The smartphone giant Apple took a major hit last week in a significant patent case in a Texas court.
The jury awarded $533 million to Smartflash LLC, an entity that has no assets other than a handful of patents. The case focused on technology used in iPhone apps, which, according to the jury, infringed patents held by Smartflash. If the verdict survives Apple’s appeal, it will be the largest ever awarded to a patent-assertion company.
“Smartflash makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology Apple invented,” said Apple spokeswoman Rachel Wolf. “We refused to pay off this company for the ideas our employees spent years innovating, and unfortunately, we have been left with no choice but to take this fight up through the court system.”
Apple can afford to pay for its day in court, to do its research and due diligence, and to get lawyers to defend it against a claim that’s perceived to be questionable.
Most companies can’t do that. Much smaller app developers also get sued, but they typically lack the resources to fight patent trolls in court.
HELPING THE LITTLE GUYS
The Application Developers Alliance (ADA) has been working on this issue in recent years, launching, in 2013, the Law School Patent Troll Defense Network, which pairs ADA members with lawyers and law school students who are willing to provide free aid to small companies in their legal fights against patent trolls.
Just a handful of companies have worked with ADA so far on their patent cases, but the legal help proved particularly valuable in at least one instance: a lawsuit faced by the car startup CarShield. The California-based business received assistance from Brooklyn Law School’s Brooklyn Law Incubator and Policy (BLIP) Clinic, which represented it in court—and landed CarShield a victory when the plaintiff dropped its suit.
Without the help, BLIP adviser Eric Adler wrote in a blog post on Medium, it’s likely that CarShield would have paid tens of thousands of dollars in a settlement to avoid even more expensive legal bills.
“However, when a law school clinic is involved, the cost of legal defense drops to zero, and defendants have no incentive to pay trolls anything at all,” Adler noted. “With a free legal and a winning defense, who wouldn’t fight all the way to trial?”
With patent reform just starting to get fresh attention in Congress, ADA might be a lifesaver for little firms stuck between a rock and a hard place.
THE GOOD AND THE BAD
The ADA program helps shift the balance of power in these cases from the patent-assertion entities to the startups. That’s a big benefit, but the challenge, ADA President Jon Potter told the American Bar Association Journal, is “finding the right clients at the right time and matching them with law schools.” The clinic seeks to assist companies that really want to fight patent trolls and not just settle with them quickly, Adler told the publication.
The clinic also looks for clients that are at a point in their case where free legal help will still be useful. “Some companies have come to us too late in the litigation process,” Potter said. “They are already looking down the barrel of a gun.”
And the complexity of the cases limits how much law schools and associated firms can get involved, according to BLIP founder Jonathan Askin. “The law firms are concerned that this is very sophisticated litigation; it takes years of experience to do it properly,” Askin told ABA Journal.
But he added that those firms are “starting to recognize it is great training for their younger associates.”