Controlling the $7 Billion Patent Troll Litigation Machine

July 16, 2015 Jennifer Latzo

Nearly $7 billion: that is the projected cost of litigation filed by non-practicing entities, or patent trolls, in 2015. A recent report by Unified Patents revealed that patent case filings are expected to surpass 6,100 this year—an all-time high—thanks in large part to patent trolls; the same is true at the Patent and Trademark Appeal Board, which is expected to hit a record 1,906 cases.

A disproportionate amount of this burden falls on technology companies. While patent trolls are responsible for 68 percent of patent cases filed in U.S. district courts, that figure jumps to 90 percent for patent litigation cases involving the technology industry—the only industry where patent trolls are responsible for a majority of the cases. The costs of these cases can be devastating, as many patent trolls try to force their opponents into submission by driving up expenses through extensive discovery.

As patent reform continues to be hotly debated, what can litigants do to control costs? With any luck, they will land in a court that has adopted a version of an e-discovery model order first proposed in 2011 by former Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit. The model order attempts to strike the proper balance between litigants:

[L]itigation costs should not be permitted to unduly interfere with the availability of the court to those who seek to vindicate their patent rights—the enforcement of such rights is both an obligation of the legal system and important to innovation. Likewise, disproportionate expense should not be permitted to force those accused of infringement to acquiesce to nonmeritorious claims. This only serves as an unhealthy tax on legitimate commerce.

Thus, the order restricts the number of custodians and search terms to five each, provides for cost shifting, establishes that the inadvertent production of privileged material does not lead to waiver, limits the production of metadata, and requires specific requests to obtain e-mail. Limitations such as these are essential to curtailing the financial burden of patent discovery.

Litigants that face a patent lawsuit in a court that has yet to adopt a model order governing e-discovery should propose it during their initial Rule 26 conference with the court. Another cost-effective approach can be the employment of phased discovery, particularly involving e-mail. Finally, in data-intensive matters, they should consider retaining consultants to advise on targeted search terms and using advanced discovery technology, such as technology-assisted review, to expedite the early stages of review.

Sheila Mackay is vice president at Conduent. She can be reached at smackay@conduent.com.

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