The Future of Patent Troll Behavior

Patent trolls, also known as patent assertion entities, are companies or individuals who buy patents for the sole purpose of enforcing them against infringers, that is, patent trolls have no intent to develop or market the patents that they purchase.  Patent trolls are garnering a lot of attention because some of the largest companies are being inundated with patent suits from patent trolls, which results in millions of dollars in legal fees.

In January 2014, President Barack Obama stated “let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation” and urged lawmakers to pass patent reform legislation that would curb patent trolls.  Moreover, Fortune 500 companies, such as Apple and Google, have also joined the movement and are encouraging the courts to step in and deter patent troll behavior.  One of the statues that may deter this behavior is the Attorney Fees provision of 35 U.S.C. Section 285, which states that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”  Many opponents to patent trolling have argued that the courts are not employing the “exceptional” attorney fee provision enough and that implementing the provision more often will deter patent troll behavior.  Traditionally, the Federal Circuit has employed a two-part test and held that a case is exceptional when the litigation is brought in subjective bad faith, and when the litigation is objectively baseless.  Brooks Fruniture Mfg. v. Dutailier, Inc, 393 F.3d 1378 (Fed. Cir. 2005).

By the end of this summer, the United States Supreme Court should have a decision how courts should determine whether a case is “exceptional.”  The US Supreme Court will decide what the standard should be while hearing two cases: Octane Fitness v. Icon Health and Fitness and Highmark Inc. v. Allcare Health Management Sys.

The potential effects of a less rigid interpretation of the “exceptional” cases rule have been hotly debated and will continue to heat up in the next few weeks and months.  On one side, a more liberal interpretation of the provision will deter frivolous and speculative lawsuits because the party bringing the suit loses, he or she will likely be paying the other parties attorney fees.  Conversely, an easier standard for interpreting the provision may over-deter parties from bringing what otherwise may be a valid infringement claim.

The future of patent troll behavior will be determined in the next few months and hinge on whether the Supreme Court decides to adopt a new test, or alter how the courts should apply the test.

Article written by Byron Ma, J.D. candidate.