A Patent Small Claims Court?

December 23rd, 2012 by Eric

Defending a patent lawsuit is expensive, even when the plaintiff’s patents are weak and potential damages are low. But what if there was a quick and affordable method of settling smaller patent disputes? What if accused infringers could defend a baseless patent lawsuit for $5k instead of $5 million?

A patent small-claims system could be a real opportunity to minimize the harm caused by patent trolls, and strike suits in general. The Patent Office is considering a “small claims” system, and they have asked for your input.  I tried simplify the original patent office questions (gray) into human-readable English (black).



1. Provide a general description of your understanding of the need or lack of a need for a patent small claims court or other streamlined proceedings. If you believe there is a need, please provide a description of which types of patent cases would benefit from such proceedings. If you believe that there is not a need for such a court or proceedings, please share why you hold such a view.

1. Do we need a Patent Small Claims court? Where would it help?


2. Please share your views, along with any corresponding analysis and empirical data, as to what a preferred patent small claims proceeding should look like. In doing so, please comment on any of the following issues:

2. How should a Patent Small Claims system work? Specifically:

 

(a) What the possible venues for a small claims proceeding should be, including whether patent small claims should be heard by Federal District Court judges or magistrates, whether patent small claims should be handled by an Article I court, such as the U.S. Court of Federal Claims, or whether patent small claims should be heard in another venue not specifically listed here;

(a) Should Patent Small Claims happen in normal federal courts? Or a special administrative court?


(b) What the preferred subject matter jurisdiction of the patent small claims proceeding should be, including which if any claims, counterclaims, and defenses should be permitted in a patent small claims proceeding;

(b) How small should the “small claims” be? Less than a million dollars? Less than $30,000?  Should Patent Small Claims courts allow every type of patent claim? or just a limited sub-set? Should it allow every type of defense?


(c) Whether parties should agree to waive their right to a jury trial as a condition of participating in a small claims proceeding;

(c) Should Patent Small Claims be decided by a jury? Just a judge?


(d) Whether there should be certain required pleadings or evidence to initiate a small claims proceeding;

(d) Should Patent Small Claims require special allegations to start a case? What kind of evidence should be necessary to start a Patent Small Claims case?


(e) Whether a filing fee should be required to initiate a small claims proceeding and what the nature of that fee should be;

(e) How much should a plaintiff have to pay the court to start a Patent Small Claims case?


(f) Whether multiple parties should be able to file claims in a small claims proceeding and whether multiple defendants may be sued together;

(f) Should several different plaintiffs be allowed to band together to start a case in Patent Small Claims?

Should one plaintiff be allowed to sue multiple defendants in a single Patent Small Claims lawsuit?


(g) What role attorneys should have in a small claims proceeding including whether corporations should be able to represent themselves;

(g) Should attorneys be allowed to represent clients in Patent Small Claims?


(h) What the preferred case management characteristics that would help to control the length and expense of a small claims proceeding should be;

(h) How can we keep Patent Small Claims trials affordable and short? How much discovery should Patent Small Claims allow? 


(i) What the preferred remedies in a small claims proceeding should be including whether or not an injunction should be an available remedy and any minimum threshold or maximum cap on damages that should be imposed;

(i) If a Patent Small Claims court finds infringement, how can it compensate the patent owner? Should there be a limit on payments from the infringer to the patent owner? Should Patent Small Claims court be able to order the infringer to stop selling its product?


(j) Whether a small claims proceeding should include attorney’s fees or some form of a “loser pays” system;

(j) Should the loser have to pay for the winner’s legal fees?


(k) Whether a small claims proceeding should include mediation and whether mediation should be mandatory or permissive;

(k) Should mediation be required before filing in Patent Small Claims court? Mediation is a negotiation with an expert facilitator (the mediator). The mediator can’t issue orders like a judge. The mediator can only encourage cooperation and settlement.


(l) What type of record should be created during a small claims proceeding including whether hearings should be transcribed and whether a written decision should be issued;

(l) Should Patent Small Claims have a written transcript like regular court? Some other kind of recording?


(m) What weight should be given to a decision rendered in a small claims proceeding in terms of precedent, res judicata, and estoppel;

(m) When a judge issues an order in Patent Small Claims court, how should this affect future cases involving similar issues?


(n) How should a decision in a small claims proceeding be enforced;

(n) How should Patent Small Claims decisions be enforced?


(o) What the nature of appellate review should be including whether there should be a direct appeal to the U.S. Court of Appeals for the Federal Circuit or whether there should be intermediate review by a U.S. district court or some other venue;

(o) If the loser thinks the Patent Small Claims judge screwed up the decision, how should appeals work? Should we create a new Patent-Small-Claims Appeal Court? Or should appeals be sent to the Federal Circuit (the court that currently hears all patent appeals).


(p) What, if any, constitutional issues would be raised by the creation of Federal small claims proceedings including separation of powers, the right to a jury trial, and/or due process;

(p) Is this cool with the Constitution?
 

(q) Whether the patent small claim proceedings should be self-supporting financially, including whether the winning and/or losing parties should be required to defray any administrative costs, and if so, how would this be accomplished;

(q) Should Patent Small Claims be paid for by tax dollars (like most courts)? Or should the plaintiff’s filing fees be high enough to cover the judges salary and everything?


(r) Whether and how to evaluate patent small claims proceedings, including whether evaluations should be periodic and whether the patent small claims proceeding should be launched initially as a pilot program; and

(r) How can we measure the effectiveness of Patent Small Claims court? What kind of data should we collect? Should we start small with some beta testing?


(s) Any other additional pertinent issues not identified above that the USPTO should consider.

(s) What else should we think about?


3. Please share any concerns you may have regarding any unintended negative consequences of a patent small claims proceeding along with any proposed safeguards that would reduce or eliminate the risk of any potential negative unintended consequences, to the extent any such concerns exist.

3. What are the dangers of Patent Small Claims? How can we minimize them?

Comments are due by March 18, 2013.


 

Some other food for thought:

England’s Patents County Court is like a small claims court. Is it a useful model?

What about software patents? Could we develop a Patent Small Claims system that encompassed most software infringement disputes?

Note that plaintiff’s generally have wide latitude to select the forum for their lawsuit. A useful small-claims court ought to have a mechanism for forcing low-merit patent claims (strike suits) into a patent-small-claims court.

What do you think?

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