The Impact of Patent Trolls

Date: April 6, 2016
Panelist: Roger Pao, Lead Faculty for the Paralegal Studies program at the George Washington University

In this webinar, Professor Pao will provide a great understanding of the concept of patent trolls, examine the financial damage they have on businesses, and explore evolving federal public policies to alleviate the problem of patent trolls.

Panelist Bio: Roger Pao, JD, is an attorney and educator who is originally from California but is now loving life on the East Coast. He is a graduate of Harvard Law School, magna cum laude, and Duke University, summa cum laude. He teaches Intellectual Property Laws, Elements of Intellectual Property Laws, and Prosecution and Litigation in Intellectual Property Law for the GWU Master’s in Paralegal Studies Degree Program. He greatly enjoys working with students and helping them towards achieving their educational and professional goals and dreams.

Transcript

[Start of recorded material at 00:00:00]
Kira: Morning everyone, the time is now noon and we’ll just give everyone another minute or so to settle in and we’ll start very soon. Thank you.
Perfect, good afternoon, everyone and welcome to today’s webinar titled The Impact of Patent Trolls presented by Roger Pao the lead faculty of GW’s Master’s degree in paralegal studies online program. This is a fascinating topic and I’m sure you have lots of follow-up questions. So please be sure to send them over to our Q&A, for our Q&A session. My name is Kira and I will be your moderator. I know everyone is excited to hear from our featured speakers so let’s go over to today’s logistics.
Please note our participant conference lines are currently placed on mute or listen only mode to ensure a smoother line of communication. As this presentation is being recorded to communicate with me please type your messages to me via the chat box, it’s the roundish bubble icon found on the top right hand corner of your screen. And if you click on it it should light up blue if it’s currently grey. We will be taking your questions throughout the webinar so please don’t hesitate to send your questions over to me via that chat box and I’ll send them over to our panellist. If we’re not able to get through all of your questions within the hour we will be sure to get in touch with you after our event. Also our Enrollment advisor will be happy to follow up with you at a later time on any program related questions.
Now let’s introduce you to our speaker. Roger Pao [JD] is an attorney and educator who is originally from California but is now loving life on the east coast. He is a graduate of Harvard Law School magna cum laude and Duke University, summa cum laude. He teaches intellectual property laws, element of intellectual property laws and prosecution and litigation in intellectual property law for the GW Master’s in paralegal studies degree program. He greatly enjoys working with students and helping them towards achieving their educational and professional goals and dreams. Welcome, Roger, and welcome our audience. Roger, please take the stage.
Roger Pao: Thank you so much, Kira, and welcome everyone to this live session. I am so excited to be presenting on this topic, patent trolls, which I think is one of the most fascinating topics in intellectual property law. As Kira noted in her introduction I am a professor here at GWU, I teach in the Master and paralegal studies program. It is such an outstanding program and I feel very privileged to have the opportunity to work with a number of wonderful students as well as collaborate with many superb staff and faculty members.
One question that I’d like to ask everyone if you could type in the chat [unintelligible 00:05:09] in the lower right hand corner, this is [unintelligible 00:05:12] what’s your background in intellectual property law or what makes you interested in intellectual property law. What makes you interested in this particular topic, patent trolls, for example, any or all of those questions would be fine. I just want to get a sense of what folks are interested in. If you set your chat feature to all panellists or to me privately I will be able to see while I am presenting on this particular topic.
As I was mentioning before patent trolls is such an interesting topic in intellectual property law. It is a relatively recent phenomenon but it has been growing and spreading at the pace of an epidemic especially in the United States. Now here in the slide you see it’s debilitating innovation since 1993 and that’s because over the past couple decades patent trolling has become an increasingly difficult problem.
Now what is a patent troll? Well, basically a patent troll is a party, generally a company but could be an individual that attempts to enforce patent rights against alleged accused infringers beyond what the actual value or contributions to the [unintelligible 00:06:51] the patent is.
So how do we go about identifying patent trolls? Well, non-practicing entities which we’ll herein refer to that as NPEs from time to time which are companies which do not really engage in any kind of research and development or private development, attempt to enforce patent rights against accused infringers far beyond what the actual value or contribution to the [unintelligible 00:07:27] is. So basically I always like to view patent trolls in layman’s terms or layperson’s terms as something that folks object to because they don’t contribute any value to the economy right.
So obviously individuals who engage in patent trolling as we will discuss not only object to this particular term patent trolls but they would counter that they do provide some value to the economy. But the reason why we use the term patent troll to begin with is that the idea is that they don’t really provide anything new to the economy. So just to take a step back for a second our intellectual property law system with its system of copyright and patents as was first set up in the U.S. constitution ideally should create a system that encourages innovation while at the same time protects the economic rights of the innovators, of the inventors who come out with these new products or new services that are patented.
And so what we’re thinking of when we’re thinking of our intellectual property system as well as our patent system which is part of the IP system is, I always like to say, a balancing act, right. So and the balancing, the consideration that we’re trying to balance here are the considerations of promoting innovation, promoting creativity on the part of individuals while at the same time protecting the economic interests of the particular individuals and companies that are innovating all the time. One might say that if we protect the economic interests of these innovators then we are also stimulating innovation. So it’s essentially circular in that particular respect, one supports the other.
Many individuals though would claim that patent trolls essentially throw that balance out of whack. They upset that particular circular balance that I just discussed because what they do is that they take money out of the economy, they take money out of businesses without actually stimulating any innovation, right, because these patent trolls, these companies that attempt to enforce these particular patents are actually not inventors themselves, they’re not doing any innovation.
And I’m looking in the chat [unintelligible 00:10:41] and I see it’s excellent, I see that a number of people are either paralegals at law firms or would like to be IP paralegals at law firms or would like to be IP paralegals which is awesome or have worked in intellectual property rights. And so it definitely seems like we have a wonderful mix here of folks with experience in IP and folks who are interested in intellectual property which is terrific. And I also scatter in my discussion, you know, a lot of discussion about patent trolls is theoretical and philosophical. But I’ll also scatter in the practical elements of the practice of IP law, the practical aspects of dealing with patent trolls as well.
So as I mentioned to Kira before this live session I have to give her and her team for a lot of credit for these graphics. I love this little patent troll that you see here, this fly with its little brain sticking out, but very, very curious about the patent system. So a patent troll essentially uses patents as legal weapons. Rather than actually creating any new ideas or coming up with new ideas that I just discussed, trolls are in the business of litigation or sometimes simply threatening litigation, right. You know, like a troll does is that they will purchase a particular patent or many, many patents and then they will send letters out to businesses claiming that there’s been an infringement upon that particular patent.
Now those of you who are paralegals in intellectual property, have worked with patents before, many have represented both sides of this, right. You know, you may have been the one who drafted out these particular letters that are sent out by these so-called patent trolls and/or you may be the ones that are responding to these particular letters alleging infringement on the part of patent trolls. You know, if you’ve worked in intellectual property law either for a short period of time or for a while you know essentially if you’re representing, if you’re working at a law firm and then working as outside counsel but also if you’re working as inside counsel you know for a fact that you can be on either side of the particular dispute or the particular conflict. Or the particular transaction.
And so how it typically starts off with patent trolls from a practical perspective is when you have patent trolls using these patents as legal weapons, threatening litigation or trying to simply extract some amount of money from a particular alleged infringer it usually starts off as both calm and disruptive, that’s how I like to put it. It’s calm in that it’s simply paperwork. Patent troll sends out this letter to a company alleging infringement however it’s also very disruptive in that the company that receives this particular letter – all legal by the way – is typically very, very upset when they receive the letter. Generally speaking if the letter is issued to a senior executive member of a company they would immediately forward it on to their in-house counsel or if they’re a relatively small business without in-house counsel they will immediately forward it to their outside counsel. And chances are they will be very, very upset.
And so for those of you who are paralegals at law firms, you know, you’re supervised by an attorney and so what the attorney gets from their particular client is typically an angry email or an angry voice message or an angry phone call letting the attorney know that they have received this letter alleging infringement. It’s never a happy communication, never a happy conversation. Depending on the particular circumstance the attorney will then call or email the senior level executive and then decide on an appropriate course of action.
Now a lot of the patent troll cases are actually not even litigated so they aren’t even decided in court so to speak. Chances are the vast majority of them are settled out of court. They’re either, it’s financial settlement that is paid to the patent troll or there’s some strongly issued letter that disputes the patent troll’s claim. And in some cases the patent troll will just drop the matter. But in many other cases the patent troll will not drop the matter. Still also in many cases the company whose infringement is alleged will also not drop the matter, right. You know, and that’s when two parties cannot drop the matter that’s where both parties lawyer up so to speak. They typically have both in-house counsel and hire outside counsel with a specialized expertise in intellectual property. And then they litigate the matter.
You know, I see a number of folks have just joined us. One of the questions I asked at the top of the hour is what is your experience with intellectual property law, what is your experience with patent trolls or what brought you to this session. Definitely feel free to send me a private message or send it to everyone, you know, you can do either and there are a number of folks with experience in intellectual property law here and there are also a number of folks with no experience just simply interested in this particular topic.
So how do patent trolls work? Well, what patent trolls do is that they often buy up patents cheaply from companies down on their luck that are looking to monetize what resources they have left such as patents. Armed with these over-broad and vague patents – and we’ll discuss, we’ll be discussing a few examples of these vague and over-broad patents – but I just want to mention a few of them. Patent number 5443036 is the method of exercising a cat by moving a laser pointer around. You know, for those of you who have cats you know that they are mesmerized by laser pointers. Patent number 5107620 is an electrified table cloth designed to discourage bugs from crawling around.
You know, it’s the month of April, I’m here in the Boston area, it’s still too cold to have a picnic. But for those of you who are residing in places where it’s warm enough to have a picnic, warm enough to put out a tablecloth on the grass if you really wanted to discourage bugs from crawling around, well, be on the lookout for the patent-holder of that particular patent with that tablecloth designed to discourage bugs from crawling around.
And patent trolls, of course, send these threatening letters to anybody that may be infringing upon their patent and these letters threaten legal action unless the alleged infringers agree to pay [licensing fees]. I would even add or agree to outright purchase the patent. And these can typically be tens or even hundreds of thousands of dollars. But in the case of very prominent companies like Apple or Amazon where the patents can be quite lucrative these particular patents can also be ones where they can be in the millions of dollars. I should say the licensing [fees] can be worth, can be in the millions of dollars and the worth of the patent can be in the millions of dollars as well.
Damage [report]. So patent [unintelligible 00:20:36] for financial gain cost U.S. companies nearly $30 billion in 2011. Litigants filed six times as many patent suits in 2013 than in the 1980s. One might say why not, why wouldn’t they file these particular patent claims, right, there’s money there and as we know when something is legal to do and when there is money there, chances are there are companies that will be engaged in it.
Now, I’m just going to give you a sneak peek. The U.S. Supreme Court did decide a very, very important case in April of 2014, so about two years ago now, almost two years ago now, they issued an opinion on April 29th. The case of Octane Fitness LLC vs. [Icon] Health & Fitness Inc., two fitness companies but the case had nothing to do with exercise but had to do with the loser pays cost regime. What does that mean? Well, in Europe patent trolling has historically been less of a dilemma because Europe has a loser pay cost regime. That is the loser of a particular case pays both the winner’s and the loser’s attorneys’ fees.
Now there are pros and cons to that in different contexts, right. Obviously with a loser pays cost regime when pro or con depending on upon how you want to look at it is that it discourages litigation. Now historically in patent troll cases the U.S. has typically used what’s known as the American rule which provided that each party would be responsible for paying its own attorneys fees. But what this particular case Octane Fitness LLP vs. Icon Health & Fitness Inc. did was that it made it easier for courts to allow the loser, the courts to mandate that the loser would pay for all attorneys’ costs. Obviously when you have that kind of regime that it intended to discourage frivolous litigation.
Now on the one hand it’s intended to discourage frivolous litigation, right, but you could also argue on the other side that well doesn’t it discourage legitimate litigation. If you are a party with a legitimate case that might discourage you from bringing the case because you could potentially be responsible for the other party’s attorneys’ fees. If you are found to have lost, if you lose a particular case but in any event the case of Octane Fitness was a unanimous Supreme Court decision, very important decision in patent law jurisprudence.
There were – a very important case I should day – there were 3,134 patent lawsuits in 2013, more than half of all patent suits in general and factoring in suits that did not go to trial, lawsuits by non-practicing entities cost a whopping $29 billion.
So patent trolls usually target small and medium sized companies, the ones that don’t have the resources that larger companies do. Although they also do target larger companies simply because larger companies have deeper pockets. But the reasons why they might target smaller and medium sized companies is because they may not have the resources to defend themselves as effectively. Larger companies like Apple or Amazon have deeper pockets but they also fight a lot harder.
The medium companies sued in 2011 had only $11 million in revenues. Between 2010 and 2013 patent trolls or non-practicing entities cashed out at three times of the rate of real companies. Patent trolls who use patents to extract licensing fees or legal settlements are responsible for 68% of all patent cases in U.S. District courts. And so I want to step back a bit and provide just a bit of background for those of you may not have as much experience with American law.
So patent law, copyright law as well as all types of intellectual property law are generally known as federal law, those are patent cases are cases that resolved in federal courts. In our federal court system we have 93 U.S. District courts, a number of appellate courts and then the U.S. Supreme Court. So when I say U.S. District courts I’m simply referring to the trial court. All of the patent troll cases will start off, assuming that it’s not settled before litigation, in U.S. District trial court. The losing party obviously may appeal to one of the circuit courts of appeal, assuming that they want to go through the time and expense of doing so. And the U.S. Supreme Court in very rare circumstances may hear a patent troll case. Obviously the U.S. Supreme Court almost never hears cases but I just mentioned one case, the Octane Fitness LLP vs. Icon Health & Fitness Inc. in 2014. So it does happen but just very rarely.
So what do trolls do? Trolls take undue advantage of the justice system by filing suits in certain notorious jurisdictions like east Texas. East Texas as known as particularly fertile ground for patent trolls. And there are a number of factors as to why a particular troll so to speak would go to east Texas. First of all motions to kill abstract patents have a 71% win rate nation-wide. It comes down to 27% east Texas. You can see here from this graphic the results for patents challenged in the 35 U.S. [unintelligible 00:28:19] section 101 the law banning overly abstract patents in 2015.
Now there are also other factors in east Texas, there’s a perception of relatively larger jury awards for plaintiffs and there are discovery rules that are more challenging for defendants. In east Texas generally judges are reluctant to grant summary judgement awards in favour of defendants who are sued in patent troll cases.
Now there are also a couple ways in looking at this particular issue, right. On the one hand this issue of patent troll being more successful in east Texas on the one hand you can argue well that’s the way our system works. We have many different jurisdictions throughout the United States. Companies choose to operate in many of these particular jurisdictions and not all of these particular jurisdictions. patent trolls have the right to bring cases in any jurisdiction that they’re legally allowed to do so that they have jurisdiction in.
But on the other hand you might also think to yourself well that’s not a very fair system, the 71% win rate nation-wide and then 27% in east Texas. Part of it also goes to the fact that we have a legal system in which there’s a system of nomination and confirmation of federal judges and they have lifetime tenure. So, for example, these judges, or judge – there’s one judge in particular in east Texas that tends to be more favourable to patent trolls – well, it’s very difficult to impeach a federal judge, it’s very difficult to remove a federal judge and the federal judge can just sit there basically as long as they would like.
And just to take a step back to illuminate a current event you may have heard that Judge Merrick Garland has been nominated to the U.S. Supreme Court by President Obama in the wake of death of Justice Antonin Scalia. And that’s partly why there has been this particular dispute, right, whether to confirm Justice Garland, he’s a very important person. All nine justices in the U.S. Supreme are and once nominated and confirmed they may sit there for a lifetime and it’s very, very unusual to remove to impeach a judge.
Well, you hear a lot about that with the U.S. Supreme Court but what you don’t hear as much about in the news media is that the same principles apply to federal judges in the court of appeal as well as federal judges on District courts. All of these particular federal judges have lifetime tenure and so they can sit in their courts for 20, 30 or 40 years. Now this is not the case with state courts, many state courts have mandatory retirement ages. And if you want to ask my personal opinion [unintelligible 00:32:20] as far as whether or not to have mandatory age, I do not believe in having a mandatory retirement age. I believe that what our U.S. constitution states in terms of lifetime tenure is appropriate and that federal judges and our system of nomination and confirmation is largely a good one and better than one of direct election.
That said, you can see how with the dispute involving Merrick Garland, his nomination and confirmation that particular position, of course, requires both the U.S. presidency and the U.S. Congress to collaborate and to work in a way that is functional. Obviously they would, the U.S. Congress and the U.S. President would always argue that they’re acting in a functional way. But currently we only have eight justices on the U.S. Supreme Court and that has occurred at various points in time throughout history where instead of nine justices we have eight justices.
I just want to go on that little aside here in case you had any questions about this … as to why U.S. District court judge in east Texas is just allowed to sit there and rule in favour of patent trolls largely. Well basically they have the right to do so. Under our U.S. constitution [unintelligible 00:33:57], as they are in good behaviour and it’s very, very unusual for a federal judge to be removed, to be impeached then they can simply sit there on their court.
So trolls go after large innovators as well. The case against patent trolls that shows that non-practicing entities are in it purely for the money and have no interest in resolving legitimate intellectual property disputes, all they are looking for is a quick payday.
In the first half of 2015 Apple [unintelligible 00:34:42] and Amazon were three of the most frequently sued corporate entities. If patent suits against all of the affiliates were to be combined Samsung would be ranked with the second-most suit company right after Apple Inc. and obviously you can see that these companies have things in common too, right. Very tech intensive, so generally the tech industry as well as the pharmaceutical industry are ones for which patents are very important and patent trolling is a particular dilemma. Obviously if you are engaged in another industry like the retail industry or the restaurant industry chances are patents and patent trolling will be less important to your particular business.
So the estimated total cost of patent troll litigation stood at $6.8 billion in 2015, last year. Here’s just another way of visualizing things about patent troll litigation. As you can see Apple Inc. has the most number of patent suits [unintelligible 00:35:48] 35. And you have Samsung HP [unintelligible 00:35:53] and Amazon.
Mean settlement costs were $1.33 million for small and medium companies and $7.27 million for large companies. Let’s put that in the form of context, right you know, I don’t know how many of you watch Shark Tank which is the show on ABC, but they talk about patents and licensing on that particular program from time to time. And for the businesses that appear on Shark Tank, $1.3 million is sometimes the value of the entire company or even more than the entire value of the entire company. So I do want to put this small company note into context. These are small companies but these are small companies in the tech and pharmaceutical space generally. Sometimes they may be valued at $10 million or $15 million or $20 million or $5 million. Still $1.33 million or $7.27 million, they’re not the [unintelligible 00:37:05], they’re still a substantial portion of the value of that particular company.
It’s not just the value of the patent itself too, right. It’s also the cost in time in terms of litigation. And mean litigation costs were $1.75 million for small and medium companies and $8.8 million for large companies. Five percent of the lawsuits for large companies cost more than $22 million. Small and medium sized firms, that is companies with less than $1 billion in revenues made up 90% of the defendant firms. Given that they mounted only 59% of the [unintelligible 00:37:53] small medium sized firms were more likely to avoid litigation and settle out of court than [unintelligible 00:38:03].
What are some examples of major trolling incidents? Well, Apple Inc. was ordered to pay $533 million to Smartflash, a British Virgin Islands-based [unintelligible 00:38:23] after a federal jury in Texas found that its [unintelligible 00:38:27] software infringed three patents that were owned by Smartflash LLC. Samsung was ordered to pay Rembrandt [unintelligible 00:38:38] $2.7 million for infringing two Bluetooth patents, Bluetooth related patents in another Texas. And [unintelligible 00:38:48] was told to pay Intellectual Ventures $17 million for using two anti-malware inventions it owned in a Delaware case. This was substantially less than the $298 million that Intellectual Ventures had been seeking. So these are substantial sums of money.
What are people doing to slay the trolls? So in December 2013 the House of Representatives passed the Innovation Act in its 325 to 91 vote. The U.S. Senate did not take up the Bill and it was re-introduced in the House of Representatives in February 2015 and had 26 co-sponsors by June 2015. It includes several key provisions that had been proposed by the White House earlier in the year. So the Innovation Act is intended to stop patent trolling [unintelligible 00:40:08] change various regulations surrounding patent infringement lawsuits to reduce the number of particular lawsuits. Some of the things that this particular propose piece of legislation would do … was to require plaintiffs that are filing a particular patent troll that is, these non-practicing entities, to be more specific about the violation, to make it more difficult to file relatively vague claims of infringement. To have to provide certain details upon filing a particular claim and to require plaintiffs that lose their lawsuit to pay the court the costs that are incurred by the wining defendant. Remember when we were talking about the U.S. Supreme Court case all that did was give the lower court the discretion to make the loser, losing party pay.
So this particular case has been dispute – or, I should say, this particular proposed piece of legislation has been disputed in the U.S. Congress. President Obama supports this particular Bill. It doesn’t sharply break along partisan lines as you might expect. There are those individuals, for example, those representatives that represent constituencies where colleges and universities are very important. And colleges and universities have been very concerned about provisions associated with fee shifting. Because many universities have, many of these research universities have large licensing departments and they lack a lot of resources to enforce their patents. And so they are concerned that litigation risks may be heightened by the Innovation Act that may devalue patents and create uncertainty as far as how these particular cases would [unintelligible 00:43:05] and undermine [unintelligible 00:43:08] of licenses to invest in commercialization of innovation on the part of university.
Some of the other slides that you see here. Patent trolls often create shell companies to hide the true owners of the patent. The White House wants to require plaintiffs to disclose everyone who has a financial stake in a patent. Protect end users from patent lawsuits. A favourite troll tactic is to threaten technology users rather than manufacturers. Since customers are less likely to mount a strong defence, the Obama administration proposes allowing vendors to step into their customers’ shoes. [unintelligible 00:44:04] and finally the bottom right hand corner, expand the Patent Office program to invalidate low quality patents. The so-called [unintelligible 00:44:12] business [unintelligible 00:44:13] program allows defendants and [unintelligible 00:44:15] financial patents to challenge [unintelligible 00:44:18] Patent Office, the White House wants to expand this program to cover more software patents.
I touched upon this a little already. So this is the humorous side of patent, the number of different whacky patents. You know, it’s funny, my dad is an engineer and he has filed for patents before. He’s a civil engineer but he’s also an inventor on the side. Patents are expensive to file but anyone can file a patent. And people do file patents for all kinds of strange things. Another patent that I had mentioned before was a patent for Stud Spectacles, eyeglasses that do not need a frame because they attach to body piercings on the face. I actually don’t think this is as odd as some of the other patents because I, I do not have these piercings on the face myself but I imagine if you had facial piercings and you’re looking for a place to hang your glasses, well, Stud Spectacles – I love that name too – might be a practical solution.
Their Patent number 6368227, method of swinging from a swing, pull on the opposite chains and swing from side to side. Well, I can tell you if you look at that little image, the little orange one, that strikes me as working fine if you just have one swing. But for those of you who are familiar with swing sets, chances are they are more than one swing. And I can imagine that it can be extremely dangerous to swing from side to side if you have more than one swing. I have no idea how that would work.
So, we’ve reached the end of the session. I know that Kira and I were hoping to have a bit of Q&A in the last 10 or 15 minutes or so. But, Kira, I also wanted to ask you – so these are sources for this presentation – Kira, I wanted to ask you, do you want to go straight into Q&A or did you have any comments or thoughts yourself?
Kira: Oh, absolutely, Professor Pao, I just wanted to go over the admissions criteria as well for our program. As you know we are currently accepting application for the summer term coming up and for those who are interested cause I know Professor Pao mentioned that in our audience we have paralegals as well as aspiring paralegals and really, regardless of your level of experience in the field, this Master’s degree in paralegal studies online program from GW is certainly relevant. And it is a [unintelligible 00:47:27] degree and it’s going to enhance your skill set. And in order to apply into the program and join our wonderful network of alumni and students there’s components such as the application form, there’s an application fee of $75, we will need a statement of purpose where you would convey your aspirations as well as your professional background just so that our admissions committee can learn a little more about you. And of course a current resume and two letters of recommendations and transcripts from all schools attended.
And that would be submitted to Shiromi the Enrollment advisor looking after the program, she’s very knowledgeable and she’s there to assist you with the application process. To discuss program logistics, application requirements and help you build your application portfolio as well. And she can be reached at 1-888-989-7069, extension 3251. And of course her email address is below there.
And now we’re going to be diving into the Q&A session. Thank you so much to our audience and Professor Pao for this really enlightening topic. The impact of patent trolls and, you know, its impact on the production of businesses. So we do have a few questions coming in from our audience. I actually am going to be opening up the lines as well so you won’t be muted in case you do want to have a question. But when you do have a question, you know, please just give us an introduction of yourself, first name is okay, full name is great and if you want to include a little bio of yourself so our audience can get to know you a little bit better, we’ll go through that as well. And I’ll be opening up the lines very soon.
But first we do have a few questions that we want to go through and then we’ll open up the line. Now the first question for profession Pao is how accurate is their claim on infringement, is it just a general review of a possible infringer or is it typically a dead on infringement?
Roger Pao: Thank you, Kira. And actually, I wrote that question down but I actually wanted to make a couple comments on what you said, you know, about the program first. First of all I want to say, I want to thank everyone for your participation in this particular session. And I also want to support completely what Kira said about the program. I’ve taught in the program for four years, it’s such a wonderful opportunity to work with a number of excellent students and colleagues in the program, so I’d highly encourage you to consider the Master of paralegal studies program at GW if that is something that you may be interested in.
You know, secondly I’d like to make a brief comment about, since we have a number of folks, paralegals in the intellectual property practice. And we have a number of folks who are interested in the intellectual property practice as well. You know, one of the reasons why folks are interested in being paralegals in the intellectual property law field frankly is because it pays very well. Now you could whether or not that’s fair, obviously, you know, the paralegals in family law, paralegals in immigration law, paralegals in a variety of different areas of law, very, very important areas of the law that generally those areas of the law when they pay paralegals don’t compensate them as well. I’m saying that as someone who was interested in family law and immigration law as a law student.
But, you know, intellectual property law is definitely a field of law that I think pays very well. It’s very intellectually stimulating. One of the reasons why it pays very well is because you’re working with these companies, whether it’s NPE or you’re trying to defend a particular patent, you are working with these particular companies that have very, very deep pockets.
And before I start rambling on too much, Kira, I apologize would you mind repeating that first question, just for everyone and for myself as well?
Kira: Absolutely. How accurate is their claim of infringement? Is it just general review of a possible infringer or is it typically a dead on infringement?
Question: - off on this tangent, answer the question for the last five minutes he’s like oh what was the question.
Kira: I’m sorry, our lines are muted currently so, yeah, if you have a question please by all means participate but right now Professor Pao is going to be answering to our questions.
Roger Pao: Well, I think that’s an excellent question. You know, generally it depends on the sophistication of the NPE. Obviously when a non-practicing entity is trying to allege infringement on the part of a company like Apple and Amazon, chances are it’s a pretty large sophisticated operation. And so the details of the alleged infringement are actually going to be relatively specific. These are very sophisticated enterprises themselves, this NPE. And so, for example, the Innovation Act that has been proposed would require specific details like the accused apparatus, feature, function, method, service or other accused instrumentality. The principal place of the party alleging infringement. The, whether the patent has been declared essential, potentially essential or having the potential to become essential to any standard setting body.
Those particular details are probably going to be relatively easy for an NPE who’s going after some party like an Apple or a Samsung. Your smaller non-practicing entities, the smaller companies that go after smaller businesses, those particular alleged infringements may be relatively vague. But, you know, from the perspective of an NPE what they’re trying to do, at least at the beginning, is that they’re trying to scare a company, maybe scare a company – and when I say scare I’m also saying that there’s some validity to that, right, because the fear of the loss of money and time. The time to scare that company into settling. And as we see it’s from our presentation they are largely successful, this is a problem that many companies particularly in the tech and pharmaceutical space actually face.
So that was my answer, Kira. I’ll go back to you for the second question or the other questions.
Kira: Of course. And the next question is how do patent trolls get around improper [forum] shopping by choosing east Texas? And this relates to our slide number 14.
Roger Pao: Right. So the companies that we were talking about – and frankly a lot of companies out there, you know, I think we saw Apple, Samsung, [unintelligible 00:55:24], Amazon – because they operate throughout the United States they’re subject to jurisdiction in virtually all jurisdictions throughout the United States. And so, it is true that you need to be subject to jurisdiction if you are a company. Obviously Apple and other companies are operating in all 50 states and that probably applies to the vast majority of tech and pharmaceutical companies.
And so in that particular situation it makes a lot of sense for a particular NPE to go after a company in a jurisdiction that would be relatively more favourable to them. Now the issue of forum shopping of course comes up more as a problem of course if you’re suing individuals, right. With individuals they may be – I remember when, this is just an aside, I’m from southern California so you have to bear with me here – the O.J. Simpson case, which is a very infamous case of course, the issue of venue was extremely important in that particular case. Now obviously O.J. Simpson’s not a company he’s an individual and so when you’re dealing with individuals issues of jurisdiction are different than when you’re dealing with businesses out there. But that’s it in a nutshell. So obviously NPEs would want to choose a particular jurisdiction that’s most favourable to them.
Kira: Great. And has there been much success for patent owners seeking to invalidate the patent being asserted by NPEs either in court or through the United States patent and trademark office?
Roger Pao: So … so I think, I’m going to … oh, I guess I don’t have the slide at the moment, but I’m going to refer back to one of the slides that we saw earlier. Oh, thank you, Kira. Success, I guess I would say to that question it depends on how you would define success. I mean, I think that there are cases in which these particular businesses have prevailed. Or they’ve been able to knock down the damages. So, for example, [unintelligible 00:58:18] was told to pay only $17 million but the patent troll wanted $298 million in that recent case that I referred to about using two anti-malware inventions [unintelligible 00:58:33], that was a Delaware case. A lot of cases are settled by these companies that would have been much more costly for these companies to litigate. And so one could argue that that is also a success.
And also if we look at this damage report actually [unintelligible 00:59:01] abstract patents have a 71% win rate including 90% win rate in Delaware where a lot of businesses are incorporated. And 82% win rate in the northern District of California where Silicon Valley is located and there’s a lot of innovation there. And so one can argue that companies are relatively successful in these particular cases. But I would also make a couple other points. I would say that even the threat of litigation can be very costly and time consuming, you know, receiving these particular letters having alleged infringement and having to respond to them, having to hire attorneys, paying these very, very high lawyers’ fees, hundreds of dollars by the hour.
And I would, secondly I would also argue that there are cases where as you can see large settlements are awarded. But that’s my answer in a nutshell, back to you, Kira.
Kira: Thank you so much, Professor. So everyone, your lines are currently unmuted so please feel free, I’ll give everyone an opportunity to forward your questions. Please go ahead and speak to the telephone line here and Professor Pao can answer questions. We have about a couple minutes left though, so, yeah. I’ll give everyone a moment to convey your questions.
Well, alright, it looks like a pretty content crowd. So I do have a question for you, Professor. Now I understand you teach the intellectual property laws and elements of intellectual property laws as well as the third course prosecution and litigation in intellectual property law. Can you tell us a little bit more for students who may be interested in the program what the take-away, you know, what they can expect from the curriculum and specifically –
Roger Pao: - Yeah, absolutely. So IP law is actually one of the higher level courses in the Master of paralegal studies program. So the course as Kira mentioned are ones that you would take relatively later on in your program simply because IP law is a relatively more specialized field, right. The first two courses that you take in the curriculum are American Jurisprudence which provides a very extensive overview of the federal court system. And Legal Research and Writing, because of those courses are essential to helping inform the rest of the courses that you will take at GW.
But it’s an outstanding curriculum, I’ve had the privilege to work with hundreds of students by now who have gone through the curriculum. It’s so wonderful to see them grow and thrive and I really hope for those of you who are interested in the paralegal studies program that you consider the one here at GW.
Voices: [unintelligible 01:02:10].
Kira: Hi [unintelligible 01:02:18], so I’m sorry, can we, I’m sorry, we are going to complete our webinar for today, so thank you, Professor Pao for giving us your presentation and to all of our attendees for reserving the time today during your lunch hour depending on whether you’re in the eastern time zone but just reserving the hour to spend with us to learn more about the impact of patent trolls as well as GW’s Master’s in paralegal studies online program. I wish everyone a wonderful day and enjoy the rest of the week. And we will have more upcoming webinars throughout the year and I hope you can join us. Thank you so much.
Roger Pao: Thank you so much everyone, thank you so much, Kira.
Kira: Thank you.
Roger Pao: Thank you.
[End of recorded material at 01:03:27]

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