The Retail Litigation Center and the National Retail Federation have jointly filed an amicus brief before the U.S. Supreme Court to highlight the importance of upholding the Patent Trial and Appeal Board’s review process.
The inter partes review (IPR), they say, aids retailers and the business community in fighting frivolous lawsuits filed by “patent trolls,” litigators who buy up patents and exploit them in the judicial system to extort settlements from businesses.
The associations filed the brief in Oil States v. Greene's Energy Group, a case that examines the constitutionality of the inter partes review process established by the America Invents Act.
The Supreme Court case focuses, in part, on the Leahy-Smith America Invents Act of 2011 and its creation of an “adversarial administrative process” at the U.S. Patent and Trademark Office in which a party can challenge “the novelty or obviousness” of a patent after it was issued.
The brief argues that, in many cases, retailers are sued based on their resale or use of products they did not design or manufacture and that retailers defending patent infringement litigation start “behind the eight-ball,” often lacking the knowledge or the means to analyze how a product might infringe. The brief states that the process helps resolve these allegations with less time and expense than full-blown patent litigation.
"Retailers defend patent infringement litigation from behind the eight ball,” the brief says. “First, retailers have limited or no information at hand to assess the merits of the claims of infringement as to the products they use and sell. Second, they must choose between paying hundreds of thousands of dollars to either litigate disputes that are likely not meritorious, or else settle with the patentee for a sum, that while substantial, is still less than the cost of defense.”
Arguments made in the brief:
"This is truly a Hobson's choice: patent assertion entities typically strategically set settlement rates at or below litigation costs, yet settlement with one PAE encourages more PAEs to file equally frivolous suits."
"A patent system that forces retailers to pick either poison has broader public policy implications."
"These costs harm the public as well as retailers, and are passed down to consumers in the form of higher prices and diminished competition."
“Litigation and settlement costs create excess burdens on commerce in addition to the economic cost of the invalid patent itself, and IPR reduces these burdens.”
“Retailers are constantly seeking ways to bring innovative products and solutions to the American marketplace,” says Deborah White, president of the Retail Litigation Center. “Unfortunately, in their quest to innovate, retailers face patent liability for products they sell but do not make and often have the least access to information about possible infringement. As patent trolls pray upon America's retailers, the industry is faced with the lose/lose scenario of choosing between costly litigation or settlements against unmeritorious claims. The IPR process is effective against fighting these claims and must be upheld.”
“Patent trolls have targeted retailers over and over again to try to extract extortionate settlements from these innocent users of products,” the National Retail Federation's Senior Vice President and General Counsel Stephanie Martz said in a statement. “The sensible way to resolve a valid claim of infringement is to allow the U.S. Patent and Trademark Office to apply its expertise in the first instance, rather than incurring high litigation costs. There's no question that this process, called inter partes review, is smart, efficient, and entirely within the authority of the patent office under the Constitution.”
The brief was prepared by Seth Greenstein of the law firm Constantine Cannon for the associations.