Recent news in IP (Week of Mar. 10, 2017)

A few recent articles that have caught my eye:

The House Has Passed H.R.720: The Lawsuit Abuse Reduction Act of 2017

Source: Benesch's Sixth Circuit and Ohio Class Action-Plus Report

This is deep in the weeds if you don't follow civil trial procedure, but this could be a big deal. Any time a lawyer files something with a court, they are required to certify that the filing is done in good faith, is not frivolous, etc. This is codified in Federal Rules of Civil Procedure as Rule 11.

Currently, if a lawyer is caught doing something that the court considers in bad faith, the judge has the right to impose a variety of punishments, including fines that the lawyers or their clients must pay personally. As a practical matter, though, rule 11 motions are hardly ever made and the results are usually closer to a stern dressing-down than a penalty.

The linked bill (H.R. 720, the Lawsuit Abuse Reduction Act of 2017) changes rule 11 so that penalties are mandatory. It makes rule 11 challenges and findings much more serious.

From an IP perspective, one of the key enablers of patent litigation abuse is the ability patent plaintiffs to file cursory, technically incorrect, or astoundingly vague claims - and to keep defendants in the dark about the scope of their arguments until forced to make things clearer by the court... a year or more later.

I have frequently felt that filings that are clearly incorrect based upon publicly available information should be sanctionable under rule 11. If this bill passes, perhaps they may be.

Autonomous Driving in California: A New Frontier or Business as Usual?

Source: Squire Patton Boggs

This is reporting on some of the new autonomous driving regulations that are being promulgated by the California DMV. This is a final draft, so now it goes into the formal rulemaking process.

Even with the loosening up that these rules represent, it is still harder to test and deploy autonomous vehicles in California than in a lot of other states. This is a California currently has the most testing taking place, probably due to Silicon Valley, but there is apparently some willingness to test and deploy in other states that have a more accommodating regulatory stance.

I've been interested in this area for a while. I've been doing some study for my panel at the Connected and Automated Vehicle Workshop hosted by the Greater Austin-San Antonio Corridor Council. We are on the front end of a very large industry - this is a space to watch.

How tech’s ruling class stifles innovation with efficient infringement

Source: IPWatchdog

Another day, another hyperbolic IPWatchdog article. This takes a perfectly reasonable article (Tech’s Ruling Class Casts a Big Shadow) wondering whether there is too much consolidation in the tech industry and uses it, without support, to accuse the largest tech companies of "efficient infringement" - i.e., consciously violating IP rights because it is allegedly cheaper to litigate than to license.

I'll probably write something more about this in the future, but I have a hard time believing that efficient infringement exists on a commercially significant scale - and anyone who has been through multi-million dollar patent litigation would agree. This is especially true in light of recent Supreme Court rulings that make treble damages for willful infringement much easier to get. That's not to mention that any lawyer that recommended efficient infringement to a client would be committing malpractice and be potentially on the hook.

No, the problem is not with any mythical "efficient infringement," no matter how much some folks would like to elevate that to an evil on the same level as patent trolling. The problem is that people tend to overvalue and overstate the reach of their IP in the context of real business transactions, and so they are disappointed when they try to license and there are no takers.

An Economic Argument Against Mandatory Patent Exhaustion

Source: Patently-O

A guest post on Patently-O by Randy Barnett of Volokh Conspiracy fame, ahead of the Impression Products v. Lexmark argument at the Supreme Court.. He argues that the best policy is a "presumptive exhaustion" regime where the presumption can be overcome via clear contractual language.

I'm not sure I agree, but I take almost anything Randy Barnett says seriously. It's a good argument, at least with reference to the theory. But from a practical perspective, I don't think that the "presumptive exhaustion" would actually work. Specifically, the effect of a "presumptive exhaustion" doctrine would be mostly indistinguishable from a "no exhaustion" doctrine.

Why? Because lawyers are businesspeople too, and within seconds of the release of an opinion establishing presumptive exhaustion there would be lawyers offering client alerts saying, "Update your contracts now to maintain your patent rights!" There would surely be some one-time fallout for non-renegotiable contracts. But within weeks there would be a new slide in the "contract mistakes to avoid" CLE and non-exhaustion would become a new standard term in almost every contract.