A Troll’s Refuge
Everyone is familiar with the phenomenon that is trolling and the ubiquitous troll face. Equally as familiar in the public conscious is the concept of the “patent troll,” a term that has been affirmed by the late, great Justice Scalia in Commil USA, LLC v. Cisco. The term has even been brought to the masses through the venerable learning mechanism of comedy via John Oliver. In a nutshell, patent trolls first obtain rights to enforce patents and then threaten to enforce those rights on suspected infringers of those patents. In order for the other party to avoid patent litigation costs and liability, the patent trolls seek settlement exchanges in addition to license fees to practice their patented invention.
Part of the way in which Congress is trying to combat these trolls is through the use of venue legislation because a large percentage of these patent litigation cases are held at “rocket docket” districts that speed up the process of litigation through local patent rules, the most scrutinized of which is the Eastern District of Texas (EDTX). Congress’ recent bill to combat patent trolling is the VENUE Act, the Venue Equity and Non-Uniformity Elimination Act of 2016. But will it succeed where others have failed before it?
Let’s take a look at the fate of those bills last year that attempted the impossible. For example, the Innovation Act of 2015 (H.R.9) and the PATENT Act (S.1137) both involved co-sponsors on both sides of the political aisle and both bills primarily involved changes to patent litigation aimed at curbing abusive suits by patent trolls. However, both these bills were fraught with contradictions that would not allow them to be effective vehicles of change for venue reform. For example, there is a provision in the proposed legislation changing the claim construction standard used in the Patent Trial and Appeal Board (PTAB) added at the behest of patent owners concerned about how frequently the PTAB invalidates patents. Specifically the change would require the PTAB to conduct its review proceedings utilizing the claim construction that a court would use by “construing each claim of the patent in accordance with the ordinary and customary meaning of such claim,” rather than using the broadest reasonable construction currently used by the PTAB. The Innovation Act’s change in PTAB standards therefore makes it more difficult for the PTAB to conclude invalidity because a narrower construction will be less likely to cover the prior art. Therefore, this provision is an outlier in otherwise non-patentee-friendly bills, since it would tend to make patents owned by non-practicing entities (a kinder term for patent trolls) more likely to survive PTAB reviews.
Ironically, the provision in the Innovation Act dealing with claim construction standards has been praised, and has received much support from the patent community and specifically the AIPLA, the American Intellectual Property Law Association. However, the picture is not all rosy. While the AIPLA recognized the threat of patent trolls, the AIPLA states that it does not support many provisions of H.R. 9 as currently drafted because they “unintentionally impair the ability of patent owners to enforce their rights in good faith” and “discourage innovators who rely on the patent system for protection of their efforts.” Therefore, while the specific provision changing the claim construction standard may be supported, the legislation will likely not move forward.
That brings us back to the merits of the VENUE Act. Patent bills have historically garnered bipartisan support because patent law is not a subject generally beholden to strong political or emotional leanings. The VENUE Act is relatively short and takes the venue portions of the Innovation and PATENT Acts and makes it a separate bill. It does its best to tie venue to where defendant’s business is predominantly located or where the infringing act took place.
Despite predictions about whether the bill will pass or not, should it be passed? The intentions are seemingly good. After all, it does seem unfair that patent owners receive an obvious advantage in quicker litigation: the earlier a verdict of infringement, the earlier a patent owner can collect damages. The Eastern District of Texas favors such quick litigation through its local patent rules. Much literature has been poured over how these rules and the historically high denial of motions for summary judgment have contributed to acceptance of the EDTX as a haven for trolls.
My response is that, perhaps, quicker litigation for patents should be the norm. After all, this is why the America Invents Act created IPRs: to be a “faster, less costly alternative to civil litigation to challenge patents.” It is simply because patent litigation usually takes too long and the trial itself including discovery is too costly. Isn’t the purpose of the Federal Rules of Civil Procedure timely justice? Moreover, other districts have the same right to speed up their litigation via their own local rules. Yes, expediting local rules may favor patent owners who wish to collect damages faster, but they also cheapen the cost of litigation. It is also worth noting that the definition of a troll can be vacuous. It is true that there are bad actors looking only to make a dollar but organizations like the AIPLA have a point when they oppose legislation such as the Innovation and PATENT Acts. These trolls also include non-practicing entities such as small businesses as well as universities and their professors, who are often at the forefront of innovative technologies. Instead of waiting on Congress to fix things (Can they even be trusted?), it may do well for other courts to take note and follow suit by changing their local rules to speed up litigation so that the patent lawsuits pie may be spread more evenly. Till then, trolls and their kin have a refuge in the Eastern District of Texas.
Julian Pymento is a J.D. candidate, 2017, at NYU School of Law.