Judges speaking at a panel of the Eastern District of Texas Bench-Bar Conference said the horror stories of patent trolls shutting down businesses with abusive litigation don't jibe with what federal judges from across the country see in court, and they are concerned an overreaction by Congress would disrupt the courts and make it harder to litigate all patent cases. Businesses and patent holders in the U.S. would be better served if both judges and patent litigators broke from the mold and used lower-cost practices to resolve disputes, they said.
"We need to police our own house," U.S. District Judge Cathy Ann Bencivengo of the Southern District of California said. "Let's deal with the problems and not have Congress come in and say this is how I need to run my courtroom. Their reality and mine are very different."
U.S. District Judge Barbara M.G. Lynn of the Northern District of Texas is part of a patent pilot program that directs patent cases in the district to one of three judges, intended to enhance expertise in patent cases.
She said abuses in patent disputes generally happen before a case is ever filed — with demand letters and threats of litigation — but that those matters are front-loaded and don't usually make it to her. Instead, "abusive litigation" has become code for patent trolls and slamming non-practicing entities, but it's an "overstated problem," according to her.
"This is a problem that exists in the mind of Congress, but it's not a problem that exists in great numbers in actual litigation," Judge Lynn said.
Former Eastern District of Texas Judge Leonard Davis, now a partner at Fish & Richardson PC, said that in his years on the bench, he did see abusive litigation, which he defines as someone using the judicial process and patent rules as a vehicle to extract money not based on the merit of the patent but the cost of the litigation.
But those cases are few and far between compared to legitimate disputes, and wholesale changes to the patent system threaten to "throw the baby out with the bathwater," he said.
"I think it's a bigger problem from the standpoint of the attention it gets than the reality," Davis said. "Abusive litigation makes great fodder for those who want to modify the system for their own gain. It gets more attention than the reality of it is."
Davis added that it's not just the judiciary but also practitioners in the bar who need to take action when they see litigation that exploits the judicial process, rather than focusing on the merits of a patent. If lawyers don't act to curb problematic litigation, Congress will step in and could make changes that further complicate patent litigation, he said.
When Davis was on the bench, he created a "Track B" program in the Eastern District that called for earlier disclosures of information from both sides on questions of damages, infringement and validity. The point was to enable a more meaningful scheduling conference early on, and also serve as a tool to identify "cost of defense cases," in which the plaintiff is leveraging a fear of huge trial costs to extract a quick settlement, he said.
But in general, Davis said he didn't see defense lawyers pushing for changes to the trial schedule in ways that could resolve cases more efficiently.
"I've been surprised there hasn't been more interest in pursuing that," Davis said. "Lawyers are creatures of habit. They're used to following standard procedure and can be timid about raising something new. They think judges will be offended.
"I don't think that's the case in the Eastern District. If you can make your case and show that a novel approach can cut costs and speed up resolution, that goes a long way."
Judge Lynn said she has a rule in her court that gives litigants a way to get to trial within six months, with very limited motions practice. In 16 years on the bench, the option has been used only twice, she said.
"Lawyers need to get on board with programs that allow them to cut costs for small cases and work out a methodology to charge clients less so they have a reason to stay in," she said.
Mike Jones of Potter Minton PC said that for his clients, dealing with small but unmeritorious patent claims comes down to a business decision.
When a client gets a demand for a $25,000 licensing fee — or even less — it's hard to justify the cost of defending a lawsuit, he said. Courts and lawyers need to find a process that allows defendants to resist a patent infringement claim for an economically reasonable sum, he added.
"To me, it's not so much an issue of abuse but how you deal with small lawsuits," Jones said. "We need an efficient way to allow defendants to say no. The frustration is that defendants feel there's no way to say no."
McKool Smith PC's Doug Cawley said that with the average cost of defending a patent suit reaching $750,000, there's a hotbed for abusive plaintiffs who are just trying to get money without a real debate about the merits of a given patent.
He said federal court judges have shown a willingness to address the problem but that, to an extent, their ability to do anything about it is constrained by what practitioners put before them.
--Editing by Catherine Sum.
