Contents of page:
- Patent Troll Strategy – Case Study
- The Importance of a Single Word
1. PATENT TROLL STRATEGY – CASE STUDY
Mikio Ishimaru, Licensed US Patent Attorney
During hard economic times, it often happens that everyone wants to make the best use of all their assets. Sometimes their only assets consist of one or more patents. With all the publicity about patent trolls making lots of money by threatening or bringing patent suits against small companies that cannot afford to defend themselves, many small patent holders believe they can get rich off of their patents by threatening or suing manufacturers.
I had just joined a new company in the U.S. and was going through invoices when I noticed a bill for a litigation matter that I had not seen in previous months. I called my attorney handling the matter and asked him for an overview.
Apparently, a couple of years earlier, a solo inventor had come around to a group of companies and threatened them with five patents he had written and that had been granted by the U.S. Patent and Trademark Office. The companies had studied the patents and determined they were not infringed. Essentially, the patents did not apply to their products. However, since there were five patents and a number of companies, the companies agreed to pay $1 million total for the inventor to grant them licenses to whatever he had and go away.
The inventor was a small patent troll and said he wanted lots more and sued all the companies.
Upon investigation, it was determined that the inventor was retired, had almost no money, but liked filing legal papers and acting as his own lawyer. He filed a continuous stream legal papers that had to be responded to and requested numerous hearings that had to be attended by our attorneys, at our cost. He appealed his cases and they were all rejected. He was thrown out of court in his multitude of cases until he was prohibited from filing more cases. He then went to different courts across the country and filed again, often with the same papers. He was designated by various courts as a frivolous and vexatious litigant but continued to file law suits.
Because of his advanced age and lack of assets, no one wanted to have him cited for contempt of court. If he were cited, he didn’t have money so he just could not pay. The only other sanction would be jail time. This would stop him from suing and filing papers but the solution was viewed as too Draconian by everyone.
In actuality, he was a recreational litigant who enjoyed playing with the legal system and no one had a solution for stopping so the companies were suffering from the torture of a thousand cuts.
Once I understood the situation, I instructed my attorney to get sanctions, or financial penalties granted by a judge, for each frivolous filing and hearing. I was warned by the other companies that the inventor had little money so I would not be able to get any money from him and such sanctions against him would not stop him. As a matter of fact, it might encourage him to focus on my company more and file more documents or requests for hearings against just my company.
In six months, various courts had granted us US$250,000 of sanctions.
Then, I instructed my attorney to sue him for the amount of the sanctions and force him into bankruptcy.
Once he was in bankruptcy, my company purchased his patents from his bankrupt estate and had the US Patent and Trademark Office transfer the patents to my company. Without the patents, the inventor was left with the assets he previously had but could no longer sue my company or any of the other companies.
2. THE IMPORTANCE OF A SINGLE WORD
Mikio Ishimaru, Licensed US Patent Attorney
The choice of the correct word is key to drafting a successful patent claim that will protect a described invention from infringement. A competitor’s failure to understand this principle cost his company and my former employer thousands of hours of lost time and millions of US dollars in legal expenses.
One cold winter evening my doorbell rang. A rather scruffy looking individual was standing at my door and mispronouncing my name. After I corrected my name, he handed me an envelope and walked jauntily off into the darkness.
I ripped open the envelope and discovered that it was a subpoena for me to be deposed in a lawsuit. I was being deposed by a competitor of my former employer on a patent owned by that employer. I had to do some research to discover that the patent in suit was one that I had written over 12 years earlier.
Since I had written hundreds of patents in the intervening years, I did not remember the patent in suit, so I had to call my former employer to learn what was going on. I was reminded about the settlement negotiations that had been in process at the time I left the company. Well after I left, my former employer had filed a patent lawsuit against the competitor and the lawsuit had been resolved without my involvement.
Now, a follow-on lawsuit was in progress involving the same patent. Since the competitor was calling me for a deposition, it was better to know as little as possible so the competitor would learn as little as possible from me. As a result, I did not do anything to prepare for the deposition. At the deposition, I replied to most of the questions that I could not remember the answers since the questions related to things that had happened at least 12 years earlier.
Although I did not say anything of value to the competitor during the deposition and I did not expect to be called as a witness for the trial, I must have said something that made the competitor decide to call me as a witness.
As a result, I went to the law offices of my former employer’s attorneys and looked through all the documents that had been discovered during the pre-trial discovery to refresh my recollection of what I had done in obtaining the patent. At trial, it is necessary to know as much as possible.
I remembered then that the inventor had given me a very technical and detailed product specification rather than a regular invention disclosure. He had given it to me days before the product was going to be shipped and I had worked long days and late nights putting the patent application together, including spending several days working on the claims that legally defined the invention.
I remembered dictating the patent application, having my secretary frantically type it and the other documents required for filing, getting signatures, and rushing to the post office to mail everything a few minutes before the deadline.
I remembered that, during the next several years, I worked on a number of Office Actions, rejections and arguments, with the U.S. Patent and Trademark Office because they stated the invention was obvious. Part of the problem was that the invention was exceedingly complex and at the leading edge of technology so it was difficult to comprehend. It was my job to simplify the technology so it could be understood by the examiners in the Office.
In the simplest terms, the invention was a microprocessor emulator system that was used to repair personal computers, game controllers, and other microprocessor controlled systems. It consisted of a host computer and a replacement microprocessor control unit, which could be connected to the system to be repaired. The control unit had a four mode switch.
In a first mode of operation, the control unit switches to receive programming from the host computer. In a second mode, the control unit modifies the programming and switches to send the modified programming to the system to be?repaired. In a third mode, the control unit switches to receive results from the system to be repaired. In a fourth mode, the control unit modifies the results and switches to send the modified results back to the host computer. The host computer analyzes the modified results and determines what the next programming is. The control unit then switches back to the first mode.
The patent suit was in a Federal District courtroom. The courtroom was typical with a raised golden oak dais for the Judge, the great seal of the United States behind it, and an American flag to one side. Below and to the right of the dais was the witness booth and further to the right was a fenced area for 14 jurors; 12 regular jurors and 2 backups.
Directly in front of the dais was a golden oak podium for attorneys to stand behind when speaking to the Judge. Large golden oak tables for the plaintiff’s and defendant’s attorneys were in front of and to the left and right of the podium. The back of the courtroom had benches and was fenced off by a golden oak railing for witnesses and visitors.
My former employer as Plaintiff went first; the competitor was the Defendant.
The trial progressed as expected, and I was one of the last witnesses.
I was sworn in? and the questioning began. I was questioned for the first day about all the detailed circumstances of writing the patent application and the settlement negotiations.
On the morning of the second day, the competitor’s attorney pounded away at everything that I had said earlier and tried to find discrepancies in all the statements that I had made. The competitor’s attorney was unsuccessful and was ready to release me as a witness when the President of the competitor asked for permission to ask me some further questions.
This request is highly unusual in litigation, but because the President had been sued as an individual and qualified as a technical expert, the Judge allowed him to do so.
After spending a couple of hours questioning my microprocessor background and the technical aspects of the invention, he started asking me about the particulars of his own product. Specifically, he wanted to point out that his control unit did not have a switch. After getting me to agree numerous times that his control unit did not have a switch, he was about to end the questions when he decided that he had to ask just one more question.
Turning his back on the Jury and facing me directly, he asked angrily why I thought there had been infringement of my former employer’s patent by his company’s product.
I paused for a moment and then speaking directly to him I explained that the broadest claim uses the term “isolates” to describe the different modes.
I then went on to explain that my former employer’s product used a switch in the control unit but that is only one meaning of the term “isolates” and one way of obtaining the result claimed.
In English, the term “isolates” can mean “physically separated” as by a switch, but it can also mean “ignoring other things”. A door “isolates” one person from another, but one person ignoring another “isolates” that person from himself.
The President’s product, in a first mode of operation, receives programming from the host computer and ignores the system to be repaired. In a second mode, the control unit modifies the programming and sends the modified programming to the system to be repaired and ignores the system to be repaired. In a third mode, the control unit receives results from the system to be? repaired and ignores the host computer. In a fourth mode, the control unit modifies the results and sends the modified results back to the host computer and ignores the system to be repaired. The host computer analyzes the modified results and determines what the next programming would be. The control unit then returns to the first mode.
As a result, the President’s product infringed the patent claim I wrote.
The President’s mouth dropped open as he suddenly understood the broad meaning of this word and realized why he was guilty of infringement. Unfortunately, he had his back to the Jury and by the time he turned around, he had composed himself.
I was asked no further questions.
During a break, the President came over to me and said he wished he had talked to me five years earlier because my comments were the first time he really understood why he infringed and that no one had been able to explain it to him earlier.
It was unfortunate because both companies had spent thousands of hours and millions of dollars in the litigation without realizing that it was based on not realizing how broadly a single English word could be interpreted. But this is what makes an expert Patent Attorney.
In part, because my former employer was a large company and the competitor was a small company, the Jury ruled in favor of the competitor.
However, the Judge overturned the Jury decision by ruling that no reasonable jury could have decided in favor of the competitor, and we won the case.