December 9, 2013 | By Julie Samuels

EFF Asks Supreme Court to Expand Fee Shifting in Patent Cases

Today, EFF—along with Engine, the App Developers Alliance, and Public Knowledge—filed a brief asking the Supreme Court to retain some sanity in the law and tighten up the rules around fee shifting. Fee shifting, sometimes called "loser pays," is already in the Patent Act. While the statute currently says that "the court in exceptional cases may award reasonable attorney fees to the prevailing party," the Federal Circuit has created a standard that makes this law essentially meaningless—fees are granted in but the smallest fraction of cases.

Properly applied, fee shifting can be an important tool to rein in patent trolls. Those trolls use the ballooning cost of patent litigation to extort quick settlements from potential defendants. Facing years in court and millions of dollars in legal fees, it's no wonder that so many defendants chose to not fight back. Of course, not fighting back only emboldens the trolls.

As we wrote in our brief:

The consequence of the Federal Circuit's withering of Section 285 protection is the creation of an industry of patent abusers, decimating the very small businesses and startups that drive American innovation. The intimidating cost of patent litigation is often sufficient to defeat those small parties before they even enter the courthouse door. These costs are not just legal fees: they are also the stress associated with litigation; employee time lost in deposition, discovery, and trial; and the stifling of productive output during the pendency of litigation. Thus, facing the threat of a lawsuit, a potential defendant finds itself with virtually no choice but to settle, even if it believes it has a meritorious noninfringement or invalidity case. And the proverbial analogy continues full-circle: feeding a troll just emboldens that troll to act again, while blighting the innovators upon whom the trolls feed.

Enter fee shifting. If defendants had reason to believe they might recover their costs and fees, even in some cases, it only stands to reason that more companies would join the ranks of those taking the fight back to the trolls.

The Supreme Court is not alone in looking into fee shifting. The Innovation Act, which just passed out of the House of Representatives, includes a provision that would strengthen fee shifting. And the White House, too, has explicitly endorsed expanding fee shifting. We'll be watching closely in the coming months and continue to petition courts and policy makers to level the playing field by giving those who face the threat of patent trolls tools to fight back.


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