46 Comments

Summary:

Win or lose, it usually doesn’t cost a lot for patent trolls to bring spurious lawsuits against companies and technologists. In this guest post, Ben Lee of Twitter argues that it’s time for trolls to bear more of the costs they create with baseless lawsuits.

Twitter Bird perched on gavel
photo: Shutterstock Composition: Bird via basel101658 / Gavel via Alexander A. Sobolev

Twitter is an engineering company, and engineers like to innovate. Twitter is also well known, and, as a result, we receive patent threats and lawsuits from time to time. Many of these are baseless, and our policy is to fight them with all our might. In fact, we have never agreed to pay to settle a patent suit.

Still, even meritless lawsuits cost us money in attorney fees, and force our engineers to spend time with lawyers rather than improving our product. For example, we recently won a case regarding U.S. Patent No. 6,408,309, entitled “Method and System for Creating an Interactive Virtual Community of Famous People.” After a trial before a jury, we managed to prove that we didn’t infringe and that the asserted claims from the patent were invalid. This patent was “invented” by a patent lawyer, Dinesh Agarwal. According to his own testimony at trial, Mr. Agarwal had no computer science or programming background, and he thought up the whole idea while he was shopping for groceries.

As Judge Posner recently observed in his article, “Why There Are Too Many Patents in America,” this patent is a perfect example of a patent issued by the Patent Office with a near-zero cost-of-invention. It cost Mr. Agarwal nothing to create his patent, and it cost him nothing to bring the lawsuit (the law firm of Friedman, Suder & Cooke took his case on contingency fee). When you hear engineers complaining that the patent system is broken, a system that last year issued a record-breaking 247,000 new patents, this is the type of thing they are talking about.

According to the American Intellectual Property Law Association (AIPLA)’s 2011 survey, an average patent lawsuit costs between $900,000 to $6,000,000 to defend. In the last month and a half alone, Twitter has received three new patent troll lawsuits. The law currently does not allow us to recover the millions of dollars in fees we spent to defend ourselves — nor does it compensate us for the time spent by many Twitter employees who worked on the case. The law only allows us to ask for certain types of minor fees, which is why the court was only able to order this particular patent troll to pay us $10,447.85.

There is a bill that was introduced in Congress several weeks ago, by Representatives Peter DeFazio and Jason Chaffetz, which would try to change that. The SHIELD Act would put the financial responsibility for these sorts of trivial patent lawsuits on the patent trolls themselves. We support efforts like the SHIELD Act to improve our current patent system.

Ben Lee is legal counsel at Twitter.

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  1. Why don’t they write a new act to ban frivolous patents in the first place? SHIELD only makes things more lopsided in favor of large companies.

    1. Because it also costs quite a bit of money for patent reviewer’s to do more thorough job. Plus “frivolous” is actually easier said than done; and lastly, at most one can deny one patent, and then trolls try again with different patent, possibly different reviewer.. It is quite similar to fighting SPAM.

    2. Because less suits = less work for attorneys and judges

  2. Cap the amount Lawyers can get from them and the trolls would start to fade.

    1. Wrong, then they just get surrogates.

  3. I agree that the patent system, especially w/r/t software patents, seems to be out of control, but this seems like it might have a chilling effect on valid patent lawsuits naming large or well-funded corporations as defendants. If you’re a small innovator whose work has been stolen by some big corp that can afford high-priced lawyers where you can’t, what’s your recourse under the SHIELD act?

    1. Winning the case.

  4. Why not just make it so that the patent trolls have to pay all fees regarding the trial if they lose? Instead of creating more loopholes for large companies.

  5. I’ve just patented the idea for creating a SHIELD act that protects companies from being sued by patent trolls, and acts that prevent the creation of patents regardless of cost and/or “how-frivolous-they-may-seem.” I’ve also patented the idea that prevents acts that prevent patents from being patented. OOO BURRRRN.

    1. “Ideas” are unpatentable subject matter. Call it a method.

  6. Do away with patents altogether. Problem solved.

    1. Then what happens when a modestly compensated individual…lets say school teacher…or even college student…develops something brilliant or revolutionary, and a large corporation steals the concept and puts it into production? New markets and ideas would belong to centralized private power and it would almost impossible to really reap the indivual awards of innovation.

      1. Given that the patent system is designed to help the little guy and it is being used to destroy the little guy it simply isn’t working like everyone thought it would. It’s time to go back to the drawing board and put in a system that makes more sense.

  7. One way to stop the trolls, if they lose their claim they are forced to pay for the legal fees of Twitter. This will make the lawyer think twice before taking the claim to court.

  8. How about requiring a prototype or proof of concept for a patent. Patenting a design or idea is simply wrong.

    1. No, this would stop poorer people from patenting. If you can show diagrams that support an idea and have those designs patented, that should be good enough. It’s not right that a poor but intelligent person be unable to patent something because they don’t have access to expensive machinery that is needed to make their product.

      1. Poorer people? You have no idea what it costs to actually get a patent in the first place. The patent trolls are spending lots of money to patent incredibly obvious concepts that add nothing to the known base of technology. Then they earn millions by extorting settlements from defendants who would rather pay $100,000 than 10 to 100 times as much…so the patent validity is never actually tested. It’s a racket, and it’s a drain on society. The poorer people are the ones who have the most to fear; if they have a great idea and push forward with it, regardless of whether they get a patent or not, they will be obliterated if they attract the attention of even one patent troll with a ridiculous claim of infringement.

      2. are you kidding? every second of the day 3 people are having the same idea, and diagramming it is all it takes? drivel. i would say that a yearly progress update be required by the patent office that demonstrates a good faith effort in developing on the patent, or at least a good faith effort in obtaining funding, staffing or otherwise. The EDD requires you to show effort in obtaining an income on a weekly basis if you are on unemployment, so why isnt that a fair requirement if you file a patent.

    2. Prototypes or proof of concept are a practical requirement of disclosure. Pure ideas are unpatentable. One conflict comes from the inherent difficulty in differentiating computer programs (as a mechanism for doing something useful) from the mere abstract algorithms on which they are based. Another difficulty comes from the relative ease of claiming something “new” in a computer progran

  9. why not just abolish patents in the first place?

  10. $10,447.85 is no pocket change for patent trolls. Consider the fees lost as a deterrent of future patent trolls (or rather their dumb lawyers taking cases against twitter on contingency fee). Thanks for writing this article. It reveals a sad truth about the current state of innovation.

    1. It is completely pocket change… These patent trolls make a living suing as often as they can. They have some consideration in their accounting books to make up for a measly 10k, its just a loss of business associated with the risk. You have no idea how many other people this particular troll has sued and the defendant has simply settled for 100k since it is cheaper than court. Until the trolls risks properly out weigh the reward it will keep happening.

  11. J Nicholas Gross Monday, October 8, 2012

    Let’s take these comments in opposite order:

    “The law currently does not allow us to recover the millions of dollars in fees we spent to defend ourselves — nor does it compensate us for the time spent by many Twitter employees who worked on the case.”

    Right off the bat, you know that statement is NOT true. As inhouse counsel defending patent cases, you are no doubt aware that 35 USC 285 gives the defendant as much opportunity as a plaintiff to get attorneys’ fees. Astounding that you would make such a blatant omission.

    You earlier state:

    “Many of these are baseless, and our policy is to fight them with all our might. In fact, we have never agreed to pay to settle a patent suit.”

    Here I would say, its apparent that the Courts don’t agree with your assertion, or they would have given you your fees.

    What Twitter and a bunch of large companies would like, I’m sure, is a special law written for them that makes it easier for them to simply ignore patents and walk all over the little guys, because they know the latter have very little money to hire expensive lawyers. Twitter files for its own patents, so it is amusing that it somehow considers everyone but itself devoid of technical merit, and therefore the use of third party technology as somehow unworthy of financial reimbursement. BTW Steve Jobs also had no technical degree, and did little or no programming, yet he was an inventor of hundreds of useful patents dealing with computers and software.

  12. If you want to hurt small business, oppose this idiotic legislation – if your lawyers are too expensive, blame yourself.

    1. I meant “If you want to hurt small business, support this legislation….”

  13. Why are the costs so high? If the lawsuit is frivolous, then $10,000 is a lot of money to pay for a simple filing. Don’t you know there are a ton of out of work lawyers out there? Stop paying your legal team so much money, and it will stop costing you so much money.

  14. Will all invention thieves please leave this forum. Hello……………..

    “Patent troll”

    Call it what you will…patent hoarder, patent troll, non-practicing entity, shell company, etc. It all means one thing: “we’re using your invention and we’re not going to pay or stop”. This is just dissembling by large invention thieves and their paid puppets to kill any inventor support system. It is purely about legalizing theft. The fact is, many of the large multinationals and their puppets who defame inventors in this way themselves make no products in the US or create any American jobs and it is their continued blatant theft which makes it impossible for the true creators to do so.

    It’s about property rights. They should not only be for the rich and powerful. Show me a country with weak or ineffective property rights and I’ll show you a weak economy with high unemployment. Does that remind you of any present day country?

    Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now some of those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don’t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

    Those wishing to help fight big business giveaways should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

    For the truth about trolls, please see http://truereform.piausa.org/default.html#pt.

  15. i want money frist can helpe me?

  16. The SHIELD act is a step in the right direction, but just the idea of going to court is enough to scare most people into settlements anyways, and it’s not going to fix that problem.

    What really needs to happen is to ban NPE’s from filing lawsuits in the first place. If you “own” an idea, but you are not doing anything with that idea other than suing others – that should not be legal.

  17. Contact your congressman!

    I don’t believe in protecting patents if you don’t have a product although I also know there are probably exceptions.

    But yes I remember people at ATT Labs who would patent the voice message system flow diagram. Or that was part of the patent. It is nice and all. But give any engineer in that field the task and they would come up with a similar system.

    I am also thinking many patents (the more frivoulous ones such as many software patents) should be more shorter term. You have a few years to get a jump on the market. After that its over.

  18. Twitter, wouldn’t this bill deter an engineer with a valid patent to file for a lawsuit against corporation or a large company such as yourself?

  19. Let’s just make it illegal to own patents that are not being used by the patent holder. At the very least, make it illegal to sue over a patent that is not being used by the patent holder. I think that would pretty much kill off all the patent trolls out there.

  20. Just from the information from the article, I don’t really consider the person that sued Twitter a troll. They did not look at other patents then just decide to “one up it.” A troll patents something that is basically obvious but not so obvious that it cannot be patented. This guy on the other hand created it in his mind while grocery shopping. Good for him.

    And I’m sorry you got sued.

    Unlike what you propose, I do not think there should be a financial barrier to invent something and claim protection save for standard government filing fees. All this “SHIELD” appears to do from this article is protect big business when these businesses should be instead putting sufficient money into R&D and developing the idea to begin with. Not passing SHIELD would encourage big businesses to innovate on their own.

    You hark on how awesome it is that you never settle. But if you thought of it less as a vindication deal and more of a business decision, you could probably save money by settling for a fraction of the cost and requiring a nondisclosure agreement prior to suit and it becoming public.

  21. If the troll was liable for the cost of a failed lawsuit, that would drop frivolous lawsuits to near zero.

  22. I’m tired of the modern misuse of “troll” by old people. You’re old, just accept it and stop trying to sound hip and modern. On a more topical and anonymous note. I think patent lawsuits are excellent for the economy!

  23. Its not the patent laws that are the problem. The problem is that the courts encourage frivolous suits of all kids by not requiring the loser to pay for all legal expenses. I have been victimized by patent trolls and by employees filing bogus discrimination suits. Attorneys take these cases on contingency and there is no alternative but to settle.

  24. The faster the ‘Patent trolls are made to bear the cost’ into an International Law, the safer the world is from the mongers living on freebies.

  25. Byron M. G. Sanford, Esq. Tuesday, October 9, 2012

    Reblogged this on Briskin, Cross & Sanford, LLC and commented:
    This is an interesting opinion piece by Twitter’s Ben Lee. I absolutely agree with his proposition that US IP enforcement laws should include a cost shifting mechanism (i.e. loser pays winner’s attorneys’ fees) where the litigation is found to be frivolous. Frivolous litigation clearly is an unwanted economic drain. Unfortunately, however, such cost shifting mechanisms do not address the issues created by NPEs (i.e. patent trolls) who amass intellectual property portfolios in order to become virtual gatekeepers on the road of technological advancement. That is an issue which will require a much more subtle, nuanced approach, balancing the benefits of rewarding innovation while preventing the financial road-blocking of further innovation.

  26. Whingers. If the cases against Twitter are frivolous, a judge will dismiss the case during a Markman Hearing. What Twitter people are moaning about is they feel entitled because they have lots of users and suddenly realized they should have been patenting processes and methods all along. They woke up one day and said ‘Uh-oh!”. Too darn bad. Patents are property. What was once done by gears and pulleys is now down by software.

  27. Another Guest Tuesday, October 9, 2012

    New legislation is not needed. Judges have long had the ability to assign legal fees to the party which did not prevail. Certain circumstances are required, but if the suit is truly egregious, a well crafted request by the prevailing legal team can result in fees assigned to the losing party.

  28. Harry mustaffa Tuesday, October 9, 2012

    Apple is the biggest patent trollof them all

  29. Reblogged this on musefulness and commented:
    This isn’t usually a subject I post on, but I couldn’t agree more that patent law needs a major upheaval.

  30. Matthew Slyfield Tuesday, October 9, 2012

    I have a better idea.

    Make the plaintif in a patent case front the defendents legal fees and costs. The can recover said costs only if they win.

  31. There are several issues here intertwined. Yes, we have to stop the patents trolls. But how about easy money that big corporations earn with ridiculous patents or the threat of it? Who can withstand them? The bill is not thinking about how to protect legitimate claims that find a biased jury. Once tghey loose in court they cannot afford anything. And the risk is increasing for the SMBs here, not decreasing. Would be an interesting topic for our 12th European Software Conference in November in Munich, Ben, if you read this and are interested please contact me at software at email.de

  32. Frivolous lawsuits (including patents) would be dramatically reduced if we instituted a “loser pays” system. We are one of the few industrialized countries who do not have a loser pays system in place for civil litigation. Imagine if all the patent trolls and slip-n-fall huckster actually had to pay when they lost? Then companies would actually fight instead of settling out of court, which costs consumers higher prices. The little guy would still be protected, because legitimate lawsuits would still find lawyers who work on contingency.

    Why don’t we have a loser pays system? Probably because the Trial Lawyers lobby is the largest in the nation except for Teacher Unions.

  33. закон действительно нужно пересмотреть….

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