Many rush forward with new solutions, to unseen versions of old problems, and in the rush overlook existing solutions. Case in point – the troll. Is this a new concern; how many years ago did I first read a “Lemelson” letter; wasn’t it in the 80’s when Asian manufacturers would give in to threats of patent litigation. Somehow, that history has been put aside, and the supposed new phenomena of patent trolling has provoked a whirlwind of legislative proposals and impassioned pleas to courts to smote those passive patentees, who threaten to stifle innovators who too are makers.
When the rubber hits the highway, though, a complaintant either can plead a cause, or it’s dismissed. It’s not about who sues, but about whether they’ve got a case. If not, then they run the risk of Rule 11 sanctions.Case in point, Eon-Net, L.P. v. Flagstar Bancorp, Inc., Civ. No. 05-2129 MJP (W.D. Wash. 4 Oct. 2006). Eon-Net is the assignee of a patent for quick and automatic extraction of information from hard copy documents, and “Eon-Net contends that most, if not all, HTML form usage on the internet infringes the `697 patent.” Defendant Flagstar Bank accepted loan applications over the internet. Apparently, the plaintiff scoured many websites, and has sued a host of online merchants. The Judge in Seattle noted the complaint was “virtually identical to at least thirteen” others, and that in “recent weeks …eleven new complaints against unrelated parties” had been filed by Eon-Net. The M O was, after filing the infringement suit, Eon made “a cheap offer of settlement …based on a defendant’s annual sales.” The offers ranged from $25,000 to $75,000, for sales revenues ranging from $3M to $100M. At the conclusion of the ruling, imposing Rule 11 sanctions, the Judge remarked”even the finest patent attorney would need to think carefully before advising a client to spend hundreds of thousands of dollars in litigation when a $25,000, $50,000, or $75,000 settlement was on the table.” It too was noted that “dozens” of litigants had “opted for the ‘cheap’ standard offer of settlement.”You can guess the rest – the infringement accusation was premature, poorly-researched, and in the Court’s opinion, “baseless.” Eon produced a claim chart in opposition to the motion, which the Court stated was “crafted for versatility (fill in the blank) for each new case” but otherwise, was “essentially worthless.” Eon had not obtained the software used by defendant, and indeed, Eon had not identified what software they used. Eon’s “failure to investigate or identify infringing technology [is] the hallmark of its litigation plan.” Next, Eon asked that they be deemed to have acted in good faith because they did a claim construction. The Judge did not give them the Markman Award. “To the extent Eon-Net went through the motions of a claim construction exercise, it recklessly defined terms to suit its purposes in spite of the specification’s language.”
Thus, the solution was not new, it was Rule 11. The Judge compared the multiple suits of Eon to an earlier litigant who had filed over 400 suits claiming injuries from non-compliance with ADA access regulations, most of which were settled. There the “unusual number of settlements” was “indicative of an extortion scheme.” So, perhaps the patent bar does not need to demand a revamp of the statute, and perhaps the Supreme Court or the Federal Circuit do not need to impose judicial constructs on the law, all in the name of exorcising the accused trolls of this world. It may be just the old-fashioned approach of making them show what they’ve got to back up their allegations works as well as any new fashion statement.