Page 16: of Maritime Reporter Magazine (July 2015)

LEGAL BEAT

Patent Trolls

How to Defend against Patent Trolls without Breaking the Bank

BRESSLER atent trolls—those who seek to times the award) are available if the in- agement can make a sound judgment enforce patent rights, but do not fringement is “willful,” and attorney’s about how best to respond.

actually manufacture or supply fees can be awarded in “exceptional

Pservices based on the patents— cases.”

A. Dealing with Frivolous are a problem in all industries, including or Defective Claims the shipping industry. And as the pace of

How to Deal with a Troll innovation in shipping continues to ac-

A troll’s business model is simply a. Motion Practice celerate in areas such as environmental to get as much money as possible, as

Where the troll’s claim is frivolous or compliance, electronic navigation, ves- quickly as possible. Since trolls do its complaint is procedurally or jurisdic- sel design, construction and operation, not produce anything (they cannot be tionally defective, a motion to dismiss offshore construction and exploration, counter-sued for patent infringement as may allow a defendant to dispose of a and cargo logistics management, claims competitors often can be), and are of-

HU case before engaging in expensive dis- by patent trolls are sure to rise. ten bank-rolled by investors whose sole covery. If the frivolity of the claim is

It is not just companies who design purpose is to engage in litigation or by more serious, various types of sanctions and sell products in the maritime sector law ? rms that work on a contingency, can be sought. While these sanctions are who are at risk. Your company can be trolls do not have the business motives not unique to patent suits, they can be sued by a troll (or by a “legitimate” pat- of a competitor. Conventional wisdom particularly useful against trolls that ? le ent owner) if it makes, uses, sells, offers of how best to defend a patent case suits without adequately investigating to sell, or imports an item, or practices therefore does not always apply, as it is the legitimacy of their claims, or main- a method for conducting business (for often the most conservative, expensive, tain suits after being apprised of why instance, a method for managing the and time-consuming approach. Winning there is no infringement. routing and stowage of containers on a a case means little if your company does

Another pre-trial procedure that can liner service) that is covered by a U.S. not survive.

help bring a troll’s claim to an early con- patent. Your company can be sued for

While many claims of patent infringe- clusion is a motion for summary judg- patent infringement even if it does not ment brought by trolls are frivolous and ment, which is available where there is

BELKNAP directly infringe, but rather induces oth- may even be made with the hope that no dispute as to the material facts and ers to infringe or contributes to their in- the target will settle quickly for the sole the only issue is whether the moving fringement. Retailers, manufacturers, ? - purpose of avoiding the costs associ- party is entitled to judgment as a mat-

The Authors nancial services companies, investment ated with defending the claim—a clas- ter of law. Summary judgment may be funds, and companies at every step of sic strike suit—that does not mean that appropriate when there is prior art that

Kenneth L. Bressler the supply or service chain are exposed.

a claim made by a troll always lacks invalidates the patent or where the facts

Blank Rome Partner Ken Bressler coun-

Defending a patent case against trolls merit. It is important to keep in mind clearly establish that the patent is not ac- sels companies on general business mat- is expensive and, depending on where that a patent asserted by a troll has gone tually being infringed.

ters and conducts due diligence reviews the suit is pending, the median time to through the same examination proce- of intellectual property assets for private trial is 2.3 years, though in some in- dure in the U.S. Patent Of? ce as patents b. Challenge the Validity equity, IPO’s, M&A and ? nancings.

stances a patent case can take 10 years owned by non-trolls. Moreover, patents of the Patent or more from start to ? nish. Damages asserted by trolls are often acquired

Christopher K. Hu

If there are arguments that the pat- for patent infringement usually take from reputable, multinational corpora-

With over 35 years of experience, Blank ent at issue is invalid, it may be better the form of a reasonable royalty—what tions that sell patents they no longer to challenge the validity of the patent

Rome Of Counsel Christopher Hu concen- you would pay for a license to the pat- need to the highest bidder.

trates his practice in intellectual property before the U.S. Patent Of? ce. This op- ent knowing that the patent is valid and

While settling a frivolous case pres- litigation and represents a broad spectrum tion was made more attractive when infringed. One study of royalty rates ents philosophical issues—Do I want to the America Invents Act (“AIA”) was of clients in patent and trade secret cases awarded in litigation over a 23-year pe- and disputes. pay off extortion?—quickly settling a signed into law in 2011. riod concluded that the average rate was non-frivolous claim may be a sensible

In general, the Patent Of? ce proce- about 13 percent of the price of the in-

Thomas H. Belknap exercise of business judgment to avoid dures provide a cheaper way to chal- fringing product. Another study reveals disruption, uncertainty, and the risk of lenge patent validity than having to pro-

Blank Rome Partner Tom Belknap concen- trates his practice in the areas of interna- that, inexplicably, the median damages a signi? cant damages award. Critical ceed in court litigation. As courts will tional commercial and insurance litigation awarded to trolls are twice the median to this decision is making a prompt and often stay an infringement action in def- and arbitration, with particular emphasis award for practicing entities. In addi- candid assessment of the validity and erence to the Patent Of? ce, these proce- on the maritime industry. tion, increased damages (up to three scope of the patent claim, so that man- 16 Maritime Reporter & Engineering News • JULY 2015

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