April 29, 2014 | By Daniel Nazer

Watch Out Trolls: Supreme Court Expands Fee Shifting in Patent Cases

Lately it seems every day has a big new patent story. Yesterday, the Supreme Court heard argument in an important case about the problem of vague and ambiguous patents. Today, the Court issued twin rulings, in Octane and Highmark, that will make it easier for defendants in patent cases to get attorney’s fees. This decision is bad news for patent trolls who bring weak cases and use the high cost of defense to extort settlements. While it’s a step in the right direction, we hope it will be followed by broader legislative reform curbing patent troll abuse.

Today’s unanimous opinions deliver a strong rebuke to the Federal Circuit (the intermediate appeals court that hears patent cases). By imposing strict requirements not found in the statute, the Federal Circuit had made it almost impossible for defendants to get attorney fees after defeating a weak case. In its Octane opinion, the Supreme Court applied a much more flexible standard, ruling that trial courts should award fees “in the case-by-case exercise of their discretion, considering the totality of the circumstances.” EFF had argued for precisely this result in the amicus brief we filed in the case.

In the second decision, Highmark, the Supreme Court held that appeals courts should be more deferential when reviewing fee awards in patent cases. In essence, today’s twin rulings cut the notoriously pro-patent Federal Circuit out of the loop in fee shifting disputes. This will give trial judges, who are closer to the action and better able to spot abusive tactics, more power to award fees. We hope trial judges use their new authority wisely and cut down on abusive patent troll litigation.

We can expect opponents of patent reform to argue that today’s decisions mean that we should delay, or even abandon, efforts to pass new patent legislation. But this ignores the fact that current proposals include many additional reforms—like heightened pleading and end-user protections. And the fee shifting proposals before Congress would be stronger than current law. We need patent reform on multiple fronts—the courts, the Patent Office, and Congress—to deliver real change.

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