US PATENTSNDUSTRIAL DESIGNS IN GERMANY
Gaus as the plaintiff . However, aſt er years of battling in the US District Court for the Southern District of New York, including a trial before a magistrate judge, Gaus’s litigation backfi red. T e Federal Circuit dismissed the case in its entirety, wiping out an approximately $50,000 jury verdict for Gaus. T e defendant’s money, time and energies required to defend this complex lawsuit could not be recovered, because the circumstances of the litigation did not fall under the umbrella of an ‘exceptional’ case, which otherwise would have qualifi ed it for an award of attorneys’ fees.
T ere are very practical and understandable reasons why patent trolls have taken hold in the US. One reason is the legal system that permits attorneys to represent clients in matters on a contingency fee basis. We don’t see contingency fee arrangements of this type in most jurisdictions elsewhere in the world. T e fact that parties without considerable resources might be able to hire lawyers to represent them in matters having great merit provides a level playing fi eld when they go up against parties with enormous resources. T ey will have no exposure to fees or, in some cases, costs, which will be paid from recoveries, if any, from court victories or settlement.
Trial by jury
Another reason why patent trolls are able to convince their targets to accept licence arrangements instead of contesting matters in court resides in another US legal system feature: trial by jury. Owners of patents have the legal right to have the facts of their dispute decided by a jury, not a judge. It is a petite jury of six, plus alternates usually numbering two or more, who typically hear testimony and view evidence in patent
infringement litigation. T e jury
decides whether one or more claims of a patent are infringed. In the absence of a litigation being bifurcated, that same jury will decide whether the presumptively valid patent is in fact valid.
T e presumption of patent validity is a rebuttable presumption. Juries are truly unpredictable. Anyone suggesting otherwise has not had much experience trying patent cases before juries. It is my experience that most juries genuinely try to do the right thing, and try to be fair to the parties. With few exceptions, they take their sitting as part of a jury very seriously, and most jurors are attentive and interested in the case before them. However, I have tried patent cases before juries where one or more jurors has repeatedly fallen asleep during live testimony, and where the judge has had diffi culty keeping the jurors awake. T is uncertainty feeds the apprehension of accused patent infringers.
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Jurors also decide the amount of damages to be awarded to a patent owner, if any. And such jury awards can be astronomical. While judges have the power to reduce or set aside a large jury damages award, they are generally hesitant to do so. T e $930 million awarded to Apple by the California district court during the initial phase of its litigation with Samsung is an example of the enormous exposure facing accused infringers.
Yet another reason that accused infringers will oſt en seek to take a licence from patent trolls, rather than fi ght in court, has to do with the enormous legal costs associated with defending such a lawsuit. It is reported that the median legal fees required to defend a relatively non-complex patent
infringement litigation can approach
$5 million, exclusive of expert witness fees and many other costs. A defendant will have to pay those fees without knowing whether victory is guaranteed or assured. And if the defendant wins the case, absent special circumstances, it will not recover these monies.
“IN THE ABSENCE OF BAD FAITH ON THE
PART OF THE OWNERS OF PRESUMPTIVELY VALID PATENTS, NPEs SHOULD BE AFFORDED THE SAME RIGHTS AS OTHER PATENT HOLDERS.”
T e patent owner carries the burden of proving infringement based upon a predominance of the evidence, and must obtain a unanimous verdict of infringement in order to prevail on that issue. If there is less than unanimity, the judge will declare a mistrial, and the entire court proceeding will need to be repeated. Or the jury may unanimously determine that there is no infringement, thereby granting a victory to the alleged infringer.
An alleged infringer must similarly obtain a unanimous jury verdict of invalidity in order to prevail on that issue. However, the burden of proving patent invalidity is greater than that associated with proving infringement. T is burden requires clear and convincing evidence. It is easy to recognise that an accused infringer faces a formidable task in proving by clear and convincing evidence to every single person sitting on the jury that the presumptively valid patent in suit is invalid.
World Intellectual Property Review Annual 2014
Paul J. Sutton is a founding partner of IP boutique law fi rm Sutton Magidoff LLP. As an adjunct professor at NYU’s Polytechnic School of Engineering he teaches the courses Intersections of Law, Engineering, Business & Psychology and IP Strategies for Engineers and Scientists.
www.worldipreview.com
It is hoped that the foregoing observations will assist those who fi nd themselves the target of a patent troll.
Paul J. Sutton is a founding partner of Sutton Magidoff
LLP. He can be contacted at: paul@suttonmagidoff .com
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