Patented Stamp

Patent law and antitrust law are converging due to the alleged threats to the economy by “patent trolls”.  This could open up new avenues of patent and antitrust litigation, requiring not only the use of patent infringement expert witnesses, but also those in the antitrust field, such as antitrust and business expert witnesses.

So-called patent trolls, entities who sue businesses for violating patent rights possibly without justification, have been portrayed as antagonists using the legal system to prey upon unsuspecting businesses.  These Non Practicing Entities (NPE’s) may have huge portfolios of patents and may sue anyone and anything that may arguably be infringing on these patents.  Because of how they’re structured, NPE’s can’t be counter-sued under patent law.  It’s been estimated that more than half of the 4,000 patent infringement cases filed last year were filed by NPE’s.

Their targets claim these lawsuits are just sophisticated extortion attempts because the patents the NPE’s hold may not be valid and the claims they’re being violated may be weak.  Given the high cost of litigation, many NPE targets find it cheaper to settle claims and move on.  The Boston University School of Law study estimates NPE litigation costs the economy $29 billion.1

This business has gotten the attention of the White House.  Earlier this year, President Obama announced a number of executive actions and legislative proposals to curb the problem.2 Edith Ramirez, the chairwoman of the Federal Trade Commission (FTC), the federal agency that enforces antitrust laws, recently announced her agency will begin the rulemaking process to implement the President’s initiatives.

One particular sub-species of patent troll is getting the attention of the FTC.  The “patent privateer” is a “patent assertion entity” that may be using the legal system for anticompetitive reasons.  Federal antitrust law’s goal is to promote competition and encourage the marketplace to create as many goods and services, in the widest variety of qualities, quantities and prices.  An example of an illegal act would be Industries A transferring a number of patents to C Enterprises, so that it can threaten to sue B, Inc., (Industries A’s rival) for alleged infringement.  The purpose of Industries A is to increase the costs of doing business for B, Inc.  The goal is not so much to enforce the patents as it is to restrain competition.

The tool FTC could use against these privateers, and other NPE’s, is Section 5 of the Federal Trade Commission Act.3 It prohibits unfair or deceptive acts or practices that affect commerce.  Patent troll critics say they falsely claim they have valid patents and the costs of paying them off, or litigating the issue, is affecting their ability to do business and constraining their ability to grow and innovate, thus affecting commerce.

As patent trolls impact a wider range of businesses, and suing other business for more money, their success is making them a bigger target (rightly or wrongly) of government action and more creative defense attorneys.  If you have a client on one end or the other of this issue, consulting the right experts and using the right expert witnesses will be critical to your client’s success.  These areas of laws are notoriously complex and you’ll need the help of patent infringement expert witnesses.

Whether your client is the one crossing the bridge, or is the troll underneath it, federal government action and the use of antitrust law promises to make this a legal issue doubly dependent on expert witnesses.

1 Source: http://www.bu.edu/law/news/BessenMeurer_patenttrolls.shtml

2 Source: http://www.whitehouse.gov/sites/default/files/docs/patent_report.pdf

3 Source: http://www.federalreserve.gov/boarddocs/supmanual/cch/ftca.pdf

By: Rodney Warner, J.D.