Presented to ACC America September 19, 2014 By: Jason M. Schwent Taming the Trolls: Litigation Strategies for Dealing with Patent Assertion Entities

PAEs/NPEs/Patent Trolls  Various Names Patent Trolls Non-Practicing Entities (NPEs) Patent Assertion Entities (PAEs)

Percentage of Patent Troll Cases Filed in U.S. (2010 – 2012) Why are they a problem? 29% 40% 56%

PAE Litigation  What Do They Want?  Who Are They?  Litigation Strategies  Legislative Responses

PAE Litigation  What do they want? Always, without exception… MONEY!!!  What do they give you? Nonexclusive license Covenant not to sue Not likely to keep $$$ confidential (especially ED Tex) Under current law, no injunction likely

PAE Litigation  Who are they?  Acacia, GeoTag, EMG, Helferich, Lodsys, etc. Usually familiar plaintiff’s counsel Contingency fee relationship Wealth of information Prior suits Prior rulings Prior settlements Prior art Prior work by others

PAE Litigation  Litigation Strategies If you’re sued…. Fight or Flight? Safety in Numbers Merits Think creatively Third-Parties

PAE Litigation  Fight or Flight Early settlement Spend is low Early discount Poorly developed info Fight then Flight Maximize leverage – Timing-based leverage – Evidence-based leverage – Patent Office challenges Leverage cost savings

PAE Litigation  Safety in Numbers Co-defendants Pool resources Prior art searching Experts Ride later wave Preserve individual defenses

PAE Litigation  Merits Infringement Do you practice it? Is it important? Is part of it done outside US? Is it already licensed? Invalidity Is the patent valid? Prior art searching Patent Office re-review – Possible stay of litigation

PAE Litigation  Patent Office Challenges Ex parte reexamination Challenger starts—no further role Post-grant review w/in 9 mos. of issuance Inter partes review at least 9 mos. post-issuance Covered business method patent review

PAE Litigation  Think creatively Early motions Narrow scope of case Attack patent assets – on multiple fronts Any dirt on PAE?

PAE Litigation  Third Parties Indemnification Vendor/Supplier Possible stay? License Broker Interested Parties Bounties

PAE Litigation  Washington perception of the size and scope of the problem Small businesses and inventors being harmed Innocent end users and customers – Coffee shop WiFi – Scanners – Local retailers Innovation and employment PAE litigation increase Prior fixes weren’t enough  State Attorney General actions

PAE Litigation  Patent reform legislation? Current Status = Dead Compromise could not be found What was the problem?

PAE Litigation  Two problems: Defining wrong doers Unintended consequences

PAE Litigation  Who to target?  Target entities who don’t make, sell, or develop anything Patent holding companies Trusts Universities  Target entities whose only income is from patent enforcement Patent holding companies/trusts Universities Small Inventors

PAE Litigation  Unintended consequences… Fee shifting? Plaintiff litigation bonds? Punishing meritless arguments? Early claim construction/discovery stay? Administrative alternatives?

PAE Litigation  So now what? Congress wants to try again Court based reform Octane Fitness, LLC v. ICON Health & Fitness, Inc. Highmark, Inc. v. Allcare Health Management System, Inc.

Questions

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