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Business litigation involving patent cases may be regulated

| Oct 20, 2014 | Business Litigation |

A widely recognized and discussed phenomenon in business litigation, including in North Carolina, is the frivolous patent infringement lawsuit. A distinct group of companies have been formed strictly to pursue business litigation claims against small, medium and large businesses, for patent infringement. The plaintiff company buys up patents, generally in the technology sector, and then searches for companies to sue on the basis that they are using the same or similar technology as set forth in their patents.

The claims are nebulous and sometimes difficult to defend without the defendant company having to spend large amounts of time and resources to do it. The plaintiff “patent troll” thus tries to outlast the victim until a settlement is obtained. In prior years, defendants buckled under the prospects of spending more in litigation costs than they would for a relatively inexpensive settlement early in the case.

That strategy was successful for several years. Recently, however, some companies have defended the suits aggressively, with success. Furthermore, the problem is controversial enough that Congress began to debate legislation to control frivolous patent litigation. One U.S. Senator, John Cornyn from Texas, had sponsored a statute for patent litigation reform last year, but it failed to pass.

This year he plans to try again. It makes it more difficult for predatory companies to sue for frivolous claims intended only to compel out-of-court settlements. Although the Senator recognizes that companies have a right to litigate, the goal is to limit the numbers of blatant, obstructive cases that are filed. The cases usually deal with software patents pertaining to some aspect of the technology revolution.

Both in North Carolina and nationwide, the problem arises with software programs that may generate somewhat broad applications that can be similar to others in the same genre. This can create confusion and doubt when the intricacies of a patent are enforced against a company that is generally using a similar idea. Such business litigation is often considered unfair and unjustifiable, but getting satisfactory legislation to control it is another problem that may or may not be resolved.  

Source: venturebeat.com, “Sen. Cornyn: We need to limit the business of ‘frivolous’ patent litigation“, Tom Cheredar, Oct. 8, 2014

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