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> one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit. Is the underlying

> one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit. Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? What if the value of a patent really is only a few thousand dollars? Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller entities. Licensing discussions often begin with the potential licensor saying "sue me", or these days, outright suing you first with a Declaratory Judgement. Can an individual afford to take on a large company? Trolls appear to simply be a symptom of this disparity in the market.

Lawtonfogle 11y ago
The legal system is not equally available to all entities. That it is the center of how we enforce our rights and hold others to their duties is a major problem. Even if we could fix it in the case of patents, we still have major issues within other civil and criminal courts. I do not know the solution or even have any half baked ideas on it, but I do think the first step to any solution is for us, as a society, to realize that the legal system is largely pay to win and not a justice system.
- tachion 11y ago
  There are other countries, where this issue is solved (more or less) by the fact that the side which have lost the case is covering trial costs. This does stop 'court trolling' because even is the cost of winning the case is higher than the cost of the settlement, winning the case nullifies that cost. But hey, US is special this way! (and many others... ;)
  - adebtlawyer 11y ago
    Having litigated against adversaries who use the courts primarily to be a nuisance, with little or no regard to the actual strength or weakness of their claims, I've become convinced "loser pays costs and attorney's fees of prevailing party" is a better system than what we have in the U.S.
    - tachion 11y ago
      This is not the only difference between the justice systems in US and EU (EU is what I consider to be elswhere): in US the case is the battle between boths sides lawyer, and the judge is simply a watching function, that a the end calls the sentence, based on the outcome of that battle. In EU, the case is a so called 'process of finding material truth' and the judge can take active stance, call witnesses, ask additional questions, call for professional opinions and so on - it is no longer a battle of who has better lawyers but a way to find what's the actual state of things.
      - adebtlawyer 11y ago
        The US system is also supposed to be a process of truth-finding, just that we leave the parties to support their own positions as adversaries. Without advocacy, American courts do very little on their own. So far that doesn't bother me, but I'm a lawyer. For someone thrown into the system, there can be an incorrect expectation that the court will automatically act to do justice.
        eigenvector 11y ago
        Part of the problem with the adversarial system is that if one party has bad lawyers, you can end up with bad case law as a result of them failing to properly argue their case.
        mcv 11y ago
        You could end up with one party intentionally losing a case in order to establish precedent that they expect to profit from in the future, because they expect they'll usually be on the other side of similar cases.
        mcherm 11y ago
        Really? Have you ever heard of a case where this occurred?
  - dtparr 11y ago
    How do they avoid disincentivizing small parties from suing larger ones in this system? Let's say I have a strong case (say 90% chance of winning) to sue an insurance company for, say, $50k. But the cost of their legal team/experts/discovery to defend it is, ~$500k, then things look a bit more bleak. Are there caps? Is one side prohibited from charging substantially more than the other?
    - jon-wood 11y ago
      I believe it's at the judges discretion. There was recently a case against a journalist who paid bribes on behalf of a news corporation in which the judge outright stated that if the corporation had been paying costs he would have ruled for a much larger costs settlement then he did when it emerged the journalist himself was going to have to pay. The remainder gets picked up by the taxpayer, so whatever happens the winning party isn't expected to pay the loser's costs.
      - dtparr 11y ago
        So in my scenario, the public would finance most of the insurance company's defense if I lost?
        jon-wood 11y ago
        Standard disclaimer: you should consult an actual solicitor! I think it would somewhat depend on the judge's assessment of the situation, but I would think so long as you're acting in good faith they'd likely rule for you to pay whatever costs you can afford, and the rest would be covered by public finances. It wouldn't surprise me to hear of judges deciding that the defence's legal team is grossly excessive and telling them they're not claiming for everything either, at least in the UK judges have quite a lot of leeway in what they can do in their own court room.
    - tachion 11y ago
      Well, if you want to sue them for $50k, and the cost of defense is $500k and your case is 90% chance to be lost, then the solution is quite simple - settle the case for 50k.
  - Aaronontheweb 11y ago
    I would also suggest not having punitive damages. Removes the prospect of / threat of a big payday coming out of a lawsuit.
    - Lawtonfogle 11y ago
      This would only boost behavior that takes advantage of massive numbers of weaker individuals because in the rare case of one of them winning, you are only going to get a minor fee. If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
      - Aaronontheweb 11y ago
        > If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices. This isn't a complete economic argument in favor of companies behaving poorly. Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior. Japan, for instance, prohibits punitive damages. Is there any suggestion on your part that companies there are somehow more "predatory" than ones here in the US? https://en.wikipedia.org/wiki/Punitive_damages#Japan https://en.wikipedia.org/wiki/Punitive_damages#Japan
        Lawtonfogle 11y ago
        >Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior. That fully depends upon how you simulate humans in one's argument. For a generally rational generally well informed human this is likely true (note I'm not even going with the 'fully rational fully informed'). But for the majority of consumers, there is less cost and there are ways to reduce the cost further. There will be some impact when the news breaks (if it breaks, the story being publicly available is a world of difference from the story being CNN/Fox New's headline of the day), but people will quickly lose interest or otherwise stop caring. While punitive damages may not be enough to fix the issue, I think there is an issue and I think the issue would be worse without them.
  - _up 11y ago
    But even then you propbably will get reimbursed only what an average lawyer would have been costing you. Not what the specialized high profile Lawyer normaly asks for.
    - mentat 11y ago
      I think it's actual costs.
    - Lawtonfogle 11y ago
      In which case the problem isn't solved as the rich can still spend money to win (but they don't get it back). It makes the legal system pay to win and once again allows trolling. Maybe not as much, but still a lot.
  - Lawtonfogle 11y ago
    This does not solve it. Consider little guy suing mega corp. Little guy's costs may be covered if he wins, but with only 50K to spend, he still could lose because mega corp can drop 5M on the case. This could even make it worse, because without the ability to recover costs, little guy has a small chance at victory and losing the 50k and a large chance at losing the 50k with nothing. With the loser having to pay, it changes to little guy having a small chance at victory and losing nothing and a large chance at losing 5M + 50K.
- jchomali 11y ago
  Definitely because of costs
ikeboy 11y ago
If you know you have a valid case (you aren't a troll), how hard would it be in practice to find someone to front the money for a lawsuit? Or for that matter, could you go to the competition and sell your patent? That is, say Apple's infringing on my patent; will Samsung buy the patent from me for a fair price and then sue Apple?
- stonemetal 11y ago
  to find someone to front the money for a lawsuit? That is one of the problems, he who fronts the money expects to get the reward. Hence class actions where the lawyer who works on contingency gets millions and those wronged get a nickle.
  - ikeboy 11y ago
    Of course, but 1. You'll still get a significant sum if the total is significant (and if the case is open-and-shut, the risk wouldn't be too high for an investor, so you could get a favorable deal) 2. The infringing company would have to pay in full, which discourages them from doing it in the first place. I guess I really want to know is if this actually happens in practice, or if there are reasons I'm not thinking of that stop it from happening.
- startupfounder 11y ago
  > how hard would it be in practice to find someone to front the money for a lawsuit? What about paying into an troll insurance policy every month so that if a troll wanted to sue you they would see that you were protected and would fight the lawsuit with a giant pile of money. This might deter the troll from suing in the first place.
  - detroitcoder 11y ago
    That is essentially what RPX Corporation provides
  - rollback 11y ago
    There is a whole ecosystem that is funding these lawsuits. It also operates somewhat anonymously, with funding sources working directly with law firms and indirectly with inventors (if they are even involved anymore). I've seen emails between law firms and the inventor that literally title the investors as "the funding source." The original inventor need not put any money at risk, and the law firms and funding sources do their own diligence to decide if it's worth proceeding to file suits. In most cases, the entity filing suit is created for each series of attacks so that if they actually lose a suit and are supposed to pay out, there are no assets from which to pay. Therefore, low risk and potentially very high reward. The biggest factor for that is not the validity of the patents, but the breadth and ability of the patents to be filed against "juicy" targets with a lot of cash. The cost of filing a suit is literally in the hundreds of dollars (I think ~$750) and most of these cases get settled out fairly early because of the immense cost of the defendants to complete the discovery process.
brlewis 11y ago
I'm a software engineer. Consequently I have to admit ignorance about this concept of a valid and useful patent. All I ever see is patents that hinder the Progress of Science and useful Arts. Are there really enough valid and useful patents that we should hesitate in our fight against the rest?
- jebblue 11y ago
  I'm confused, are you asking if you should be fighting patent trolls or patents? If trolls, then fighting them is better than not. Patents are tools, valid and legal, you don't fight tools, you use them, improve them, complain about them, etc.
  - brlewis 11y ago
    I'm talking about patents. Patents are tools in the same sense that landmines are.
    - sosborn 11y ago
      Why choose the word landmine? What's wrong with, say, a hammer?
      - brlewis 11y ago
        Hammers aren't used to exclude people from a path they might otherwise blissfully follow.
        sosborn 11y ago
        I guess I disagree with the idea that patents are inherently bad. Like hammers they can be used to build or to destroy.
        ycombobreaker 11y ago
        You simply aren't using enough hammers! Though seriously, I think the term landmine is loaded toward using patents exclusively as a troll. A wider analogy could be like a toll bridge, where the builder should be compensated by travelers. Some tolls could be usurious, but that wouldn't invalidate the whole principle.
blazespin 11y ago
Fixed it for you: Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller NON PRACTICING entities. Yes, big companies have a better track record against trolls. And yes, this unfair. But that doesn't mean trolls are OK.
LordKano 11y ago
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? Lawyers are expensive. Good lawyers are extremely expensive. There are also experts, investigators and consultants to hire. Everything about the process is expensive. It's very good that newegg is doing this because it helps everyone.

Lawtonfogle 11y ago

The legal system is not equally available to all entities. That it is the center of how we enforce our rights and hold others to their duties is a major problem. Even if we could fix it in the case of patents, we still have major issues within other civil and criminal courts. I do not know the solution or even have any half baked ideas on it, but I do think the first step to any solution is for us, as a society, to realize that the legal system is largely pay to win and not a justice system.

tachion 11y ago
There are other countries, where this issue is solved (more or less) by the fact that the side which have lost the case is covering trial costs. This does stop 'court trolling' because even is the cost of winning the case is higher than the cost of the settlement, winning the case nullifies that cost. But hey, US is special this way! (and many others... ;)
- adebtlawyer 11y ago
  Having litigated against adversaries who use the courts primarily to be a nuisance, with little or no regard to the actual strength or weakness of their claims, I've become convinced "loser pays costs and attorney's fees of prevailing party" is a better system than what we have in the U.S.
  - tachion 11y ago
    This is not the only difference between the justice systems in US and EU (EU is what I consider to be elswhere): in US the case is the battle between boths sides lawyer, and the judge is simply a watching function, that a the end calls the sentence, based on the outcome of that battle. In EU, the case is a so called 'process of finding material truth' and the judge can take active stance, call witnesses, ask additional questions, call for professional opinions and so on - it is no longer a battle of who has better lawyers but a way to find what's the actual state of things.
    - adebtlawyer 11y ago
      The US system is also supposed to be a process of truth-finding, just that we leave the parties to support their own positions as adversaries. Without advocacy, American courts do very little on their own. So far that doesn't bother me, but I'm a lawyer. For someone thrown into the system, there can be an incorrect expectation that the court will automatically act to do justice.
      - eigenvector 11y ago
        Part of the problem with the adversarial system is that if one party has bad lawyers, you can end up with bad case law as a result of them failing to properly argue their case.
        mcv 11y ago
        You could end up with one party intentionally losing a case in order to establish precedent that they expect to profit from in the future, because they expect they'll usually be on the other side of similar cases.
        mcherm 11y ago
        Really? Have you ever heard of a case where this occurred?
- dtparr 11y ago
  How do they avoid disincentivizing small parties from suing larger ones in this system? Let's say I have a strong case (say 90% chance of winning) to sue an insurance company for, say, $50k. But the cost of their legal team/experts/discovery to defend it is, ~$500k, then things look a bit more bleak. Are there caps? Is one side prohibited from charging substantially more than the other?
  - jon-wood 11y ago
    I believe it's at the judges discretion. There was recently a case against a journalist who paid bribes on behalf of a news corporation in which the judge outright stated that if the corporation had been paying costs he would have ruled for a much larger costs settlement then he did when it emerged the journalist himself was going to have to pay. The remainder gets picked up by the taxpayer, so whatever happens the winning party isn't expected to pay the loser's costs.
    - dtparr 11y ago
      So in my scenario, the public would finance most of the insurance company's defense if I lost?
      - jon-wood 11y ago
        Standard disclaimer: you should consult an actual solicitor! I think it would somewhat depend on the judge's assessment of the situation, but I would think so long as you're acting in good faith they'd likely rule for you to pay whatever costs you can afford, and the rest would be covered by public finances. It wouldn't surprise me to hear of judges deciding that the defence's legal team is grossly excessive and telling them they're not claiming for everything either, at least in the UK judges have quite a lot of leeway in what they can do in their own court room.
  - tachion 11y ago
    Well, if you want to sue them for $50k, and the cost of defense is $500k and your case is 90% chance to be lost, then the solution is quite simple - settle the case for 50k.
- Aaronontheweb 11y ago
  I would also suggest not having punitive damages. Removes the prospect of / threat of a big payday coming out of a lawsuit.
  - Lawtonfogle 11y ago
    This would only boost behavior that takes advantage of massive numbers of weaker individuals because in the rare case of one of them winning, you are only going to get a minor fee. If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
    - Aaronontheweb 11y ago
      > If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices. This isn't a complete economic argument in favor of companies behaving poorly. Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior. Japan, for instance, prohibits punitive damages. Is there any suggestion on your part that companies there are somehow more "predatory" than ones here in the US? https://en.wikipedia.org/wiki/Punitive_damages#Japan https://en.wikipedia.org/wiki/Punitive_damages#Japan
      - Lawtonfogle 11y ago
        >Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior. That fully depends upon how you simulate humans in one's argument. For a generally rational generally well informed human this is likely true (note I'm not even going with the 'fully rational fully informed'). But for the majority of consumers, there is less cost and there are ways to reduce the cost further. There will be some impact when the news breaks (if it breaks, the story being publicly available is a world of difference from the story being CNN/Fox New's headline of the day), but people will quickly lose interest or otherwise stop caring. While punitive damages may not be enough to fix the issue, I think there is an issue and I think the issue would be worse without them.
- _up 11y ago
  But even then you propbably will get reimbursed only what an average lawyer would have been costing you. Not what the specialized high profile Lawyer normaly asks for.
  - mentat 11y ago
    I think it's actual costs.
  - Lawtonfogle 11y ago
    In which case the problem isn't solved as the rich can still spend money to win (but they don't get it back). It makes the legal system pay to win and once again allows trolling. Maybe not as much, but still a lot.
- Lawtonfogle 11y ago
  This does not solve it. Consider little guy suing mega corp. Little guy's costs may be covered if he wins, but with only 50K to spend, he still could lose because mega corp can drop 5M on the case. This could even make it worse, because without the ability to recover costs, little guy has a small chance at victory and losing the 50k and a large chance at losing the 50k with nothing. With the loser having to pay, it changes to little guy having a small chance at victory and losing nothing and a large chance at losing 5M + 50K.
jchomali 11y ago
Definitely because of costs

ikeboy 11y ago

If you know you have a valid case (you aren't a troll), how hard would it be in practice to find someone to front the money for a lawsuit? Or for that matter, could you go to the competition and sell your patent? That is, say Apple's infringing on my patent; will Samsung buy the patent from me for a fair price and then sue Apple?

stonemetal 11y ago
to find someone to front the money for a lawsuit? That is one of the problems, he who fronts the money expects to get the reward. Hence class actions where the lawyer who works on contingency gets millions and those wronged get a nickle.
- ikeboy 11y ago
  Of course, but 1. You'll still get a significant sum if the total is significant (and if the case is open-and-shut, the risk wouldn't be too high for an investor, so you could get a favorable deal) 2. The infringing company would have to pay in full, which discourages them from doing it in the first place. I guess I really want to know is if this actually happens in practice, or if there are reasons I'm not thinking of that stop it from happening.
startupfounder 11y ago
> how hard would it be in practice to find someone to front the money for a lawsuit? What about paying into an troll insurance policy every month so that if a troll wanted to sue you they would see that you were protected and would fight the lawsuit with a giant pile of money. This might deter the troll from suing in the first place.
- detroitcoder 11y ago
  That is essentially what RPX Corporation provides
- rollback 11y ago
  There is a whole ecosystem that is funding these lawsuits. It also operates somewhat anonymously, with funding sources working directly with law firms and indirectly with inventors (if they are even involved anymore). I've seen emails between law firms and the inventor that literally title the investors as "the funding source." The original inventor need not put any money at risk, and the law firms and funding sources do their own diligence to decide if it's worth proceeding to file suits. In most cases, the entity filing suit is created for each series of attacks so that if they actually lose a suit and are supposed to pay out, there are no assets from which to pay. Therefore, low risk and potentially very high reward. The biggest factor for that is not the validity of the patents, but the breadth and ability of the patents to be filed against "juicy" targets with a lot of cash. The cost of filing a suit is literally in the hundreds of dollars (I think ~$750) and most of these cases get settled out fairly early because of the immense cost of the defendants to complete the discovery process.

brlewis 11y ago

I'm a software engineer. Consequently I have to admit ignorance about this concept of a valid and useful patent. All I ever see is patents that hinder the Progress of Science and useful Arts. Are there really enough valid and useful patents that we should hesitate in our fight against the rest?

jebblue 11y ago
I'm confused, are you asking if you should be fighting patent trolls or patents? If trolls, then fighting them is better than not. Patents are tools, valid and legal, you don't fight tools, you use them, improve them, complain about them, etc.
- brlewis 11y ago
  I'm talking about patents. Patents are tools in the same sense that landmines are.
  - sosborn 11y ago
    Why choose the word landmine? What's wrong with, say, a hammer?
    - brlewis 11y ago
      Hammers aren't used to exclude people from a path they might otherwise blissfully follow.
      - sosborn 11y ago
        I guess I disagree with the idea that patents are inherently bad. Like hammers they can be used to build or to destroy.
      - ycombobreaker 11y ago
        You simply aren't using enough hammers! Though seriously, I think the term landmine is loaded toward using patents exclusively as a troll. A wider analogy could be like a toll bridge, where the builder should be compensated by travelers. Some tolls could be usurious, but that wouldn't invalidate the whole principle.

blazespin 11y ago

Fixed it for you: Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller NON PRACTICING entities. Yes, big companies have a better track record against trolls. And yes, this unfair. But that doesn't mean trolls are OK.

LordKano 11y ago

Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? Lawyers are expensive. Good lawyers are extremely expensive. There are also experts, investigators and consultants to hire. Everything about the process is expensive. It's very good that newegg is doing this because it helps everyone.