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Court Won't Let Patent Troll Dismiss Its Way Out Of A Lawsuit, Orders It To Pay Legal Fees


Another patent troll will be paying out legal fees, thanks to a judge seeing something he didn't like in the plaintiff's long history of lawsuits. Here's the good news, from Daniel Nazer of the EFF.

A district court in California issued an order (PDF) this week ordering Shipping & Transit to pay a defendant's attorney's fees. The court found that Shipping & Transit has engaged in a pattern of “exploitative litigation.”

Shipping & Transit owns a number of patents that relate to vehicle tracking. We’ve written about its patent trolling on numerous occasions. In many cases, Shipping & Transit asserted its patents against businesses that simply sent email to customers with a tracking number. In other cases, it has sued municipal transport agencies and logistics companies.

This fee award comes as the result of the plaintiff's cut-and-run tactics. As we've seen in countless troll operations, lawsuits that are challenged often result in plaintiffs dismissing suits in hopes of avoiding paying the winning parties' legal fees. (The government does this as well in asset forfeiture cases.) The same thing happened here.

Hall Enterprises, Inc. was targeted by the patent troll in hopes of an easy settlement. That didn't happen. Hall Enterprises pushed back, hoping to have the court find the asserted patents invalid under the Supreme Court's Alice decision. Unfortunately that didn't happen either. Because of the dismissal, the court was unable to rule the patents invalid. But the court does take the time to indicate it would have done so if Shipping and Transit hadn't force quit BaselessLitigation.exe.

An important consideration in evaluating patent subject matter eligibility is whether the claims would preempt use of the abstract idea.

[...]

Here, claim 14 is written so broadly that it could cover the activities of everyone from taxi dispatchers to warehouse delivery coordinators to bike messengers to hotel bellboys. Notably, claim 14 of the ’299 Patent does not recite the use of any specific technology to perform the steps of the claimed method.

[...]

The asserted claims of the ’207 Patent are directed to the same abstract idea of monitoring and reporting the location of a vehicle, and add the concept of using certain information (i.e., caller ID) to look up and transmit information about the vehicle status.

[...]

In this case, the claims are directed not to an improvement of car tracking systems but simply to the use of computers as a tool in the aid of a process focused on the abstract idea of monitoring and reporting vehicle status. That is not enough to constitute patentable subject matter.

The same goes for Shipping and Transit's other patent:

The ’359 Patent does not teach or claim any new hardware, software, or other computer technology for performing this routine process. Claim 19 is not directed to a specific improvement to the way computers operate, nor does Plaintiff contend as much. Rather, it merely implements an old practice in a new environment…

Once this is established, the court moves on to the legal fees. The plaintiff argued its dismissal should prevent a fee shift. The court, looking over the plaintiff's long history of trolling efforts, disagrees.

Plaintiff responds that the filing of numerous cases without more does not make a case exceptional. (Dkt. 23 at 9.) Plaintiff admits that the average license fees have been between $10,000 and $25,000, but argues that they properly reflect “the uncertainties of the ever-evolving § 101 jurisprudence and the value of previous licenses granted under the Patents-in-Suit to similarly situated [d]efendants.” (Id. at 10.)

Although the Court agrees that filing a large number of cases does not necessarily mean Plaintiff litigated in an unreasonable manner, it nevertheless finds troubling that Plaintiff has repeatedly dismissed its own lawsuits to evade a ruling on the merits and yet persists in filing new lawsuits advancing the same claims. Specifically, Plaintiff has filed similar lawsuits (more than 90 for the ’207 and ’297 Patents and more than 400 for the ’359 Patent) against countless defendants. Patent litigation is expensive, so it is unsurprising that the vast majority of accused infringers choose to settle early rather than expend the resources required to show a court that the Patents-in-Suit fail under § 101. When the few challenges do occur, however, they are promptly met with voluntary dismissals with prejudice, as in this case.

The court goes on to point out the plaintiff could have saved itself some money if it had just dismissed the suit as soon as the defendant made it clear it would challenge the patent's validity. Instead, it chose to call to keep racking up its opponent's billable hours.

Here, Defendant has made clear from the start its position that the asserted claims were invalid under § 101, and its intent to seek early judgment of invalidity plus attorney fees if Plaintiff did not dismiss its case. If Plaintiff had dismissed its case by October 15 as requested, most of the attorney fees would have been avoided. Instead, Plaintiff forced Defendant to incur the expense of filing the § 101 motion, which predictably led to Plaintiff voluntarily dismissing the case.

Finally, the judge calls a troll a troll:

Plaintiff’s business model involves filing hundreds of patent infringement lawsuits, mostly against small companies, and leveraging the high cost of litigation to extract settlements for amounts less than $50,000. These tactics present a compelling need for deterrence and to discourage exploitative litigation by patentees who have no intention of testing the merits of their claims. Based on the totality of the circumstances, the Court finds that this is an “exceptional” case.

If Shipping and Transit is willing to expedite the settlement process -- albeit one where it's on the losing end -- the judge has proposed a $20,000 award. If not, it may find itself paying out even more. Given its love of settlements, you'd think the troll would jump at this opportunity to walk away before it loses any more money. This ruling is sure to be referred to by defendants in other lawsuits -- especially anything that suggests the patents are invalid -- so it's likely Shipping and Transit will be hurriedly filing more motions to dismiss in the near future.


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