Lumen View is a typical patent troll. Armed with a vague patent on “facilitating bilateral and multilateral decision-making,” it sent out aggressive letters demanding payment. It refused to explain how its targets actually infringed its patent. Instead, it made shakedown offers it knew would be less than the cost of defending a lawsuit. When startup FindTheBest spoke up about Lumen View’s tactics, the troll asked for a gag order. Thankfully, Judge Denise Cote of the Southern District of New York refused the troll’s censorship demand.
Since then, things have not gone well for Lumen View. FindTheBest convinced Judge Cote to declare its patent invalid. After that, the court ordered Lumen View to pay FindTheBest’s attorney’s fees. At the time, this was one of the first rulings applying the Supreme Court's decision on fee-shifting in Octane Fitness. We praised the ruling as a good model for future patent troll cases. The trial court showed a clear understanding of the patent troll’s abusive tactics. These included the attempt to get a gag order, threats to make the litigation especially expensive, and a failure to investigate before filing.
Last week Cote ordered that, to deter future abusive litigation, the fee award should be doubled. She wrote:
This litigation was resolved on the merits because this defendant has the financial ability to resist the plaintiff’s pressure and because it chose to fund a defense in court rather than pay an unwarranted, less expensive licensing fee. It appears that none of the other defendants sued by Lumen made that choice. As a result, but for [FindTheBest]’s financial resources and resolve, Lumen’s predatory behavior would likely have proceeded unchecked. Any award in this action must be substantial enough to deter Lumen from pursuing baseless claims in the manner Lumen used in this case.
This is exactly right. The patent troll business model flourishes because it is cheaper to settle than fight. The so-called inventors behind Lumen View’s idiotic patent are the same people who received a patent for the distribution of press releases via email. That patent was also farmed off to a shell company and used to sue a bunch of companies (and the subject of a TED talk by Drew Curtis). This fee award may deter further campaigns.
While Cote’s ruling is encouraging, we still need systematic patent reform. Shell companies like Lumen View may be able to avoid paying fee awards. The Innovation Act (which overwhelmingly passed the House but stalled in the Senate) would allow defendants to join the real parties in interest (parties that financially benefit from the litigation) and collect any fee award from them. The prospect of fee awards being imposed on losing trolls could also lead to more forum shopping as plaintiffs seek patent-friendly judges. Last year, over 900 patent cases were assigned to a single judge in the Eastern District of Texas. It remains to be seen if judges in other districts will be as tough on abusive troll litigation.