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Law professor: U.S. SC rulings could reduce abusive claims filed by patent trolls

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Supreme Court,Law,Patent Law,Legal Newsline

WASHINGTON (Legal Newsline) – Two recent U.S. Supreme Court decisions that overhaul the rules governing court-awarded attorneys’ fees in patent cases will have “significant” implications for so-called patent trolls, one law professor says.

In April, the nation’s high court released opinions in Octane Fitness LLC v. ICON Health & Fitness Inc. and Highmark Inc. v. Allcare Health Management System Inc.

Together, the unanimous decisions expand the availability of attorneys’ fees for prevailing parties and increase federal district courts’ discretion in awarding fees.

Mossoff

Mossoff

The New Jersey Civil Justice Institute, which advocates against lawsuit abuse, held a July 16 teleforum to discuss the rulings and their ramifications. Adam Mossoff, a law professor at George Mason University and senior scholar at the university’s Center for Protection of Intellectual Property, was the featured speaker.

Mossoff, along with RatnerPrestia shareholder Brian O’Shaughnessy, wrote a short essay following the release of the decisions.

Mossoff said the Supreme Court’s rulings will allow district courts to better manage their dockets and, most importantly, have empowered them with greater authority to discourage bad actors in patent litigation.

Yet, the decisions also preserve valuable incentives for those patent owners who properly assert valid property rights, he noted.

“Requiring a party to pay attorneys fees is a long-standing traditional power that courts have had and can use to manage their dockets and control the behavior of stakeholders,” Mossoff explained in a phone interview.

“But the (U.S. Court of Appeals for the) Federal Circuit made it very difficult for district courts to do this.”

The Federal Circuit handles all U.S. patent appeals.

The justices wrote in Octane that the Federal Circuit’s framework in a previous decision, Brooks Furniture Manufacturing Inc. v. Dutailier International Inc., was “unduly rigid” and that it “impermissibly encumbers” the statutory grant of discretion to district courts.

“This is very significant,” Mossoff said.

“Because one of the primary complaints about our alleged ‘broken’ patent system is there are bad actors who are abusing the litigation process.”

But, as the Supreme Court’s decisions point out, there are existing legal tools that can be used to address those bad actors, Mossoff said.

“In these rulings, the court emphasized that point,” he said. “Judges have the tools and they should be able to use those tools.”

Mossoff said such fee-shifting not only enables courts to weed out those bad actors from the good, but it also promotes more responsible behavior among patent litigants.

“It serves as a significant deterrent,” he said.

In fact, the rulings already are having some effect, Mossoff said.

“More courts are now starting to award attorneys fees, just a few months later,” he said.

“And hopefully, come January, there will be a significant body of case law that will show that courts are doing exactly what they’re supposed to be doing, that it’s not the job of Congress to dictate to the courts and that, in fact, judges are managing their dockets and holding these bad actors accountable.”

Such fee-shifting provisions were a part of proposed federal legislation that failed to make it out of a Senate committee in May.

However, there are those who argue that the high court’s rulings don’t give enough direction, and are still pushing for federal reform.

U.S. Patent and Trademark Office Deputy Director Michelle Lee, in testimony to the U.S. House Judiciary Committee’s Courts, Intellectual Property and the Internet Subcommittee last week, said she believes companies need more clarity following the Octane and Highmark rulings.

“There’s still a requirement that it still has to be an ‘exceptional’ case,” Lee told lawmakers.

“I still think there’s room for legislative reform because I think companies could benefit from greater certainty about when fees would be shifted and when they would not.”

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

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