The game-changing Supreme Court decision that nobody is talking about
Why a majority opinion by Sonia Sotomayor could finally correct a gaping flaw in our legal system
TIM SAMPSON, THE DAILY DOT

Congress is still mired in its attempt at patent reform, but a Supreme Court ruling this week has dealt a heavy blow to so-called “patent trolls.”

The court ruled that Octane Fitness, a Minneapolis-based manufacturer of exercise equipment, can recoup legal fees from a rival firm that unsuccessfully sued Octane for patent infringement several years ago.

In a decision penned by Justice Sonia Sotomayor, the court choose to expand the circumstances under which defendants in patent lawsuits can demand repayment of legal fees.

The case could have huge ramifications on patent trolls—the derogatory term for firms who use ill-gotten or groundless patents to extort licensing fees from those who infringe upon them. These firms, which don’t actually produce a product based on their patent, have been a particular source of consternation within the Internet and tech industries. The success of their business model is based largely on defendants’ reluctance to foot the high cost of a patent trial defense.

In the case of Octane Fitness, the company was not sued by a patent troll but rather a rival exercise equipment maker, Icon Health & Fitness. Icon held the patent on a technology related to elliptical machines but never put out a product based on that technology. Octane later came out with a machine that Icon felt infringed on its proprietary technology.

Icon’s claims of patent infringement were ultimately rejected by the court, but not before Octane racked up some $2.3 million in legal fees defending itself. Octane sued Icon to recover its legal costs, but a lower court denied this request, citing a 2005 U.S. Appellate Court ruling that only allowed patent defendants to recoup legal costs in cases where the plaintiffs are guilty of “material inappropriate conduct,” or where the claims were “baseless” and made in “bad faith.” In other words, the plaintiff has to know they are abusing the patent system.

But in this new ruling, the court has determined that the previous standard was too narrow. They’ve remanded the case back to the lower court with the instructions that Octane can, in fact, reclaim legal fees from Icon. That case is ongoing.

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