Recent verdict against Cisco highlights need for balance in patent debates in the US 09 Jun 17
In the US, the patent troll narrative has become one of the dominant forces in how IP owners, lawyers and legislators talk about and view the patent system. It is a narrative that has been extraordinarily successful and while there have been - and continue to be - abuses of the system by some entities looking to extract nuisance settlements with poor quality or overly broad patents, there is also another side to this debate.
That concerns the behaviour of alleged infringers, often with very deep pockets. They seek to drag out litigation proceedings instead of taking a licence in the hope of either a court victory or to ramp up costs to such an extent that it forces a plaintiff into offering a cheap settlement or even to abandon its case altogether.
This efficient infringement dynamic was on full display in a recent case brought by SRI International against Cisco. Last week Judge Robinson in district court in Delaware offered an excoriating criticism of Cisco’s behavior in the lawsuit, doubling the damages the jury in the case awarded against the Silicon Valley giant and handing SRI attorneys’ fees. You can see a good summary of proceedings over at IP Wire, which highlights Cisco’s apparent disdain for SRI’s business model.
SRI International is a research foundation - an NPE in other words - which spun out of Stanford University many years ago. Since then it has been in the business of trying to monetise its research, including, fairly recently, by selling a package of grants to WiLAN which are now the subject of several infringement suits. Among its innovations, SRI was awarded patents that underpin Apple’s Siri virtual assistant.
In a lengthy opinion Judge Robinson calls out Cisco over some of its litigation tactics. “There can be no doubt that from even a cursory review of the record that Cisco pursued litigation about as aggressively as the court has seen in its judicial experience. While defending a client aggressively is understandable, if not laudable, in the case at bar, Cisco crossed the line in several regards.”
She goes onto highlight the company’s actions that increased the scope of the case including numerous defences through summary judgment, which caused SRI “to expend its resources on responding to such motions, all of which were denied”. In explaining her decision to award attorneys’ fees and costs, she concludes by writing: “Cisco’s litigation strategies in the case at bar created a substantial amount of work for both SRI and the court, much of which work was needlessly repetitive or irrelevant or frivolous.”
Although Judge Robinson declined to grant the maximum uplift in damages, she did double the initial award to $48 million explaining that “some enhancement is appropriate given Cisco’s litigation conduct, its status as the world’s largest networking company, its apparent disdain for SRI and its business model, and the fact that Cisco lost on all issues during summary judgment and trial, despite its formidable efforts to the contrary”.
Of course, as Judge Robinson writes, Cisco is well within its rights to defend itself within the boundaries of the law - and in the current climate many defendants clearly feel emboldened to drag cases out looking to drain plaintiffs’ resources or knock out a suit through a litany of early motions. There is also every chance that this case like many others will be overturned or revised by the Court of Appeals for the Federal Circuit.
But her decision to award enhanced damages and fees should serve as a warning to alleged infringers who refuse to take a licence and then drag out court proceedings. And for anyone, particularly legislators, looking to right some of the wrongs of the US IP system, Judge Robinson’s opinion is well worth reading if only to add a little balance to the patent narrative.
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