Tuesday, January 24, 2012

Patent Titans Move to Represent Patent Trolls

I saw this article from the Wall Street Journal (dated January 23, 2012): http://online.wsj.com/article/SB10001424052970203750404577173402442681284.html

The article reports on two titans in the patent world moving from traditional law firms to their own outfits. Their new focus is representing clients who are so-called "patent trolls" – NPEs or non-practicing entities whose sole function is to collect patents to assert against other companies. While patent law has become more stringent in its requirements, (including limiting venue and prohibiting an NPE from requesting an injunction for sale of product against the other side), the upside for an NPE bringing a lawsuit against a producer and seller of goods is still very lucrative and the downside is relatively small. NPEs still can collect license fees at the "going rate" (to be proved in court). So, the risk is high to a potential defendant that it will have to pay the NPE something or pay their lawyers big fees to defend a lawsuit. On the other hand, the potential leverage against an NPE is low – there are very few counterclaims that can be brought against a company that doesn't make or sell anything. That means, a real company who produces product and contributes to the economy only has downside in these lawsuits. They have to slog it out to win against the other side, or pay (to settle, or in a loss).

I have been on the other side to both John Desmarais (Alcatel-Lucent v Foundry Networks), and Matt Powers, (Immersion v Sony Computer Entertainment). I found them both to be really tough, verging on mean, in their tactics. They both have an amazing reputation in the industry though. Part of me is disappointed, but I suppose I am not really surprised with their mercenary moves.

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