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High Court Ruling Likely To Control Patent Trolls
Originally published on Wed April 30, 2014 8:22 am
STEVE INSKEEP, HOST:
NPR's business news starts with a bad day for trolls.
(SOUNDBITE OF MUSIC)
INSKEEP: A Supreme Court ruling, handed down yesterday, will make it easier for companies that successfully fight off frivolous patent lawsuits to get their legal fees reimbursed. Observers say this ruling will help ward off so-called patent trolls.
NPR's Laura Sydell reports.
LAURA SYDELL, BYLINE: The case involved an exercise equipment maker - Octane Fitness - that built a successful elliptical exercise machine. A much larger competitor, Icon Health and Fitness sued Octane for patent infringement. Rudy Telsher, a lawyer for Octane says it was a bad patent being used to extract fees from Octane.
RUDY TELSER: Icon's patent was worthless, they were never able to make a product under it that was commercially salable.
SYDELL: A federal judge agreed the patent was worthless but it also said that the winner, Octane, couldn't get back the cost of litigation from Icon.
In its ruling, the Supreme Court found that the lower court was being too strict about standards for reimbursement. The court found that bad faith or exceptionally meritless claims can warrant repayment of legal costs to the winner.
David Martin, a patent law expert, says many companies have faced frivolous suits by so-called patent trolls that own a lot of patents but don't make anything, yet they settled out of fear that fighting would be too costly. Martin says the court's decision makes fighting more appealing.
DAVID MARTIN: Everything that starts putting the onus back on the opportunistic plaintiff is always going to help augur against the frivolous litigation.
SYDELL: Martin and other experts say that frivolous patent suits are costing American business billions of dollars of year.
Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.