8 ms·

Pays what? They will create a few LLCs for each case with next to zero assets. If they lose the case the patents are almost by definition worthless, so they get

Pays what? They will create a few LLCs for each case with next to zero assets. If they lose the case the patents are almost by definition worthless, so they get nothing. However, think of trying to legitimately sue Microsoft, or Apple or Google for using your patent. You have their bills to worry about too and they can out-lawyer almost everyone. This is no doubt loved by the largest corps, it does nothing to stop trolls but makes it much harder for a real person /entity to sue them (with tens of billions in the bank) Edit: Imagine the first day in court, months after the other side's billing has started: you see 16 lawyers on the [Google's, MS, Apple's] side and have a heart attack! 16X$400 an hour (on the low side) X 5 hours = $32,000 for half a day, just to show up in court.

elpachuco 14y ago
>>Pays what? They will create a few LLCs for each case with next to zero assets. If they lose the case the patents are almost by definition worthless, so they get nothing. Sounds like fraud to me. I'm sure this loop hole could get closed.
- eridius 14y ago
  Perhaps, once deemed an NPE, the plaintiff could be forced to put up the legal costs in escrow for the duration of the trial? Not only will this require them to be able to pay if they lose, but it will be a further deterrent to even attempting to sue.
  - learc83 14y ago
    That's exactly what the bill proposes.
    - eridius 14y ago
      It does? The linked article doesn't mention that.
- DannyBee 14y ago
  This would definitely be a good case for piercing the corporate veil.
- damoncali 14y ago
  It's neither fraud nor a loop hole. Suppose you are a patent troll and you set up a business to extract value from a particular patent. You start out with $100k and buy a patent for $50k. You use the other $50k to sue someone and lose. You now owe them, say $30k. (I made up the numbers, but they don't really matter - the point is that liabilities are greater than assets at the end). Where is that $30k going to come from? It doesn't exist. If you think that this is a case where you should breach the limited liability provided by incorporating, you're opening a pretty huge can of worms - it's pretty much the basis of our economy. It's a lot more complex than "you can't do that".
  - learc83 14y ago
    That's why this bill requires NPEs to put up a bond to cover the other sides legal bills in the case they lose.
  - DannyBee 14y ago
    There is a huge difference between setting up a business to say, mow lawns, and setting up a business to file lawsuits. Especially when the possible costs are basically known (you have no customers except yourself, and you control your own costs), you are deliberately underfunding. Maybe that's not even so bad. Doing so specifically to avoid the intent of an act of congress, is, well, a bad idea. Courts make factual distinctions between cases all the time when deciding whether to pierce the corporate veil, and i can't see why they wouldn't do so here. Note that limited liability corporations are fairly new. The world got along just fine when shareholders were responsible for the actions of companies. It made the shareholders more careful in investing.
    - damoncali 14y ago
      How is setting up a separate corporation for each patent different from setting upa separate corporation for each, say, office building? How much money is necessary to keep a corporation set up for these purposes from being underfunded? Do we really want to set that precident? Do we really want to require money to access the legal system? Keep in mind the business model is not to sue other companies. The business model is to create license revenue from the patent. Lawsuits are merely a way to settle disputes.
rayiner 14y ago
> However, think of trying to legitimately sue Microsoft, or Apple or Google for using your patent. You have their bills to worry about too and they can out-lawyer almost everyone. This is why pushing "loser pays" in the U.S., along with binding arbitration, has been a favorite pet project of some people.
learc83 14y ago
>However, think of trying to legitimately sue Microsoft, or Apple or Google for using your patent. You have their bills to worry about too and they can out-lawyer almost everyone. The bill addresses that by applying the losing plaintiff pays only to non practicing entities. It specifically excludes original inventors.
- jrs235 14y ago
  What about the fact that the original inventor is actually a human being that through an employment "contract" agrees to assign and transfer any patents to the employing company? How does this idea affect things?
  - learc83 14y ago
    The employing company would then be the original assignee, and also exempt from being classified as an NPE.
- OGinparadise 14y ago
  As a non-lawyer, I read the bill and found it surprisingly very short. As usual the devil is in the details. Probably judges will be able to fill in the many details, go all the way to SCOTUS and then back to where we were. The easiest way would be to fund USPTO so they stop issuing bogus patents.
SoftwareMaven 14y ago
Re your edit: the judge would have to approve this before the case starts. If you can show you are the rightful inventor, you shouldn't have a problem.
- OGinparadise 14y ago
  What's wrong with selling your patent? You dedicate x years or $xxxxx but can't see it to completion so you cash out?
noselasd 14y ago
If you legitimately sue them, you're not a patent troll/NPE and this new rule wouldn't apply. It'd suck as much as before to lose.
vacri 14y ago
Why can't the people in your second example use the tactic in your first example?
logn 14y ago
That's true and this helps big corps but this is one case in politics where I really don't care. Software patents are universally bogus and have no business being enforced. Anything that reduces anyone's ability to sue is good in my opinion. To combat the LLC with zero assets issue, which is a good point, I'd like to see a system whereby they establish standards to pierce the corporate veil and go after personal assets, which they tend to argue in cases where the LLC/corp is essentially just a front.

elpachuco 14y ago

>>Pays what? They will create a few LLCs for each case with next to zero assets. If they lose the case the patents are almost by definition worthless, so they get nothing. Sounds like fraud to me. I'm sure this loop hole could get closed.

eridius 14y ago
Perhaps, once deemed an NPE, the plaintiff could be forced to put up the legal costs in escrow for the duration of the trial? Not only will this require them to be able to pay if they lose, but it will be a further deterrent to even attempting to sue.
- learc83 14y ago
  That's exactly what the bill proposes.
  - eridius 14y ago
    It does? The linked article doesn't mention that.
DannyBee 14y ago
This would definitely be a good case for piercing the corporate veil.
damoncali 14y ago
It's neither fraud nor a loop hole. Suppose you are a patent troll and you set up a business to extract value from a particular patent. You start out with $100k and buy a patent for $50k. You use the other $50k to sue someone and lose. You now owe them, say $30k. (I made up the numbers, but they don't really matter - the point is that liabilities are greater than assets at the end). Where is that $30k going to come from? It doesn't exist. If you think that this is a case where you should breach the limited liability provided by incorporating, you're opening a pretty huge can of worms - it's pretty much the basis of our economy. It's a lot more complex than "you can't do that".
- learc83 14y ago
  That's why this bill requires NPEs to put up a bond to cover the other sides legal bills in the case they lose.
- DannyBee 14y ago
  There is a huge difference between setting up a business to say, mow lawns, and setting up a business to file lawsuits. Especially when the possible costs are basically known (you have no customers except yourself, and you control your own costs), you are deliberately underfunding. Maybe that's not even so bad. Doing so specifically to avoid the intent of an act of congress, is, well, a bad idea. Courts make factual distinctions between cases all the time when deciding whether to pierce the corporate veil, and i can't see why they wouldn't do so here. Note that limited liability corporations are fairly new. The world got along just fine when shareholders were responsible for the actions of companies. It made the shareholders more careful in investing.
  - damoncali 14y ago
    How is setting up a separate corporation for each patent different from setting upa separate corporation for each, say, office building? How much money is necessary to keep a corporation set up for these purposes from being underfunded? Do we really want to set that precident? Do we really want to require money to access the legal system? Keep in mind the business model is not to sue other companies. The business model is to create license revenue from the patent. Lawsuits are merely a way to settle disputes.

rayiner 14y ago

> However, think of trying to legitimately sue Microsoft, or Apple or Google for using your patent. You have their bills to worry about too and they can out-lawyer almost everyone. This is why pushing "loser pays" in the U.S., along with binding arbitration, has been a favorite pet project of some people.

learc83 14y ago

>However, think of trying to legitimately sue Microsoft, or Apple or Google for using your patent. You have their bills to worry about too and they can out-lawyer almost everyone. The bill addresses that by applying the losing plaintiff pays only to non practicing entities. It specifically excludes original inventors.

jrs235 14y ago
What about the fact that the original inventor is actually a human being that through an employment "contract" agrees to assign and transfer any patents to the employing company? How does this idea affect things?
- learc83 14y ago
  The employing company would then be the original assignee, and also exempt from being classified as an NPE.
OGinparadise 14y ago
As a non-lawyer, I read the bill and found it surprisingly very short. As usual the devil is in the details. Probably judges will be able to fill in the many details, go all the way to SCOTUS and then back to where we were. The easiest way would be to fund USPTO so they stop issuing bogus patents.

SoftwareMaven 14y ago

Re your edit: the judge would have to approve this before the case starts. If you can show you are the rightful inventor, you shouldn't have a problem.

OGinparadise 14y ago
What's wrong with selling your patent? You dedicate x years or $xxxxx but can't see it to completion so you cash out?

noselasd 14y ago

If you legitimately sue them, you're not a patent troll/NPE and this new rule wouldn't apply. It'd suck as much as before to lose.

vacri 14y ago

Why can't the people in your second example use the tactic in your first example?

logn 14y ago

That's true and this helps big corps but this is one case in politics where I really don't care. Software patents are universally bogus and have no business being enforced. Anything that reduces anyone's ability to sue is good in my opinion. To combat the LLC with zero assets issue, which is a good point, I'd like to see a system whereby they establish standards to pierce the corporate veil and go after personal assets, which they tend to argue in cases where the LLC/corp is essentially just a front.