Modern patent litigation is a rough-and-tumble business, where the odds can seem particularly stacked against individual inventors or smaller plaintiffs. Things can get even harder when the target is a frequent patent defendant, if only because those types of defendants tend to involve factors other than the merits of the case before them in determining whether and when to settle. For example, a large tech defendant may have an unwritten rule not to settle with a certain class of patentees until the eve of trial, so as not to let future plaintiffs get the wrong idea about the prospects of early settlement of their claims. Other defendants do everything they can not to settle at all, preferring to lean on the Federal Circuit’s penchant for overturning jury verdicts on appeal. And nearly all large defendants will litigate the case strongly at every turn, with IPR challenges to all of the asserted patents almost a given. Either way, I continue to feel comfortable saying to others that the patent litigation approach with the highest degree of difficulty remains trying to get a seasoned patent defendant to pay money, just because someone with whom, for the defendant, a business relationship neither exists nor makes sense, brought a patent claim against them. This is especially true when the patentee can’t copy the big players at their own game, such as by adding additional patents to a case, either at the outset or sometimes even midstream.
Still, all is not lost, and even the most dogged patent defendant can sometimes be defeated. Doing so will often require a lot of patience on the part of the patent owner, coupled with the assistance of competent counsel, often with some extra help from a third party with the financial burden of long-term patent litigation. All of those elements came together for inventor Michael Kaufman, who recently got the “lion’s share” of a $10 million award from adjudged infringer Microsoft, according to a recent Bloomberg Law piece. That payday did not come together until after a Federal Circuit decision in late May, with the panel rejecting Microsoft’s post-trial attacks on claim construction issues, while also finding that Kaufman was entitled to prejudgment interest, even though the trial judge had ruled otherwise. Most importantly for Kaufman, Microsoft apparently decided, after the Federal Circuit spoke, that it had been beaten, thereby foregoing further legal proceedings for satisfying the judgment in Kaufman’s favor.
Kaufman’s success was an admirable result for himself and his counsel. It was also a rare reported win for a litigation funder financing a patent dispute. Yet, Kaufman is the first to admit that his success as a patentee would be a challenge for other solo inventors or underresourced companies looking to stop infringers to replicate: “Patents in particular are meant to protect against this, but the tech giants are just so big and have deep pockets,” Kaufman said in the Bloomberg Law article. “I was arguably in a much better position than most inventors would be, and still, I ran out of money long before we got to Microsoft. It’s sobering.” Still, there are a number of interesting angles to Kaufman’s story that are worth your focus, if only to help build out your knowledge base about how a small patent owner can increase their odds of success in the often-quixotic quest to have a tech giant actually hit send on a wire transfer based on a patent infringement claim.
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First, it is clear that the strong relationship between Kaufman and his patent prosecution counsel paid dividends and was a major contributor to the results he achieved. Patent lawyers are human and are more likely to show loyalty to clients that have shown loyalty to them. In Kaufman’s case, I am sure there were plenty of times in the decade that his patent was pending in the USPTO when he may have considered switching prosecution counsel. But he didn’t, which led to him being rewarded when his patent prosecution counsel turned into his litigation counsel, after spending five years in the search for a funding partner. In short, Kaufman’s loyalty was rewarded with his counsel’s dogged determination to give him a shot at justice.
Second, Kaufman’s case is a potent reminder of the importance of developing a workable damages theory as early as possible in a case. On that front, he was hampered by Microsoft’s considered decision to only release actual usage data for the accused product on the eve of trial. On the one hand, that type of behavior only reinforces how difficult it can be to develop a robust damages theory based on publicly available information, even for publicly traded companies. On the other hand, being able to quickly pivot around the information at hand — as Kaufman’s lawyers were able to do — can often result in a winnable damages case for patent owners against large targets, even if the numbers don’t look favorable at the outset. A healthy skepticism around why an accused infringer is only providing certain damages-related information is often warranted, since defendants are often incentivized to downplay the extent of the infringement’s contribution to their bottom line as much as possible.
Third, the case is a potent reminder that getting to trial, even if a litigation funder’s help is needed, can often be critical to getting a fair result for the patent owner. Sure, there is appellate risk, as my recent column on the Federal Circuit’s treatment of big patent verdicts highlighted. But perhaps that risk is mitigated when the verdict is a more modest one, or where, as in the Microsoft case, the merits turn on relatively discrete issues of claim construction. One would have to look at reversal rates in Federal Circuit cases of different damages sizes to know for sure. It does seem, however, that perhaps because of the smaller size of Kaufman’s case, there was a little bit more streamlining of issues on the merits. (In contrast, appeals from bigger verdicts are often more involved. It can sometimes seem like patent defenses of an often esoteric nature are put forward for appellate review when there is a large verdict on appeal.) Still, a patentee win is a patentee win. Going forward, whether we will continue to see cases of Kaufman’s size get funded, or even litigated to completion, is an open question, but for now it is good to see that at least one inventor gets to proudly pose with the statue of David in Florence’s Accademia Gallery. Kaufman has earned his glass of Chianti or Vermintino – – and can proudly toast his Federal Circuit victory.
Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.