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The Battle Against Patent Trolls Continue

May 15, 2014

The ongoing battle against patent non-practicing entities or NPEs, pejoratively known as "patent trolls," has been waged for the most part in Congress.  Several bills are introduced each year attempting to restrict patent infringement litigation by NPEs; these bills usually do not survive.  The America Invents Act, which became fully effective last year, was the first broad rewrite of the Patent Act in years, but by the time it was enacted, almost all of its provisions related to NPEs had been eliminated.  More recently, the House of Representatives passed the Innovation Act, which seeks to curb NPE litigation by provisions such as fee shifting and delays in discovery.

The most effective measures against NPEs, however, may be pursued by the Supreme Court.  In a recent triad of decisions, the justices have indicated an intent to take on what Congress has been unable to accomplish.

One complaint about NPE litigation, especially in the software industry, is the plethora of broad and somewhat vague patents.  The Supreme Court has accepted review of Nautilus v. Biosig Instruments, in which the Federal Circuit upheld patent claims that the district court had found "insolubly ambiguous."  Although not a software case, this appeal presents the Supreme Court with an opportunity to narrow the standard for when a patent claim is too indefinite to be enforced.

Another complaint about NPE litigation is the practice of suing customers.  Retailers, in particular, have been targeted for lawsuits claiming infringement of software and internet patents by use of purchased or leased systems, a matter of some annoyance to the customers.  Traditionally, United States patent law required that all steps of a method patent be performed by a single entity for there to be infringement.  The Federal Circuit abrogated that requirement last year, allowing for collective infringement, in Limelight Networks v. Akamai Technologies.  This case made it easier to prove induced infringement, having a direct impact on, for example, retailers.  The Supreme Court has accepted an appeal of this matter as well, presenting an opportunity to address how broadly an patent owner can cast its net to catch accused infringers.

Finally, the Supreme Court recently refused to accept an appeal from an internet technology company that purportedly asserts weak patents, the traditional bane of the software industry.  Soverain had sought to enforce its patents relating to "shopping carts" for on-line retailers.  Newegg, a seller of computer products, instead of acceding to Soverain and paying a licensing fee, fought the case.  Soverain won in the district court but lost in the Federal Circuit, which found the "shopping cart" patent merely to apply the common-sense idea of a shopping cart to the Internet.  The Supreme Court did not agree to hear Soverain's appeal, leaving this patent finally invalid.

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