The Prior Art

Patent Litigation Weekly: A Closer Look at a New Patent Study

Two years after Richard Frenkel—at the time an in-house Cisco Systems, Inc., lawyer and now of counsel at Wilson Sonsini Goodrich & Rosati—outed himself as the until-then-anonymous author of the controversial patent litigation blog, the Patent Troll Tracker saga appears to be over.

In January, a libel suit filed by East Texas lawyer T. John “Johnny” Ward, Jr. against Cisco over the contents of an October 2007 Troll Tracker post was settled under confidential terms. Frenkel—dismissed as a defendant in the case last August at Ward's request—has declined to comment on either Ward's suit or a second, related defamation claim filed against him and Cisco by East Texas lawyer Eric Albritton. (That suit settled in September after a week-long trial; see earlier coverage on The Prior Art here, here, and here.)

While it’s clear now that at least a few high-level Cisco employees knew the Troll Tracker’s identity, company lawyers say no one there besides Frenkel contributed to the blog. Still, because Cisco is helping to lead the lobbying charge in favor of reforming the nation's patent laws—with a particular focus on lowering litigation payouts to non-practicing entities (a.k.a. NPEs, or "patent trolls")—those who advocate for small patent holders sensed a Frenkel-Cisco conspiracy.

Putting aside the conspiracy theories aside and drama—two lawyers with a high profile in the Eastern District of Texas's lucrative patent litigation scene suing Cisco and one of its in-house lawyers for libel and defamation—it seems like an opportune time to take a broad look at the big issue at the heart of the Troll Tracker tale: that the huge piles of money at stake in patent litigation has created an independent class of IP professionals? As it happens, a PricewaterhouseCoopers study released in January on just that topic has some answers.

"Patent trolling" has its rewards.

Tech-sector executives and lawyers say privately—and an informed review of court dockets confirms—that so-called trolls aren't just surviving, they're thriving. The essential NPE tactic—suing a broad swath of companies for patent infringement, then settling with each defendant for less than the cost of fighting such a suit—is now an established business model. It's so solid, in fact, that patent-holders are starting to delve into previously untouched economic sectors, suing small retailers and even photographers.

Troll Tracker defamation case goes to trial -- opening statements heard

A hot, muggy, Southern rainstorm came down in short squalls in Tyler, Texas, Monday morning, drenching the city’s central square just as jury selection got underway in the Patent Troll Tracker defamation case, being argued in the federal courthouse here.

The Prior Art blog is reporting from the trial over the next several days.

We’ve covered the background and development of Albritton v. Cisco Systems, a case brought by lawyer and east Texas patent litigation player Eric Albritton against Rick Frenkel and his former employer Cisco Systems, alleging that in the course of Frenkel's brief and anonymous blogging career, he libeled Albritton.

(Earlier TPA coverage of Albritton v. Cisco and Ward v. Cisco: Troll Tracker sued, 3/11/20008; Judge Ward's Son may have pursued Troll Tracker for months, 3/12/2008; Frenkel, Cisco to fight defamation suits in East Texas, 5/27/2008; Troll Tracker blogger Rick Frenkel moves to Wilson Sonsini, 8/4/2008; Troll Tracker defamation update, 11/7/2008; Cisco says Frenkel told the truth, 12/9/2008.)

More recently, sibling publication Texas Lawyer just published an overview of the facts of the case here.

Good Magazine Goes Bad: The Ethics of Patent Trolling

In its current issue, GOOD magazine has a lengthy profile of Erich Spangenberg, one of the most successful "patent trolls."

Good, founded by Ben Goldhirsh to be a magazine for people who "give a damn," missed a great opportunity to address the ethical quandaries at the heart of large-scale patent assertion. While I write for a primarily a legal and business audience, I think that the kind of people who read Good would want to know how widespread patent lawsuits affect them—as consumers and as citizens. It’s an important issue, given that the purpose for patents under U.S. law is to "promote the progress" of science. 

It's one thing to say "patent trolls" aren't such bad guys after all and fill a needed niche in the economy. But Good goes so far as to compare Erich Spangenberg to Robin Hood. Hm... wouldn't we need some poor people to come into the picture after the "rob from the rich" part?

The reporter who wrote Good’s Spangenberg story really missed the point. First, she made the common mistake of mostly ignoring the most important public record of how patents are actually used—federal court litigation. It’s easy, but misleading, to go on and on about the "intellectual property business" when you conveniently ignore what's really happening—patent-holders going to court to enforce monopoly rights. 

Method Men? Handicapping Bilski at the Supreme Court

When the Federal Circuit issued the landmark Bilski decision, some folks were ready to call it the death of (most) business method patents, or even software patents—that view was a bit premature, because the law was still unsettled. Now, with the nation's top court now looking to take up the Bilski case, it's really unsettled.

Even if Sotomayor joins the court and is a strongly pro-patent judge, for those hoping for stronger limits on what can be patented, there are still ways to count to five. Several justices have, in other cases, dropped hints about what’s on their minds when it comes to the nation’s patent system.

The Court has taken four patent cases in recent years. Every time, the justices voted by a wide margin to limit the power of patents. The Federal Circuit’s Bilski decision [PDF] now at issue got rid of "pure" business method patents (without defining what they are), while signaling that lower courts should rein in patents in related areas such as software. The Federal Circuit did not, however, say how tightly to pull those reins.

FTC talks about "Public Notice" function of patents—not that it exists or anything

The Federal Trade Commission came out to Berkeley this week to talk shop with some patent experts, convening several panels Monday and Tuesday about "The Evolving IP Marketplace." The Prior Art dropped in on a panel discussing the "public notice" function of patents—that is, the idea that published patents put the public on notice as to what we're not allowed to use, sell, or manufacture without a patent-holder's consent.

The most notable part of the discussion was that no one ever really got around to mentioning whether patents provide any kind of meaningful public notice at all. When FTC attorney Bill Adkinson, who moderated the panel, began the discussion on claim construction with a quote from longtime Federal Circuit Judge Giles Rich, who was instrumental in crafting the modern U.S. patent laws, he had to urge some panelists to stifle their cackles:

"Judge Rich said the function of claims is to enable everyone to know, without going through a lawsuit, what infringes the claims and what does not."

Data from Stanford shows 2007 spike in patent defendants

Stanford Law School has unveiled its IP Litigation Clearinghouse, which includes data on 78,000  copyright, patent, trademark, and trade secret lawsuits. That includes 23,000 patent suits, and the patent data has just been made public. I can already tell this will be a great tool that I'll use a great deal, and I look forward to seeing what others come up with.

My colleague Zusha Elinson at the Recorder attended Stanford's event unveiling the IPLC. His article about the IPLC, published yesterday, is worth reading. Initial statistics show that there was indeed a real spike in the number of defendants sued in 2007; that spike may not be repeated in 2008. See graph below. This data generally confirms the estimate calculated by Rick Frenkel earlier this year. It also confirms the anecdotal evidence I reported in the IPLB 2008 Patent Litigation survey. Lemley attributes this spike to a rush by holding companies to file suit before any patent reform legislation took effect.

Stanford Law Professor Mark Lemley (pictured), who was a driving force behind the IPLC, also said he's teaming up with Intellectual Ventures founder Nathan Myhrvold in order to classify exactly who is filing all the patent infringement lawsuits. I'll be watching that project, which sounds like it could be like a Troll Tracker blog on steroids. Lemley and Myhrvold, it should be noted, have very different views about the patent-holding companies some deride as "patent trolls." Stanford's IPLC announcement has much more information about the project.

It's time to think about buying an ad when...

On one level, Greg Aharonian's recent Patently-O essay criticizing a Wall Street Journal article is unsurprising. I'm not surprised that Aharonian doesn't like the media reporting on problems with the patent system. Nobody who reads his patent newsletter will be surprised to find out that the people, companies, and organizations he writes about are judged to be either "idiotic" or "moronic." I'm not surprised to hear, again, that he would prefer a system where technology companies seek his services before developing a new product. But it takes a special kind of... imagination... to suggest that the article should actually have been about how much prior art searchers (like Aharonian) should be paid. He writes:

In short, this is a case that has little to do with tr-lls, but rather is a case that should be the basis for an article on the tactics of prior art searching (how much should small companies spend on searching during patent prosecution versus how much should they spend before entering into negotiations or litigation?).

Remarkable.

I confess to being in love with the way Aharonian takes the 'o' out of troll, in the style of Orthodox Jews who revere the name of God by deleting the middle letter. That is really just too good.