Technology companies were given a new weapon to go after patent owners who file frivolous lawsuits after an appeals court today ordered sanctions against a firm that sued Casio Computer Co. and Motorola Solutions Inc.’s Symbol Technologies.
Raylon LLC made unreasonable claims of what its patent for a ticket-writing machine covered, the U.S. Court of Appeals for the Federal Circuit said, ordering a judge to consider what sanctions to impose. It was clear that “no objectively reasonable litigant” would make Raylon’s arguments of how to define the patent, the court said.
The ruling by an appeals court that specializes in patent law provides a tool for companies that claim they’re bombarded with lawsuits by patent owners seeking cash even when they know their patent doesn’t cover the product.
Companies such as Google Inc. and Cisco Systems Inc. have pressed U.S. courts and Congress to tighten rules on patent owners who don’t make products. Critics of such limitations, including phone-chip maker Qualcomm Inc., say rules attacking the serial suers could lower the ability of inventors to obtain compensation for their research and ideas.
The Washington-based Federal Circuit last year upheld sanctions against a company that filed multiple lawsuits to obtain what the court called “nuisance value settlements.”
In the Raylon case, the trial judge in Tyler, Texas, said the ability to obtain sanctions was limited to those types of nuisance-value suits. In its decision today, the Federal Circuit said questionable litigation tactics aren’t the only grounds for a court to sanction patent owners and their lawyers.
The trial judge previously ruled that the companies didn’t infringe the Raylon patent because it covered only pivoting displays, while all the devices made by the defendants had fixed screens.
“Reasonable minds can differ as to claim construction positions and losing constructions can nevertheless be nonfrivolous,” the Federal Circuit wrote. “But, there is a threshold below which a claim construction is so unreasonable that no reasonable litigant could believe it would succeed.” Raylon’s argument, it said, “falls below this threshold.”
Raylon’s lawyer argued that interpreting patents “is kind of an arcane subject that gets ordinary lawyers like me in trouble a lot of times,” the three-judge panel said in the opinion.
The U.S. Federal Trade Commission and U.S. Justice Department have scheduled a daylong conference Dec. 10 in Washington to consider whether the economy is hurt by so-called patent assertion entities -- which use their patents to obtain royalties rather than to protect products from copies.
The case is Raylon LLC v. Complus Data Innovations Inc., 2011-1355, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Raylon LLC v. Complus Data Innovations Co., 09cv355, U.S. District Court for the Eastern District of Texas (Tyler).