3 strategies for beating patent trolls
(as published in Inside Counsel)
The number of patent infringement actions filed annually in the U.S. has increased close to 300 percent over the last two decades. Statistical studies show that in recent years the portion of patent cases filed by non-practicing entities (sometimes referred to as patent trolls) also has increased.
The underlying strategies for efficiently defending patent cases are the same regardless of the adversary: relentless focus on developing winning themes and arguments; avoiding expenditures on issues that do not relate directly to the strategy for winning; finding and maximizing the effectiveness of great experts; and connecting well with the judge and jury.
There are, however, specialized strategies that can help defendants achieve favorable and efficient outcomes in troll cases.
1. Find great prior art and present it in person
Most patent trolls file suit against multiple defendants at the same time, or intend to sue multiple defendants in the future if the first case is profitable. The best way to quickly get out of a troll case is to identify a strong defense that is not known to other defendants. A good example is strong, hard-to-find prior art, particularly from one of the defendant’s own, earlier products. The prior art should be shared with the plaintiff in person so that the plaintiff can avoid taking possession of it (which would trigger an obligation to produce it to other present or future defendants in discovery).
In a recent case, a patent troll plaintiff dropped its case against our client on the spot after seeing (and not taking possession of) our client’s prior art. The prior art was from one of the client’s own earlier products, and would have been difficult for other defendants to identify or effectively rely upon.
2. Be aggressive early in the case
Many patent trolls, represented by contingent-fee counsel, file suit without performing significant diligence on their targets. They are aiming for quick settlements that require relatively little effort; they do not wish to try cases. Even in the absence of clearly invalidating prior art, defendants can drive down the perceived settlement value of a case by being aggressive early in the proceedings—e.g., filing motions to dismiss or transfer; quickly completing a robust analysis and making a persuasive presentation to the troll on non-infringement or other defenses; or immediately initiating discovery that will cause the troll to incur unwanted costs. While delay is ordinarily in a defendant’s interest, being aggressive against a troll can be an effective strategy to secure an early favorable settlement since most trolls are not interested in a fight.
3. Seek early summary judgment
Statistics compiled recently by PricewaterhouseCoopers show that patent trolls fare as well as other patentees at trial, but do far worse on summary judgment. The trolls’ poor performance at summary judgment may simply reflect the fact that many troll cases are weak and are weeded out at that stage, leaving only the stronger ones for trial. Anecdotal evidence suggests, though, that it may also reflect a tendency by trolls’ counsel to underestimate their vulnerability on summary judgment, causing them to fall short of producing the thorough, polished and persuasive briefing that is required at the summary judgment stage of a patent case.
In any event, it is clear that summary judgment proceedings present a significant opportunity for defendants to beat patent trolls quickly on the merits. Defendants in troll cases should seek a case schedule that permits the filing of early summary judgment motions, and should quickly identify and develop arguments that are amenable to summary judgment and will not require a trial.
Patent troll litigation continues to proliferate and few companies will be able to avoid it in the years ahead. The three simple strategies described above can help companies that are targeted by patent trolls to efficiently manage the defense of such cases.