.

Frank Gulino is an associate attorney at Berenzweig Leonard, LLP. He can be reached at fgulino@berenzweiglaw.com.

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