Definition - "Patent Troll"

"PATENT TROLL" - Any party that intentionally misconstrues the claims of their patent to assert it against another. A patent troll does not have to be a non-practicing entity (NPE) or in any particular industry, all that is required is an intentional misconstruing of the claims in an attempt to extort money from another.


Disclaimer - All information and postings in this blog are provided for educational purposes only. Nothing in this blog constitutes legal advice and you should not rely on any information herein as such. If you do not have a signed engagement agreement with me, then you are not represented by me and you should retain your own attorney for any legal issues you are having.

Monday, May 23, 2011

In light of Apple's letter...

(Note - The first draft of this post was done prior to Apple releasing their letter to Lodsys.  I have updated it based on that significant development.) 

I think some of the non-attorney advice givers should admit to their followers that they are not qualified to give legal advice when they do not fully understand the underlying legal issues.  I think the Apple letter to Lodsys this morning has undermined some of the more widely distributed non-attorney advisers and, in my opinion, shows that their advice might be wrong.

I am particularly referring to those who basically said "pay Lodsys what they want or go bankrupt".  At least one such commentator, who in my opinion has such a large ego that he believes his non-attorney legal advice is better than good patent attorneys, has also questioned the abilities of patent lawyers to provide real solutions to problems.  Sadly, this person seems somewhat mis-informed and not qualified to comment on legal matters.  A little knowledge is a dangerous thing...

Problems with the comments I have seen is that the authors clearly do not understand that all business decisions with legal risks have to be based on a close examination of the underlying legal risks.  Thus, BE WARY OF NON-LAWYERS GIVING LEGAL ADVICE.  Just because someone knows a little bit about business does not make them a qualified patent lawyer.

About the non-lawyer articles giving advice, they all seem to make major assumptions that are in many cases just plain wrong.  For example, some state that the risk to application developers by Lodsys is independent from how meritorious Lodsys's assertion is.  This is completely wrong; the amount of risk is completely dependent on the underlying claim by Lodsys, as was clearly shown in Apple's letter to Lodsys that was released this morning.

I've tried to explain to such commentators that understanding the underlying legal risk is necessary to gauging the risk to an application developer; thereby allowing the developer to be able to make a well-informed business decision.  They also claim that no application developer can afford to fight Lodsys; this is also wrong (though I agree it may not be the cheapest solution).  Other dubious claims are that signing the license will make everything okay and be the cheapest course of action; again, this is not necessarily true and I highly question whether anyone making such statements has ever done any actual licensing in a settlement negotiation setting.  There are a lot of variables that each business has to understand and evaluate to make the best decision for their business.  Advice based on generalizations can lead to very bad outcomes.

While I have tried to explain this theory of making informed business decisions to such commentators, they dismiss this so that they can send out their headline grabbing statements that basically say sign the license or DIE!  While such commentators may truly be attempting to help the application developers, they are actually doing the developers a disservice by pretending to give knowledgeable advice when it is really short-sighted and may discourage application developers from hiring an attorney to properly advise them of their legal risks. 

Every application developer that is threatened should hire a patent attorney experienced in litigation and licensing, at least to advise them of their options and risks.  A job of an attorney is to advise each client about the options and legal risks associated with taking different courses of action.  Attorneys do not make the decisions, they just try to minimize risk for the client.  The client makes the decisions, and the best decisions are based on a full understanding of the underlying LEGAL risks, not just someone's assumptions about business; in the Lodsys mess, the risks would include the legal analysis of infringement of the patent and costs associated with different actions.

In rebuttal to the SIGN OR DIE options put forth by non-attorneys, there are the other options available to the application developers, each with different inherent risks that need to be explained to the threatened application developers by their LAWYER:

1.  Do nothing.  Basically you would be calling Lodsys's bluff.  In light of Apple's letter, this might not be a bad strategy.  Though, nothing in the letter prevents Lodsys from suing or offers indemnity to the application developers.  As you are aware if you have read my other posts, their patent is shit.  Will Lodsys go all in by filing suit or not?

2.  Send Lodsys a letter telling them that you do not infringe and that any further threats by them may result in you filing a declaratory judgment action against them.  Maybe even threaten filing a suit based on patent misuse or violation of antitrust laws.

3.  File a reexamination.  This costs some money, but I will be posting more info on an invalidity analysis that could help defer such costs.

4.  File a declaratory judgment action.

5.  Enter into a joint defense arrangement with other application developers or Apple.

6.  Agree to License the patents from Lodsys.  Though, this is also not a guaranteed cheap option depending on the license terms and amount of negotiation needed.

7.  (added to differentiate from just taking the license they offered)  Negotiate a Settlement and License with Lodsys.  If an application developer has done their due diligence (some of which is provided on this site), they would have very good leverage to negotiate with Lodsys, considering that most application developers would not infringe their patent and their patent may be invalid.

Whichever option you go with, there will be different costs and risks, application developers should hire a patent attorney with licensing and litigation experience to advise them on each of these.  Please do not take your legal advise from non-attorney commentators that are not qualified patent attorneys.  A threatened party needs to do their due diligence to make an informed decision.


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