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US Supreme Court declines to hear appeal by patent troll
- motbob 13y ago"While the Court will likely hear the remaining cases, which deal with finer points of patent law, its dismissal of Soverain speaks to the potential frivolousness of its claims." I don't think this is accurate. The standard that the Supreme Court uses to decide whether to take cases is not "is this frivolous." Soverain v. Newegg would have to meet a pretty high standard in order to be granted appeal. I think the author of this piece is reading into this denial way too much. The norm is for appeals to be denied. To be more precise, less than 5% of appeals were granted over a recent one year period. http://dailywrit.com/2013/01/likelihood-of-a-petition-being-granted/ http://dailywrit.com/2013/01/likelihood-of-a-petition-being-...
- ama729 13y agoFor those wondering why the total is closer to 1% (because of IFP) than 5% (paid), it's because the court is more frequently petitioned by prisoners with IFP: https://en.wikipedia.org/wiki/In_forma_pauperis https://en.wikipedia.org/wiki/In_forma_pauperis
- venomsnake 13y agoWhat are the standards that SCOTUS uses except the obvious circuit split (having opposite laws in different parts of the country is obviously bad) for picking up a case?
- motbob 13y agoI don't think I can be more specific than to say that the case has to raise interesting questions. That is to say, I'm not sure.
- trothoun 13y agoThey also like cases that are purely questions of law, they tend to avoid cases that have unresolved questions of fact.
- michaelhoffman 13y agoThey don't really have standards for most of the sorts of cases that come up. It's really up to the justices' discretion. _Deciding to Decide: Agenda Setting in the United States Supreme Court_ is a fascinating book that explains how the court decides to take some cases and not others, based on interviews with court insiders. http://www.amazon.com/Deciding-Decide-Agenda-Setting-Supreme/dp/0674194438 http://www.amazon.com/Deciding-Decide-Agenda-Setting-Supreme...
- rayiner 13y agoWhen the federal government appeals, the Supreme Court will more likely than not hear the case. Blatant conflict with prior Supreme Court precedent tends to increase the chances of the Supreme Court hearing a case. Decisions striking down acts of Congress are more likely to get heard. The Supreme Court also appears to try and "tidy up" areas of law by hearing a number of cases in a particular area in successive terms. For example, in 2004-2008, the Court heard Hamdi, Rasul, Hamdan, and Boumediene, all Guantanamo prisoner cases, in an effort to outline the rights of detainees. This article has a very thorough description of the cert process: http://www.mayerbrown.com/Certiorari-Practice-The-Supreme-Courts-Shrinking-Docket-06-12-1995/ http://www.mayerbrown.com/Certiorari-Practice-The-Supreme-Co...
- dded 13y agoI'm encouraged that patent trolls are getting knocked. But my fear is that patent law will hit such a state that only large corporations can wield them. If I'm a small patent holder, and I'm liable for court costs if I lose a suit, then it becomes far too risky to defend my patent against a corporation that violates it.
- lostcolony 13y agoJust like currently it's far too risky to fight a troll in court even for a corporation, since treble damages means that if the jury (because 12 random people from the streets clearly know enough about technology, or can understand it well enough when it's explained to them, to pass a fair judgement) decides you're guilty, you're paying through the nose. The comparatively small amount demanded by the patent troll to go away, from large AND small businesses, is calculated to be the maximum amount possible where it still seems a better choice than that risk. We need to either remove that risk, or make it equally risky if they go to court. Or, you know, stop pretending software is patentable.
- blueskin_ 13y agoA good idea might be to reform the law to allow actual damages to be awarded against a patent troll if their target is found non-infringing rather than just forcing them to pay the legal costs.
- dded 13y agoI'm with you on the undesirability of sw patents. But nowadays, even hw patents are a problem. There doesn't seem to be any meaningful requirement of a patentable idea being non-obvious to "one skilled in the arts." What we have is a race to occupy the available implementation space. But I don't see the courts addressing either of these concerns. What they are addressing is the troll's ability to misuse patents against companies that make things (good), but they crank up the financial cost and risk so that only big players can play (bad).
- marcosdumay 13y agoThe result is that only big companies can be patent trolls. It's still an improvement, but I'm quite sure it's not the intented one. By the way, small companies were never able to defend their patents anyway. That does not change.
- kalleboo 13y agoI had to use a secret browsing window to read this without signing up, so here it is for anyone else who has trouble loading the page: -------- Chalk one up for the enemies of patent trolls: The Supreme Court on Monday threw out a request for trial from alleged patent troll Soverain Software. The case, called Soverain Software LLC. v. Newegg Inc., is one of three such cases the Supreme Court is expected to consider this year. While the Court will likely hear the remaining cases, which deal with finer points of patent law, its dismissal of Soverain speaks to the potential frivolousness of its claims. Soverain acquired the rights to numerous pieces of code tied to the online shopping cart, developed in the 1990s. In recent years, Soverain has gone on a litigious tear, suing more than two dozen companies including Amazon, Nordstrom, Macy's and Newegg, an online retailer, which all use shopping carts for internet sales. Soverain had some success suing on the state level, where a Texas jury awarded the Chicago-based company $2.5 million in damages against Newegg. However, Soverain lost on appeal last year in U.S. District Court for the Eastern District of Texas, which ruled the shopping cart patents owned by Soverain were too general. Patent trolls typically acquire rights to fallow or soon-to-expire patents with no intention of using the patent. Often patent trolls set up shell companies whose only assets are the patents, which means they have no real revenues or assets. Their sole purpose is to harass small businesses, which usually settle rather than pay for extended and costly litigation. Patent law was originally written to protect the patent holder, making it easier for the patent holder to prevail in court. For the patent infringer to win, rather, the defendant must prove exceptional circumstances--namely that the patentee acted in bad faith and made baseless claims. This is hard to do. While the patent holder can be awarded "treble damages," or three times the damage claimed, the most the infringer can ever collect is attorney fees. The remaining cases before the Supreme Court will deal with these finer points. Congress is examining legislation that would fight patent trolls and their frivolous lawsuits by making them liable for court costs, should they lose their cases. Small businesses mounted 3,400 legal defenses in 2011 for patent cases, a 32 percent increase over the prior year, according to a research paper from 2012 by Boston University law professors James Bessen and Michael J. Meurer. That cost to small companies was about $11 billion in 2011, also a 32 percent increase over the prior year. The total median awards to trolls is now nearly twice as high as those to legitimate patent holders, whose median reward fell about 30 percent to $4 billion, according to a 2013 report by PriceWaterhouseCoopers.
- rev_null 13y ago"It's a really tough time to be a patent owner." This is coming from someone who took a common noun, stuck the words "on the internet" at the end, and then extorted billions of dollars from companies that actually make something.
- ck2 13y agoWhat did it cost Newegg to litigate that? Does the troll have to pay legal fees? Hope Newegg can remain price competitive.
- Nutella4 13y agoAnd I hope the many companies that caved to this patent troll and paid it millions for claiming it owned the shopping cart now go after it to get all those millions back. With interest.
- ceejayoz 13y agoMy understanding is that revenues get siphoned very quickly out of the shell company to avoid precisely that.
- inetsee 13y agoI think that one of the fundamental problems with the current patent system is that NPEs are able to use shell companies to shield themselves from the financial consequences of their bad acts. I hope one of the "finer points of patent law" that the Supreme Court will be looking at is just this issue.
- brubaker 13y agoExcept they made a private agreement to license the patent. That was their choice and they are stuck with it.
- officemonkey 13y agoMost organizations have general counsel staff that they pay hefty six-figure salaries. They get paid whether they're in court or surfing reddit. Might as well make them work for a living.
- rhino369 13y agoGenerally, the general counsel doesn't actually handle active trial matters. They farm it out to a law firm who specializes in the area of law the case is about. They cannot afford to keep teams of lawyers at the ready. A case through trial is about 2-10 thousand lawyer hours.
- revelation 13y agoI guess this is why HN mods edit titles on submissions (although the original title is just as terrible). The Supreme Court did not side with anyone; they denied a petition to the court, which is the case for the vast majority of petitions. If they did accept this particular petition, this would not mean that the Supreme Court sides with the patent troll and the world is doomed; it simply means that the case deals with a contested issue where clarification by the Supreme Court is widely sought.
- dded 13y agoI cut-and-pasted the original title, which now appears to have changed.
- bostonpete 13y agoI thought cut-and-pasting the title was the only sanctioned approach to titles on HN and anything else was "editorializing". I've seen any number of more useful titles changed to match the linked article supposedly for this reason.
- ubernostrum 13y agoThe policy is this: 1. If you used the original title, that was wrong and it needs to be changed to something more informative or less link-bait-y. 2. If you provided a more informative title, that was wrong and it needs to be changed to the original title. I hope that clears it up for you.
- dded 13y agoI see that the title has been changed to something that's neither the original title nor the current title of the article itself, but to something more straightforward and unbiased. That's all well and good, but I do wish that the word "Newegg" had been preserved in the title, as I think of this as the "Newegg case"; and I think a lot of others do too. Preserving it would be better for people searching for the discussion in the future.
- vanderZwan 13y agoGood news, but the last sentence of the article made me curious: > The total median awards to trolls is now nearly twice as high as those to legitimate patent holders, whose median reward fell about 30 percent to $4 billion, according to a 2013 report by PriceWaterhouseCoopers. I was wondering how they estimated this, so I checked out the report: > We collect information about patent holder success rates, time-to-trial statistics, and practicing versus nonpracticing entity (NPE) statistics from 1995 through 2012. > Damages awards for NPEs averaged more than double those for practicing entities over the last decade. Note: PWC does not use the word "patent troll" - that is entirely the interpretation of the article. So, just to play the devil's advocate: are NPEs by definition patent trolls? I can't think of a counterargument, but maybe someone else can? EDIT: Thanks for the enlightening examples so far!
- mjburgess 13y agoThey arent definitionally "trolls" but they cannot be Using the patents (deriving value from their being patents in the fist place). So it's still a useful metric.
- Karunamon 13y agoI think the canonical example of a NPE is ARM. They don't fabricate their own chips, but they license out their designs.
- acjohnson55 13y agoThat's true, but I think you can also differentiate between ARM and the more trolly NPEs in the basis of how much ongoing original work they do. Not all trolls are NPEs either. Look at Apple. I wouldn't say the whole company is a troll, by any means, but they've certainly done some trolling.
- bryanlarsen 13y agoARM is not an NPE because many of the designs they license are copyrighted as well as patented. If all of their patents were struck down they still would have a viable business, although their revenue would be significantly reduced. Many software companies have business models similar to ARM's, yet we don't call them NPE's.
- deleted 13y ago[deleted]
- grellas 13y agoA few thoughts: 1. The Supreme Court declined to hear an appeal by Soverain from an adverse ruling by the Federal Circuit Court of Appeals that had determined the Soverain "shopping cart" patent to be invalid on grounds of obviousness. 2. The Federal Circuit's holding by a 3-judge panel had been remarkable and had shocked patent lawyers generally in that the parties before the court had not even raised the issue on appeal as a ground for invalidating the jury's verdict below. The court raised the issue on its own, concluded that the patent was obvious and invalid, and gave judgment for Newegg in spite of the fact that the jury at the trial court level had found that Newegg infringed. 3. This particular patent had been the original shopping cart patent, dating back to 1994 (well before Amazon began) and it had had a formidable history by which its holder had gotten massive licensing fees from major players over many years for the privilege of using online shopping carts on the web. 4. It is easy to say today that everyone knows what the concept of a shopping cart is and that anyone could have come up with the idea of applying that concept to online shopping. That is all well and good but consider this: not only had this patent passed muster as being non-obvious with the USPTO on its original filing but it had also been found to have been non-obvious on two separate patent re-examinations before that same body and by a string of U.S. district court judges before whom the issue had arisen. In other words, Newegg faced a huge challenge on this issue (the legal standard required that it be able to prove that it was obvious by "clear and convincing" evidence, which is often a tough standard to meet) and this is why Amazon and virtually all other major other online retailers had long since caved and agreed to pay royalties for use of the patent. In the patent community, the Soverain patent was seen as rock solid and one whose shopping cart idea was deemed far from obvious. The top judges and lawyers in the nation, not to mention the USPTO, had all so concluded. The chances of upending it seemed slim to none. And, as noted, even the parties themselves had not raised the issue on the key appeal as a ground for potential reversal. Thus, everyone was stunned when the Federal Circuit reversed the judgment against Newegg on that ground, invalidated the patent, and threw the case out. 5. All that said, when Soverain petitioned the Supreme Court for review of the Federal Circuit's decision, it was trying to undo what it perceived as an injustice done to it as a private litigant ("this is so unfair to us and to our valuable patent"). However, from the Supreme Court's point of view, the kind of petition filed by Soverain is to be granted, and a case heard, only when it has significance far beyond whatever impact it might have on any private litigant. The Court's role in hearing such discretionary appeals is to step in and decide important questions of federal law or to determine who is right when the various lower federal appellate courts may have reached conflicting decisions on such points of law in way that cries out of definitive resolution by the highest court. The Court will not hear cases merely because they might have been wrongly decided unless some such extraordinary factor exists. Thus, in denying Soverain's petition, the Court did nothing more than say that this particular petition did not present important issues of the kind that warranted its attention. It did not validate the Federal Circuit's reasoning or analysis. It did not weigh in against patent trolls. It did not add its authority to the fight against frivolous patents. It simply did what it does on over 99% of such discretionary petitions: it used its discretion to deny it. The legal significance of its decision goes no farther than that. 6. Is Soverain a patent troll that deserved this outcome? Well, its CEO had been a law partner at a major law firm (Latham & Watkins) and the company's business was clearly driven by a legal licensing scheme that had little or nothing to do with active business operations or innovation. It had simply acquired the original company that had come up with the patent back in the day. So, it is a troll if you want to call it that or it is not if you want to use some different definition. But this distinction does underscore how difficult it becomes to analyze patent issues simply by placing labels on the parties. The problem with modern software patents is that too many are too easily granted over trivial "innovations" and this has given vast incentives to those who would package them into shakedown licensing ventures and thereby gum things up for true innovators. It is a situation that calls for action by Congress to rein this in. Otherwise, every party trying to defend itself will find itself, as Newegg did, having to go to extraordinary efforts at massive expense to avoid claims of infringement. Very few litigants can do that and, indeed, Newegg is to be commended for fighting this all the way against tough odds. Let us only hope that systemic fixes can help correct the problem so that this is not the only way available for dealing with such patents. Whatever else this system does, it hardly promotes true innovation.
- csbrooks 13y agoI worked on shopping cart software for the web in 1996, and the company I worked at, Evergreen Internet, had been around a while before that. I wonder if anything we did constitutes prior art.
- incogmind 13y agoI think the best way out of these things is make software patents invalid after a short period- like 10 years.
- shmerl 13y agoI hope TQP troll will be busted as well. When will the Supreme Court process that case?