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Supreme Court Clears Patent Invalidity Suits

ScuttleMonkey posted more than 7 years ago | from the open-season dept.

Patents 120

The Empiricist writes "The United States Supreme Court has cleared the way for entities to sue over the validity of a patent — even while paying user fees to the patent holder. The eight-to-one Medimmune v. Genetech decision, written by Justice Scalia, held that by paying royalties to a patent holder, one does not necessarily waive the right to challenge the validity of the patent."

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One would hope... (5, Insightful)

Bryansix (761547) | more than 7 years ago | (#17547346)

that it is obvious that the Supreme Court would reach this decision. Any other decision would defy all logic.

Re:One would hope... (4, Insightful)

Quila (201335) | more than 7 years ago | (#17547372)

Any other decision would defy all logic.

Which is why I almost expected any other decision. Some of their recent decisions have not been at all logical.

Re:One would hope... (5, Funny)

Mayhem178 (920970) | more than 7 years ago | (#17547384)

Any other decision would defy all logic.

You're not from around here, are you...

Re:One would hope... (3, Funny)

Tackhead (54550) | more than 7 years ago | (#17547468)

> > Any other decision would defy all logic.
>
> You're not from around here, are you...

One thing's for sure, he sure as hell ain't from the patent office or the Supreme Court.

Re:One would hope... (4, Insightful)

MBCook (132727) | more than 7 years ago | (#17547420)

I'm quite glad that they did and by such a large margin, but the lower court's opinion had logic behind it. If you license the patent, then you are agreeing that it's valid (you licensed it, after all), and thus have no right to challenge it's validity. That logic makes sense, however, this decision makes quite a bit more sense. You shouldn't be forced to either fight a patent and not be able to produce whatever the patent covers during the multi-year suit (or risk massive fines) or just basically giving up and licensing the patent so you can stay in business.

This is a GREAT decision, and should help with software patents ("Sure we've been paying you for your patent on the window close button, but it's obvious so we are challenging it").

The one catch: As a patent holder I'm not required by law to license to you. I believe I can even revoke (or refuse to renew) your license. So patent holders could use that as leverage to prevent suits by declining to let people license the patent while they were actively challenging it in court.

Re:One would hope... (1)

stevesliva (648202) | more than 7 years ago | (#17548114)

You shouldn't be forced to either fight a patent and not be able to produce whatever the patent covers during the multi-year suit (or risk massive fines) or just basically giving up and licensing the patent so you can stay in business.
IANAL, but I believe that licensing is forced when you want to prevent getting whacked with treble damages for willful infringement. As soon as you're notified, you'd better license or be damn sure that you'll prevail in court. This decision allows you to license to get out of willful infringement morass while still hedging your bets by arguing that patent is bogus in the first place...

Re:One would hope... (2, Insightful)

Schraegstrichpunkt (931443) | more than 7 years ago | (#17548206)

The one catch: As a patent holder I'm not required by law to license to you. I believe I can even revoke (or refuse to renew) your license. So patent holders could use that as leverage to prevent suits by declining to let people license the patent while they were actively challenging it in court.

I'm not sure the judge would be impressed with that.

Re:One would hope... (1)

quanticle (843097) | more than 7 years ago | (#17551868)

Why not? A patent grants me a legal monopoly on the production and distribution of a good. I can use my monopoly powers to stop others from challenging my market. I don't see anything irrational or morally outrageous about the matter.

Re:One would hope... (2, Insightful)

drinkypoo (153816) | more than 7 years ago | (#17548266)

If you license the patent, then you are agreeing that it's valid (you licensed it, after all), and thus have no right to challenge it's validity. That logic makes sense

No it doesn't. That's like saying that signing a ticket is an admission of guilt. It is not. It is an admission that you have a ticket (or in this case, an admission that there is a patent) and then you go to court and fight over whether or not you should have gotten a ticket - and in this case, you go to court over whether they should have gotten a patent.

Licensing a bullshit patent is good business sense and, really, a necessary protection if you want to sell something covered by that patent whether it's a good patent or not - just as signing the ticket is a necessity if you don't want to go to jail and have your car towed. I'm pretty proud of this particular simile - it's an almost-automotive metaphor that isn't totally worthless :D

Re:One would hope... (4, Informative)

morgan_greywolf (835522) | more than 7 years ago | (#17548304)

The one catch: As a patent holder I'm not required by law to license to you. I believe I can even revoke (or refuse to renew) your license. So patent holders could use that as leverage to prevent suits by declining to let people license the patent while they were actively challenging it in court.


You might be. It depends on what kind of agreement you signed when you licensed me the patent. Many patent agreements either license the patent for n units (i.e., You agree to license your PatentWidget(tm) technology to me for a flat fee on 1,000,000 units of my product that incorporates your PatentWidget(tm) technology), x years (i.e., You agree to license your PatentWookie(tm) system to me for a period of 1 year), or some are even in perpetuity, but say, limited to a specific geographic area. Many do, however, have stipulations that the license becomes revoked if a lawsuit is filed against the patent holder.

IANAL

Re:One would hope... (1)

tony1343 (910042) | more than 7 years ago | (#17548836)

Why would someone license patent technology for perpetuity when the patent only lasts 20 years from filing or 17 years from issue? That doesn't seem to make much sense; once the patent term is over there is no need to continue paying royalties. I guess this just might be the price one pays to be able to use the technology before the term expires.

Re:One would hope... (1)

Free_Meson (706323) | more than 7 years ago | (#17551086)

I guess this just might be the price one pays to be able to use the technology before the term expires.

You get into antitrust and patent misuse issues pretty quickly if you go down that road. A patent holder can be sanctioned very heavily for patent misuse. IIRC, a patent holder's monopoly right can even be revoked for such abuse, at least in the US.

Re:One would hope... (1)

StikyPad (445176) | more than 7 years ago | (#17548364)

The one catch: As a patent holder I'm not required by law to license to you. I believe I can even revoke (or refuse to renew) your license. So patent holders could use that as leverage to prevent suits by declining to let people license the patent while they were actively challenging it in court.

That's not necessarily a catch since licensing income may well turn a profit after court costs, whereas court costs alone is a guaranteed loss. In other words, it would be foolish not to accept money from the person who's trying to invalidate your patent. It's unlikely they'd have to repay it, but even if they did, it would be usable capital while they had it.

Re:One would hope... (1)

kcornia (152859) | more than 7 years ago | (#17549914)

But the question I came here to ask/see responses on is, if I pay you royalties on a patent, and that patent is later ruled invalid, do I have any recourse with regard to recouping royalties I paid you on an invalid patent?

Not sure how good faith, reasonableness, etc. apply when it comes to contracts and such

Re:One would hope... (1)

StikyPad (445176) | more than 7 years ago | (#17551090)

Hopefully a lawyer reads this far down so they can lend some insight, but my guess would be that there would not be any sort of restitution since a) the patent was granted, which means the patent holder had a reasonable belief that licensing his patent was legal, b) the licensing arrangement was entered into voluntarily, and c) that would create a huge liability for patent holders. Item B is probably the strongest -- licensees could have opted not to license if they felt a patent was invalid. From a business perspective though, it's definately safer to license.

Re:One would hope... (2, Interesting)

Dr. Donuts (232269) | more than 7 years ago | (#17548806)

Yes, you could refuse to license to a company beforehand if you believe they will sue to invalidate. However, if they are successful in invalidating your patent, then your patent has no value and you've gained nothing. If you revoke a license after a lawsuit is initiated and your patent is invalidated, then you've gained nothing.

If your license is not invalidated, then the invalidation suit raises questions as to whether a company knowingly violated a patent. If you come to me demanding a license, I don't agree because I believe your patent is invalid and sue to invalidate, then the "knowingly" part of treble damages comes into suspect. The simply act of notifying a person/company they are in patent violation wouldn't be enough. Only after the failure of an invalidation suit and you *still* violate the patent could you be reasonably held to be "knowingly" violating the patent.

I suspect that we'll see companies filing lawsuits to invalidate patents just to avoid paying the treble damages in the event they are unsuccessful in overturning a patent.

Re:One would hope... (1)

phorm (591458) | more than 7 years ago | (#17549426)

If you license the patent, then you are agreeing that it's valid (you licensed it, after all), and thus have no right to challenge it's validity.

Partly, but in many ways it's just part of covering your bases. If you have a legitimate arguement that the patent is invalid, it could still take a substantial period of time to prove. In the meantime, you could also be sued, and when the courts seem to allow such things as US companies sueing foreign entities for more than their country's GDP, then one can see how much that would suck.

So long as the license doesn't have a do-not-sue clause, you can protect yourself from lawsuits and try to have the patent invalidated. It might be cheaper to pay $10,000/year and have the patent nuked after 1-2 years than fight lawsuits of $10,000,000, have production of your goods halted, and have the stigma of being sued for patent violation (which may mean less sales) hanging over one's head.

Re:One would hope... (1)

Curunir_wolf (588405) | more than 7 years ago | (#17551886)

Thomas' dissent was logical, too. He made some good arguments for not accepting the case, based on the precedents that require an "actual controversy" before the court can decide a case. His opinion only makes sense in a strictly academic context, though. He completely dismisses the realities that real companies have to deal with in the real world. I think the rest of the court is starting to get a little better educated about the real-world problems with patents, but Thomas still acts like a clueless tool. Check this out from the dissenting opinion:

The majority explains that the "coercive nature of the exaction preserves the right . . . to challenge the legality of the claim." Ante, at 12 (internal quotation marks omitted). The coercive nature of what "exaction"? The answer has to be the voluntarily made license payments because there was no threat of suit here. By holding that contractual obligations are sufficiently coercive to allow a party to bring a declaratory judgment action, the majority has given every patent licensee a cause of action and a free pass around Article III's requirements for challenging the validity of licensed patents. ...

So his idea is that licensing a patent is *unnecessary* if you think there is any chance you can challenge it successfully in court. Don't worry about your revenues if some clueless judge issues an injunction against selling your product, and don't be concerned about the price of your stock when the patent holder announces the lawsuit. There's no coercion at all that would require you to enter into a *voluntary* patent license!

Yea, I think the *rest* of the court made the right decision on this one. Now everybody can go ahead and use that free pass.

The one catch: As a patent holder I'm not required by law to license to you. I believe I can even revoke (or refuse to renew) your license.

Well, that wouldn't apply in this case - if you revoke the license, you can't argue that the plaintiff has no standing to sue because they signed a license agreement, which the patent holder was doing in this case. Also, if you revoke the license, the licensee now has another cause of action against you, so you now have to defend your patent *and* for break of contract.

Re:One would hope... (0, Troll)

kfg (145172) | more than 7 years ago | (#17547436)

Any other decision would defy all logic.

Please note the name "Clarance Thomas."

Draw your own conclusions.

KFG

Re:One would hope... (4, Funny)

kfg (145172) | more than 7 years ago | (#17547504)

Or "Clarence Thomas." Use the one that makes you happy and leave me out of it.

KFG

Re:One would hope... (0, Offtopic)

spun (1352) | more than 7 years ago | (#17548294)

Or "Clarence Thomas." Use the one that makes you happy and leave me out of it.

Right. I'm gonna go with 'Long Dong Silver' because the thought of me someday meeting Justica Thomas and calling him Long Dong makes me giggle.

"Hey! Long Dong! Over here! Justice Silver, I'm talking to you! Yeah, that Anita chick [wikipedia.org] was HOT! I'd tap that."

Re:One would hope... (1)

butterberg (1046750) | more than 7 years ago | (#17547514)

that it is obvious that the Supreme Court would reach this decision. Any other decision would defy all logic.
Well, from this point of view, it's interesting to see, that it was only a 8 : ONE(!) decision!

Re:One would hope... (1)

DreamCoder (679179) | more than 7 years ago | (#17548618)

Any other decision would defy all logic.

Now if someone would just explain that to the dissenting Honorable C. Thomas...

Logic Defied (1)

darkonc (47285) | more than 7 years ago | (#17552084)

Then, it is probably worth noting that the SCOTUS decision overturns the decisions of two lower courts.


We're talking the legal system. Apparently a number of well respected lawyers have noted that


The legal system has nothing to do with justice.

Justice is just, sometimes, coincidental.

Good (1, Insightful)

Anonymous Coward | more than 7 years ago | (#17547374)

Hopefully this will spell doom for patent trolls. I'm sure some people will say "but what about the small inventors?" yet we hardly see anyone but patent trolls and megacorps doing anything with patents, so anything which weakens them is for the best.

If you're just a lone inventor and you have that good an idea, you're probably better off making a prototype and marketing the idea directly, anyhow, rather than getting patents.

Re:Good (5, Interesting)

s20451 (410424) | more than 7 years ago | (#17547604)

yet we hardly see anyone but patent trolls and megacorps doing anything with patents, so anything which weakens them is for the best.

That's because patents only make the news when you get sued. I take it that you are not an inventor. Much of the value of a startup technology company is contained in its patent portfolio, and that portfolio is what makes it attractive for purchase by larger companies.

If you're just a lone inventor and you have that good an idea, you're probably better off making a prototype and marketing the idea directly, anyhow, rather than getting patents.

There's no reason why you can't do both. In fact, if you don't do both, you're an idiot who is taking unnecessary risks on behalf of your investors.

Re:Good (4, Interesting)

Omnifarious (11933) | more than 7 years ago | (#17547856)

I suspect that this is an error, and that the real value lies in the expertise and ability of the lone inventor or small company to create the technology in question. It's really interesting how business shies away from valuing people and expertise over some sort of even very nebulous, intangible and somewhat imaginary asset. I think there are some powerful blinders in operation somewhere.

Re:Good (1)

s20451 (410424) | more than 7 years ago | (#17548652)

The problem is that people and expertise can quit and walk out the door. I would rather the company hold a patent than for them to impose some onerous non-compete clause.

Re:Good (1)

Omnifarious (11933) | more than 7 years ago | (#17549464)

If they walk out the door the business is as good as dead anyway. The only thing you gain by holding the patent is the ability to make it hard for a new one from starting up in the same space.

Re:Good (1)

scwizard (941758) | more than 7 years ago | (#17552212)

I think what he's afraid of is the big business buying the people and expertise, then the people walking out of the door and starting another small business. Without the patents, the big business has effectively purchased a whole lot of nothing.

Re:Good (1)

Omnifarious (11933) | more than 7 years ago | (#17552722)

That makes sense. And there the patent is serving as sort of a more enforceable non-compete clause. Hmmm....

Re:Good (2, Insightful)

Chris Burke (6130) | more than 7 years ago | (#17548826)

I suspect that this is an error, and that the real value lies in the expertise and ability of the lone inventor or small company to create the technology in question. It's really interesting how business shies away from valuing people and expertise over some sort of even very nebulous, intangible and somewhat imaginary asset. I think there are some powerful blinders in operation somewhere.

Actually a lot of businesses do value people with expertise over just about all else. A lot of startups -- I mean real startups that were producing actual products, not business plans based on selling advertisements to goldfish -- were bought out not because their patent/product portfolio was really all that impressive or valuable on their own, but because the engineers that designed those products were impressive. Brainpower is a powerful asset, and successfull businesses recognize it and try to aquire/cultivate it. Of course then the accountants come in with the quarterly reports and then the axe starts swinging, but so it goes.

TANJible. (1)

twitter (104583) | more than 7 years ago | (#17551806)

It's really interesting how business shies away from valuing people and expertise over some sort of even very nebulous, intangible and somewhat imaginary asset. I think there are some powerful blinders in operation somewhere.

Deplorable, but easy to understand. The idea is to take all of the fruits of the lone inventor's labor. Patent trolls and big dumb companies alike do this with nebulous and imaginary patents. When they win, they not only get the advantage of the inventor's life time of effort, they also get to keep any would be competitors out of the market. Big dumb companies also like to buy smaller companies, often after destroying their market share and value though bogus lawsuits. "Who wants to buy thing from a company that's about to get creamed?" whine the kind of weenies who run XP because it's "supported." All of it is theft and all of it is made possible by nonsensical patent laws.

The only real solution is to restrict patents to real and useful inventions. "Business method," software and other abominations can eliminate the advantage real patents give and are no more worthy of a patent than an efficient way of alphabetically organizing paper files.

Re:TANJible. (0)

Anonymous Coward | more than 7 years ago | (#17551914)

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  • Avoid hyperbole and unsubstantiated claims at all costs. It's unprofessional and will result in unproductive discussions.
  • A thoughtful, well-reasoned response to a posting will not only provide insight for your readers, but will also increase their respect for your knowledge and abilities.
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From http://www.ibiblio.org/pub/linux/docs/HOWTO/Advoca cy [ibiblio.org]

Re:Good (5, Insightful)

kfg (145172) | more than 7 years ago | (#17548146)

that portfolio is what makes it attractive for purchase by larger companies.

Back in the day the goal of a small company was to grow until it was one of the larger companies, not lose itself to the highest bidder.

KFG

Re:Good (1)

Eli Gottlieb (917758) | more than 7 years ago | (#17550662)

Back in the day trying to grow could make you and your investors a profit.

Paul Graham disagrees with you (0)

Anonymous Coward | more than 7 years ago | (#17548210)

http://www.paulgraham.com/softwarepatents.html [paulgraham.com]

"...Most innovation in the software business happens in startups, and startups should simply ignore other companies' patents. At least, that's what we advise, and we bet money on that advice.

The only real role of patents, for most startups, is as an element of the mating dance with acquirers. There patents do help a little. And so they do encourage innovation indirectly, in that they give more power to startups, which is where, pound for pound, the most innovation happens. But even in the mating dance, patents are of secondary importance. It matters more to make something great and get a lot of users."

Re:Paul Graham disagrees with you (1)

marcosdumay (620877) | more than 7 years ago | (#17548288)

Of course, you should hightlight that he's talking about software. That logic changes on some industries.

youtube had patents? (0)

Anonymous Coward | more than 7 years ago | (#17548256)

Ok, how big was youtube's patent portfolio when google bought them for $1.3 billion?

New Legal Strategy for Big Corporations... (4, Insightful)

Xerotope (777662) | more than 7 years ago | (#17547418)

... bully the little-guy patent holder by suing even while paying license-fees. Little-guy can't get an injunction because fees are being paid, so it costs the big-corp nothing except their staff lawyers time. Little-guy then either has to pay to defend the patent out-of-pocket, or lose their patent (and any future license fees). Of course, this situation only plays out if the little-guy is a patent-troll and can't be counter-sued for patent infringement. And of course, in the end, the lawyers win.

Re:New Legal Strategy for Big Corporations... (5, Funny)

spiritraveller (641174) | more than 7 years ago | (#17547464)

And of course, in the end, the lawyers win.

I like happy endings.

Re:New Legal Strategy for Big Corporations... (1)

Duncan3 (10537) | more than 7 years ago | (#17547530)

You got it. This only helps the big companies even more.

It's the right call but the real world fallout is gonna suck.

Re:New Legal Strategy for Big Corporations... (1)

stevesliva (648202) | more than 7 years ago | (#17548204)

This only helps the big companies even more.
I choose to read that as, "It helps the companies that actually make stuff." But yeah, I suppose it'll hurt the pocketbooks of people licensing debatable patents for money.

Re:New Legal Strategy for Big Corporations... (5, Insightful)

parvenu74 (310712) | more than 7 years ago | (#17547676)

Little-guy can't get an injunction because fees are being paid...
Unless the license contains an auto-revoke clause in the case of suing to contest the underlying patent, or some similar action.

But you raise another interesting point: the ability of a licensee to essentially attack the patent-holder via law suit to try to get the little guy to buckle. Such a lawsuit is clearly unjust and there's got to be a law somewhere that covers such an aggressive move against a patent-holder. Extortion? Racketeering? The little guy ought to be able to immediately contest the lawsuit itself as being predatory, meant to bankrupt him, force him to sell his patent, or re-negotiate the license. If the lawsuit is found to be without merit and predatory, the company bringing the suit should be liable in a HUGE way at that point, ordered to pay HUGE compensation, and the executives who initiated the suit brought up on criminal charges. Otherwise, companies will be able to get away with anything they want as long as they have a bigger legal war chest than their competitors.

Re:New Legal Strategy for Big Corporations... (1)

fishdan (569872) | more than 7 years ago | (#17547730)

Otherwise, companies will be able to get away with anything they want as long as they have a bigger legal war chest than their competitors

Yup, you're right. No way that could happen.

Re:New Legal Strategy for Big Corporations... (1)

taustin (171655) | more than 7 years ago | (#17548150)

Most states have some sort of SLAPP statute. Barratry is a crime in California.

Re:New Legal Strategy for Big Corporations... (1)

Dr. Donuts (232269) | more than 7 years ago | (#17548516)

An auto-revoke clause would most probably be ruled as invalid, since this court decision has just affirmed that you have the right to sue even if you are licensing.

Just because something is written and you sign it, doesn't make it enforceable.

Re:New Legal Strategy for Big Corporations... (1)

ClamIAm (926466) | more than 7 years ago | (#17552412)

the ability of a licensee to essentially attack the patent-holder via law suit to try to get the little guy to buckle.

I always thought that this was the entire reason patents existed, but I guess I was mistaken.

Re:New Legal Strategy for Big Corporations... (1)

avalys (221114) | more than 7 years ago | (#17547992)

The little guy can terminate the big corporation's license if they sue him.

Re:New Legal Strategy for Big Corporations... (1)

Anonymous Cowpat (788193) | more than 7 years ago | (#17548316)

no, they should increase the cost of the license by a factor of about 1000. If the big corp declines it doesn't look so bad on the little guy. If the big corp accepts, they start paying for both sides of the lawsuit.

Re:New Legal Strategy for Big Corporations... (1)

dgatwood (11270) | more than 7 years ago | (#17548392)

...or refuse to license the patent in the first place. There is no compulsory licensing of patents. Besides, the big guys could sue the little guy to invalidate the patent anyway. This just means that the little guy can get money during the process if desired.

Re:New Legal Strategy for Big Corporations... (1)

ajs318 (655362) | more than 7 years ago | (#17548856)

There is no compulsory licensing of patents.
That is really the whole problem. If patent licencing were on an "everyone or no-one" basis (and let's not forget, the original intention of the patent system was to encourage sharing of innovation, as counter-intuitive as that may sound), the system would be far less open to abuse; it would not then be possible for a cartel of existing players to lock competitors out of a particular marketplace.

Re:New Legal Strategy for Big Corporations... (1)

bendodge (998616) | more than 7 years ago | (#17548384)

And of course, in the end, the lawyers win.
No,then there is actually a hearing on whether or not it is a valid patent. Now it's actually up to a judge to decide what happens, instead of "whose got the biggest wallet and the most lawyers?".

Re:New Legal Strategy for Big Corporations... (1)

ajs318 (655362) | more than 7 years ago | (#17548646)

For that to work, Big Company has to be actually working the invention (otherwise they can't be making money out of it). And if the Little Guy's patent evidently has merit, then they ought to be able to borrow the money to fight the case (and win back costs from the other side as part of the settlement) on the strength of future royalties. If the patent doesn't have merit, no-one will lend you the money -- and rightly so. (This is assuming you can admit Intellectual Property as collateral for a loan; I don't see why not, since in almost every other way it gets treated like physical property.)

Re:New Legal Strategy for Big Corporations... (0)

Anonymous Coward | more than 7 years ago | (#17549146)

Little-guy then either has to pay to defend the patent out-of-pocket, or lose their patent.
Simple answer...come up with a license amount that covers your legal costs. Why pay out of pocket when big-corp is willing to bankroll your defense? If anything, this ruling helps the little guy because big-corp will be more inclined to not pay license fees during litigation to maintain their advantage when it comes to hiring lawyers. With this ruling, it would be easier to justify treble damages since big-corp was given the opportunity to license and declined.

Re:New Legal Strategy for Big Corporations... (1)

Eskarel (565631) | more than 7 years ago | (#17550032)

Actually this isn't a problem. Big Corporations don't do things like this because it's fun, or to further some sort of evil agenda, they do it for money, and if the licensing fee they're paying is so low that you can't use it to defend yourself in court(they have to prove your patent is invalid, not the other way around so your costs should be substantially less than theirs), they aren't going to bother.

In order for most companies to bother, I would guess the licensing fees would have to be >1 million dollars, which is more than enough money to hire a decent lawyer.

Not genetech... (1)

posterlogo (943853) | more than 7 years ago | (#17547440)

Should be "GENENTECH"...the mega biotech/research company.

It's something... (2, Insightful)

DurendalMac (736637) | more than 7 years ago | (#17547446)

At least this is one small step toward reforming the ridiculous patent system in this country. Yes, we need patents. They can be a good thing. However, when companies patent everything they can no matter how ridiculous or small, it's time to start fixing a broken system.

Re:It's something... (0)

Anonymous Coward | more than 7 years ago | (#17547738)

Yes, we need patents. They can be a good thing.

You misspelled pants.

Great! (-1)

Anonymous Coward | more than 7 years ago | (#17547578)

It places the lotion into the baaaasket

Makes total sense (5, Insightful)

Dachannien (617929) | more than 7 years ago | (#17547596)

For average Joes like you and me, if I tell you that you owe me money, and you fear damage to your credit report if you don't pay me but you don't actually think that you do owe me, you can write "paid under protest" underneath where I would endorse the check, and then sue me to get your money back. The court won't hold it against you that you paid the bill if you make it clear to the court that you never considered yourself to be liable for the debt.*

The fact that we're talking about multi-bazillion dollar corporations doesn't mean this concept shouldn't still apply.

(* As a side note, the new electronic bank records for checks makes this a lot more viable as proof, because the fact that the bank has on record that they cashed the check with "paid under protest" already written on it means that the defendant can't claim you wrote it after the fact. Also, banks have to send you an official copy of their record of the check upon request - the copy you get with your bank statement may get accepted in small claims court, but it's not what the law considers "official".)

Re:Makes total sense (1)

schwep (173358) | more than 7 years ago | (#17548578)

Instead of paying the money to the company you are sueing, simply open an escrow account and put the money in the escrow account. Your credit isn't damaged because you made the money available, you are just disputing the terms. When the terms are reached, the money in escrow is distributed to the appropriate people.

I am not a lawyer, but this helped me with a dispute with a landlord at one point.

Re:Makes total sense (1)

Dachannien (617929) | more than 7 years ago | (#17548960)

Good advice, especially if you have reason to believe that the would-be creditor may not be around to file suit against later.

Re:Makes total sense (1)

cdrguru (88047) | more than 7 years ago | (#17548966)

Good luck with getting the creditor to accept this. If they don't, you haven't paid. Also, good luck with getting a bank to want to get in the middle of some disagreement as a third party.

Now, if you owe the money to the bank or the creditor does, then maybe they aren't really a third party and have some interest in this. In that case the bank might even help push the creditor to accept such an escrow deal.

Re:Makes total sense (2, Informative)

burnin1965 (535071) | more than 7 years ago | (#17548610)


The court won't hold it against you that you paid the bill if you make it clear to the court that you never considered yourself to be liable for the debt.


Of more interest to companies is that they can avoid treble damages for willfully violating a patent if they acquire a license and still have the option to challenge the patent. As was learned in the Blackberry vs NTP case although NTP's patents were in the process of being invalidated Blackberry could not stop the patent troll case against them. Perhaps Blackberry could have saved some capital by licensing NTP's patents when they first demanded extortion payments and then followed up with a suit against NTP to invalidate the bogus patents and request compensation for royalties paid.

Re:Makes total sense (1)

TheoMurpse (729043) | more than 7 years ago | (#17551810)

Perhaps Blackberry could have saved some capital by licensing NTP's patents when they first demanded extortion payments and then followed up with a suit against NTP to invalidate the bogus patents and request compensation for royalties paid.
I'm not too sure about that -- there have been cases in the past where courts have ruled under similar facts that the plaintiff had elected to "buy its peace," and was not recoverable. Some military academy case comes to mind, of which I've forgotten the name. However, an experienced lawyer could probably come up with a way to distinguish these two cases.

Covenent not to sue now part of boilerplate (2, Insightful)

davidwr (791652) | more than 7 years ago | (#17547612)

Effective immediately, all patent-licensing deals will have a covenant not to sue or challenge the validity of the patent as part of the licensing agreement, enforceable by a payment of "lost royalties" through the expected life of the patent.

If you won't sign away your right to sue, then you don't get a license.

If anyone figures out a way around this, the patentholders will figure out another workaround for future cases. Cat and mouse, spy vs. spy.

I thought you couldn't sign away those rights?! (1)

FatSean (18753) | more than 7 years ago | (#17547672)

I thought that you always had the right to be heard in court..

Re:I thought you couldn't sign away those rights?! (1)

taustin (171655) | more than 7 years ago | (#17548196)

I thought that you always had the right to be heard in court.

One way or another, yes, you do. If you sign a contract that gives up the right to sue, you can sue to challenge the validity of the contract. The Uniform Commercial Code includes provisions for voiding contracts (or portions thereof) that are manifestly unfair. And it does happen, from time to time.

Re:I thought you couldn't sign away those rights?! (1)

megaditto (982598) | more than 7 years ago | (#17550382)

I thought that you always had the right to be heard in court.

Not if they call you a terr'rist you don't.

Re:Covenent not to sue now part of boilerplate (0)

Anonymous Coward | more than 7 years ago | (#17547858)

You can't do that... and if you did, you couldn't use that signature against me when I sued you.

Re:Covenent not to sue now part of boilerplate (2, Informative)

Dr. Donuts (232269) | more than 7 years ago | (#17548426)

Simply because something is written in a contract or agreement, doesn't mean it's legal or enforceable.

Some things just can't be signed away. Since the Supreme Court has already upheld that the right to sue for patent validity cannot be subsumed through licensing, putting such a clause in the licensing agreement would have no legal effect.

free shot? (4, Insightful)

duranaki (776224) | more than 7 years ago | (#17547664)

"It essentially gives your licensee a free shot at knocking out the patent and their obligation to pay royalties, and from a licensor's - from Genentech's - point of view, that's not a good thing,"


A free shot? I can't recall a time involving lawyers where anything was free. It gives them a shot instead of the alternatives, which include getting sued for violating the patent without a license or just staying out of the marketplace because of a stupid patent while you wait for it to be overturned.

Re:free shot? (1)

ClamIAm (926466) | more than 7 years ago | (#17552442)

I think they mean "free" as in "freedom" :D

Applicable to SCO? (3, Interesting)

Tmack (593755) | more than 7 years ago | (#17547740)

I wonder if this would open the flood gates to all those that purchased the "Linux license" from SCO (for the low low introductory price of $900) to sue SCO for return of their fee once these last death throws in court are over with, if theres anything left of SCO? Basically the license was to cover royalties on the patents that Linux supposedly infringed that SCO "owned", and as these patents and other IP that SCO claims to own and claims is in Linux are being laughed out of court I would think this would make reclaiming the fee from SCO easier..

tm

Re:Applicable to SCO? (1)

LWATCDR (28044) | more than 7 years ago | (#17547806)

Maybe not. It is possible that part of the "agreement" or as I would call it "extortion" was signing away the right to sue over the patient.

Who dissented? (0, Redundant)

140Mandak262Jamuna (970587) | more than 7 years ago | (#17547766)

Thomas? Ginsberg? Kennedy?

Re:Who dissented? (1)

Sabaki (531686) | more than 7 years ago | (#17547870)

According to the article, Thomas.

Re:Who dissented? (3, Informative)

jonnythan (79727) | more than 7 years ago | (#17547970)

From another article: [patentbaristas.com]

"Justice Thomas, dissenting, felt that a patent licensee in good standing must breach its license prior to challenging the validity of the underlying patent pursuant to the Declaratory Judgment Act, 28 U. S. C. 2201. 546 U. S. 1169 (2006). He held the opinion that the Court has consistently held that parties do not have standing to obtain rulings on matters that remain hypothetical or conjectural and that this was such a case."

Re:Who dissented? (1)

WhyDoYouWantToKnow (1039964) | more than 7 years ago | (#17548378)

Justice Thomas, dissenting, felt that a patent licensee in good standing must breach its license prior to challenging the validity of the underlying patent

Oh course, because why would anyone need to challenge a patent unless they've first violated the license. I mean, come one, they should have some incentive to invalidate their license and get out of the fees they'll have to pay for their violation.

</sarcasm>

Re:Who dissented? (4, Insightful)

rewt66 (738525) | more than 7 years ago | (#17548538)

It's not a totally stupid point. The courts do not like "what if" lawsuits. If your issue is "maybe" or "what if", the courts will in general tell you to get lost - and, in my opinion, rightly so. The courts are clogged enough as it is.

But I think the application of that principle to this particular situation is in error. If I'm having to pay royalties to use a patent that I believe is bogus, and my options are to expose myself to severe liability (by stopping payment but still using the patent), or stop making the product, or continue to pay the extortion, that's a pretty unjust situation that has been created. And the law, as another principle, doesn't like to create unjust situations by stupid application of rules. (Though I must say, for something that it tries to avoid, it seems to do it way too often anyway...)

Re:Who dissented? (1)

clem.dickey (102292) | more than 7 years ago | (#17548542)

parties do not have standing to obtain rulings on matters that remain hypothetical or conjectural
Thanks for the explanation. The original link had Justice Thomas' conclusion with no reasoning! Suppose that Nikon patents a lithography process - one which costs a billion or so to apply. Is there any criterion for standing to sue? What happens in these two cases:
  1. Someone who has licensed the patent but cannot afford to apply it?
  2. Someone who has not licensed the patent and cannot affort to apply it?
If (1) has standing then (2) does also, unless licensing now grants more standing, whereas it used to remove standing.

I will enforce my melanin patent this summer (3, Funny)

Seismologist (617169) | more than 7 years ago | (#17547864)

I have patented the process by which melanin allows an individual's skin to become darker in pigment color when UV light is applied. I will enforce my patent and thus require all individuals that appear to be tan, to pay the appropriate royalty fee. Tanning salons may receive group discount rates.

Re:I will enforce my melanin patent this summer (2, Funny)

WhyDoYouWantToKnow (1039964) | more than 7 years ago | (#17548406)

So this royalty fee won't apply to anyone on /.?

Re:I will enforce my melanin patent this summer (1)

Starteck81 (917280) | more than 7 years ago | (#17548432)

While you're suing the tanned amongst us I'll be suing you for infringing on my patent of "Suing those who have infringed upon your patent". So, please cease and desist or else.

Signed, your friendly patent troll

Re:I will enforce my melanin patent this summer (2, Funny)

Arthur Dent '99 (226844) | more than 7 years ago | (#17548496)

So, in the spirit of this article, could I pay your royalties, then sue you because your process gave me skin cancer? :-)

Patched (2, Funny)

tehwebguy (860335) | more than 7 years ago | (#17547878)

Changelog for Version 2007.01.10

+ Added increased protection against patent trolls

This solves a nasty "Catch 22" (2, Interesting)

Anonymous Coward | more than 7 years ago | (#17547902)

Before this decision, if you wanted to challenge a patent, you had to violate the patent. That would expose you to triple damages because you obviously knew the patent existed. Also, patent holders get almost automatic injunctions. That means the court slaps you with an order that you can't sell your product. That's how RIM ended up paying $600 million to NTP even though the patent office was about to pitch out NTP's patents as bogus.

The patent system has problems but this decision seems to solve one of them.

Fixed with a new clause... (1)

SilentJ_PDX (559136) | more than 7 years ago | (#17547912)

So what's to stop patent licensing agreements from having an anti-invalidity clause? The instant you sue to invalidate a patent, the licence is void. Then the patent owner can sue for patent infringement.

Re:Fixed with a new clause... (4, Insightful)

Todd Knarr (15451) | more than 7 years ago | (#17548010)

The danger that the courts may rule that the licensee can't sign away his right to challenge the patent, thus that clause is unenforceable. You can see the equivalent of that all the time: the clauses that disclaim all warranties, followed by "Some states do not permit the disclaimer of the implied warranties of merchantability and fitness for purpose. In those cases, the law trumps our disclaimer.". And from the tone of the Supreme Court on recent patent cases, I get the feeling they don't agree with the Federal Circuit on a lot of things and are getting about ready to do some wholesale striking down of Fed Circ precedents.

Re:Fixed with a new clause... (1)

Dr. Donuts (232269) | more than 7 years ago | (#17548464)

Because this decision has just established that you can sue even if you are licensing. Putting a clause in the agreement to void the licensing in case of lawsuit would itself be unenforceable by this decision.

Re:Fixed with a new clause... (1)

1ucius (697592) | more than 7 years ago | (#17552556)

The licensee wins either way. This case is about whether the courts have the power to render a judgment (federal courts can't issue advisory opinions; there must be a real controversy between real parties). If the license gets canceled, then this issue is moot.

Makes sense (3, Insightful)

ajs318 (655362) | more than 7 years ago | (#17547988)

I think this makes sense. It's a recognition that monies are sometimes paid under duress and under protest.

Look at it this way: Handing over your dinner money to the playground bully doesn't necessarily mean you think he has a right to it -- just that you'd rather miss a meal than take a severe beating and probably end up missing a meal as well when he steals the money off you.

In the same way, some people choose to pay royalties they know full well to be bogus just so as to be able to ship product and earn some money, rather than challenge the bogus patents in court straight away during which time they are likely to be barred from selling product. This ruling just recognises that paying royalties does not necessarily mean acceptance that the patent is valid.

Re:Makes sense (1)

linefeed0 (550967) | more than 7 years ago | (#17548368)

On the other hand, Clarence Thomas seems to think that you have to walk home with a black eye before you can sue over it.

Re:Makes sense (1)

Qzukk (229616) | more than 7 years ago | (#17549206)

Good thing Clarence Thomas doesn't run any banks, it'd suck if you were charged late fees and interest on your credit card because you didn't pay the charge for $5000 in some other state that you submitted the paperwork to contest, but paying the contested charges would have waived your right to contest them.

He'd probably have even written the contract to read that payments are applied to contested charges first to prevent people from paying everything but the contested charges.

Re:Makes sense (1)

FLEB (312391) | more than 7 years ago | (#17549558)

The alternative problem, though, would be not taking lunch money, thus not getting beat up, then suing the bully for going hungry anyway, because... well... hypothetically if I would have had money when I was walking by...

Yea Scalia! (0)

Anonymous Coward | more than 7 years ago | (#17548908)

gee, what's in this for the right-wing conspiracy?

Auto-revoke clauses may have no teeth (5, Informative)

Dr. Donuts (232269) | more than 7 years ago | (#17549506)

For those who are talking about auto-revoke clauses in lawsuits (of which I've seen a number post), read the article:

During arguments in October, Chief Justice John G. Roberts Jr. suggested there may be some way to structure a licensing agreement to diminish the threat of a lawsuit. Best predicts companies will likely try including contractual provisions prohibiting filing suit, potentially charging lower fees for those who agree to waive that legal right. But it's unclear whether such measures are legal. Courts generally hold that the right to sue should be retained - a sentiment that came out in this case.

Simply because a clause is within a contract/agreement, doesn't make it legally valid. As the courts have established through decisions, the right to sue should be retained and it's likely that clauses stipulating the prohibition of filing suit would be deemed legally unenforceable. A contract/agreement could be structured to make it undesirable to file suit or more desirable to persuade a licensee not to, but clauses that seek to waiver that right most likely will fail.

This decision has a more profound effect then simply the right to sue. It also raises the bar in the establishment of knowingly violating a patent. If a person/company sues to invalidate a patent, then only if the lawsuit is unsuccessful and the person/company continues to violate the patent can it be established they "knowingly" violated the patent. So this will also have an effect of making it more difficult to seek treble damages. Any person/company with the foresight and resources would file an invalidation lawsuit for that very reason, I suspect.

I agree with the Supreme Courts interpretation that just because you license, doesn't mean "Actual Controversy" requirements for filing an invalidation suit are voided. Previous court decisions established that you had to violate a patent first in order to file suit to fulfill "Actual Controversy" requirements. The Catch-22 of this is that by the very act of violating the patent, you are doing so "knowingly" in order to pursue an invalidation suit. Which means that should the suit fail, you'll automatically be nailed for treble damages since you've already established you knowingly violated the patent in order to pursue the invalidation suit in the first place.

The previous logic was flawed. It was like saying that if someone portends you owe them money, you would have to acknowledge you do owe them money before you could file a suit to establish you don't. The refusal to acknowledge a patent as valid should be grounds enough to fulfill the actual controversy requirements.

Goodbye Eolas patent. (1)

DamnStupidElf (649844) | more than 7 years ago | (#17550358)

If Microsoft has the Courts in its back pocket, this is clearly the best thing they've done with it.

Mild dyslexia... (2, Funny)

posterlogo (943853) | more than 7 years ago | (#17550794)

...may cause you to read this as "Supreme Court Patents Clear Invalidity Suits". Mmmmmm... Clear Invalidity Suits. I want one of those.
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