Small Claims Court – A Way to Defeat Patent Trolls?

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supreme-court-sepia-4_lThe US Patent and Trademark Office is requesting comments on the implementation of a small claims court for patent litigation. These systems have been reportedly used with success in other countries, although in the US the implementation of such a system has not gained traction.  Should this instance be different, and if implemented appropriately, a small claims court could level the playing field for small/mid-sized companies being attacked by Non-Practicing Entities (NPEs or, derogatorily, “patent trolls”) without diminishing the rights of inventors.

Background

The issuance of a patent grants a temporary monopoly to an inventor in exchange for the disclosure of the idea to the public.  While this quid pro quo serves to “promote the progress the sciences and useful arts,” the public is dis-served by the inappropriate application of a patent to a technology (such as when a patent license is included in the cost of a device when it shouldn’t be) and the existence of invalid patents (thus stifling innovation).  NPEs are charged with exacerbating both of these issues by using the threat of (or actual) patent litigation to prey upon companies who may not have the wherewithal, money, or desire to fight a patent infringement lawsuit.  Moreover, NPEs have reportedly devised efficient systems by which to enforce patents against possible infringers thereby further disincentivising a defendant from contesting the validity of the patent.

Possible Benefits of Small Claims Systems

A small claims court for patent litigation could, if properly set-up, level the playing field for infringement defendants, allowing them to cost effectively defend themselves and challenge the validity of patents.  A few of my ideas on this include:

  • Accelerated Claim Construction
    Claim construction (the determination of what the claims of a patent actually mean) occurs during a Markman Hearing, which is generally held relatively early on in the case.  Unfortunately, the Markman Hearing will still happen many months, if not more than a year, after the filing of the lawsuit, but it is not until this hearing is held that the parties are likely to settle.  To accelerate settlement discussions, claim construction in the small claim setting could be part of the pleading and response stage, and a judgement could be rendered based upon an accelerated briefing calendar.  The benefits of this type of system have already be recognized by some courts which have developed “mini-Markman” proceedings that settle the meaning of key terms very early in the process so as to accelerate settlement.
  • Limited Discovery
    Discovery should be extremely limited until the claim terms are determined.  While there are those who indicate that meaningful discovery is necessary to adequately determine the meaning of terms, even going as far as stating the the court needs to be aware of the infringing device and/or process in order to properly perform a claim construction, the better view is that allowing the parties to hem and haw about which terms are at issue and what they mean needlessly allows for gaming of the litigation process to the detriment of the other party and the public.  While there are certain discoverable items that would have an impact on the meaning of claim terms, such as the statements by an inventor, an inventors lab notebook, etc., any discovery should be narrowly limited to very discrete and specific issues (and should not include discovery on the accused device or process).
  • Validity of Patent Determined Directly After Markman
    It is well settled that there can be no infringement if the patent at issue is invalid, yet courts typically allow the infringement and invalidity issues to proceed concurrently.  If both issues are to be settled by a jury, this process makes some sense – yet, at least for some small claims courts, there is no, or a very limited right, to trial by jury.  For patent small claims, juries should be eliminated, which would allow the courts to separate the issues of validity from issues of infringement.  Determining issues of invalidity first will have two beneficial effects – first, it will continue a process in which discovery is likely limited to only a very narrow range of issues and would certainly not include discovery on issues of infringement (sales, versions of apparatuses, notice of patents, etc.), and second, it should accelerate settlement discussions as the parties consider the invalidating prior art in view of the recent claim construction.

While none of these processes would be a complete panacea to the problems posed by NPEs, these procedures could instill a balance between the generally litigation-adept NPEs and small/mid-sized companies looking to defend themselves from suspect claims of patent infringement.

Photo credit: IslesPunkFan / Foter / CC BY-NC

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