IP lawyer: U.S. SC ruling has become a ‘viable tool’ in battle against patent trolls

By Jessica M. Karmasek | Oct 27, 2014

ST. LOUIS (Legal Newsline) - Rudy Telscher, a principal at intellectual property law firm Harness Dickey, says more federal district court judges are awarding attorneys’ fees to prevailing parties in patent infringement cases.

Telscher, who works in Harness Dickey’s St. Louis office, is partially responsible for starting the trend.

He was part of the lead counsel representation for Octane Fitness LLC.

In April, in Octane Fitness LLC v. ICON Health & Fitness Inc., the U.S. Supreme Court ruled 9-0 to expand the availability of attorneys’ fees for prevailing parties and increase federal district courts’ discretion in awarding the fees.

Specifically, the justices wrote in Octane that the U.S. Court of Appeals for the Federal Circuit’s framework in a previous decision, Brooks Furniture Manufacturing Inc. v. Dutailier International Inc., was “unduly rigid” and that it “impermissibly encumbers” the statutory grant of discretion to district courts.

Basically, the nation’s high court made it easier for courts to make the loser pay for all attorney costs, if the lawsuit is considered frivolous.

Telscher delivered the oral argument for Octane.

“The Supreme Court’s decision is well-reasoned and changed several important aspects of prior law that made it impossible to secure an award of attorneys’ fees in even the weakest of cases,” he said in a recent interview.

He said he hoped that winning the case, i.e. altering the standard, would lead to a “viable tool” for federal judges to combat weak patent cases and alleviate the need for pending Congressional action that was intended to address the issue.

“We are even more pleased that our hopes are becoming reality,” he said.

Telscher explained that from 2005, when the Federal Circuit articulated its Brooks standard for the first time, to 2011, when a federal district court denied attorneys’ fees in Octane, that there were -- to his firm’s knowledge -- no attorneys’ fee awards affirmed by the Federal Circuit based on the weak merits of the case.


There were a few fee awards for litigation misconduct and inequitable conduct, he noted, but not strictly because a case was weak.


“In complex patent litigation, with complex law and complex legal documents, with both sides having competing experts and mountains of briefing, it is nearly impossible to convince a federal district court judge that the plaintiff’s case had no chance or no merit.,” he explained.


Even when district court judges felt a case was exceptional under the prior standard, the Federal Circuit -- which hears all U.S. patent appeals -- reversed nearly every time during that prior era, Telscher said.


“Many amicus filers supported our position and resounding comment regarded that it was nearly impossible to secure attorneys’ fees in patent cases, during a time when everyone believed weak patent cases had reached epidemic levels,” he said.


Telscher said since the Supreme Court handed down its Octane decision in the spring, there have been more than 10 awards of attorneys’ fees by federal courts.


“District courts appear to understand that Octane affords them a more favorable standard to award fees in appropriate cases, and that there is substantial congressional and public interest in reigning in weak patent cases,” he said.


So what does this mean for so-called “patent trolls” and the current patent system?

Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product. In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as patent trolls.

“There are certainly (non-practicing entities) or trolls that find legitimate patents that have legitimate technology bearing on the marketplace today,” Telscher noted. “Any such entity that brings a reasonably debatable patent position and case should not be affected by Octane.


“All too often, however, and certainly in the last five years, as the patents have been picked over, there has been a proliferation of weaker patent cases brought by NPEs.


He continued, “Now, in view of Octane, NPEs will have to think much harder about bringing weak patent cases and companies defending such weak patent cases will now have greater incentive to defend such cases instead of paying a ransom to get out of the suits.”


Telscher said he expects, in light of the decision, that judges will take a harder stand against weak patent cases by shifting fees to bring the system “back into equilibrium.”


From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

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