Patent Hoarder Pitting Competitors Against Each Other For Injunction Rights
Date : 16 Jan 2008 Category : Business
Techdirt
One of the more important Supreme Court decisions concerning patents was 2006's MercExchange ruling, where the Supreme Court announced that courts shouldn't automatically grant an injunction against a company if it was found to be violating patents. This made a lot of sense, as many patent hoarders who produced no actual goods, would use the threat of an injunction (which could completely kill a business) to force the company to settle. However, the court recognized that in some cases (certainly not all), an injunction would do much more harm than good, and wasn't called for. This was especially true in cases where the patent holder wasn't making any actual products, since an injunction wouldn't actually clear up any competitive wrong -- it would just deny the market the ability to get the product. Of course, it hasn't taken long for some patent hoarders to come up with a rather ingenious (if ridiculous) way around this. It's all pointed out in a post by the Patent Troll Tracker who details how a patent hoarding firm played two competitors off of each other to grant one the rights to get an injunction on the other.
Here's how the plan works. First, the patent hoarding firm, Rembrant, sues two competitors in the contact lens space: Bausch & Lomb and Ciba. Then, it works out a settlement deal with one of those two firms -- in this case, B&L. However, part of that settlement (beyond some sort of licensing agreement) is to hand over the patent's injunction rights to B&L, while keeping the actual patent and everything else associated with it in the hands of Rembrant. Then, what you have is a patent infringement lawsuit against Ciba, just like before. Except, since B&L is a practicing competitor rather than just a patent hoarder, the company can ask for an injunction. In effect, as Ciba notes in its own filing on the matter, Rembrant sued the two competitors and then offered one a big carrot not just to settle, but to flip sides in the court case itself in order to use the very patent it had been sued over against a competitor. You have to imagine that Thomas Jefferson didn't see this coming when he laid out the details of the original US patent system.
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Here's how the plan works. First, the patent hoarding firm, Rembrant, sues two competitors in the contact lens space: Bausch & Lomb and Ciba. Then, it works out a settlement deal with one of those two firms -- in this case, B&L. However, part of that settlement (beyond some sort of licensing agreement) is to hand over the patent's injunction rights to B&L, while keeping the actual patent and everything else associated with it in the hands of Rembrant. Then, what you have is a patent infringement lawsuit against Ciba, just like before. Except, since B&L is a practicing competitor rather than just a patent hoarder, the company can ask for an injunction. In effect, as Ciba notes in its own filing on the matter, Rembrant sued the two competitors and then offered one a big carrot not just to settle, but to flip sides in the court case itself in order to use the very patent it had been sued over against a competitor. You have to imagine that Thomas Jefferson didn't see this coming when he laid out the details of the original US patent system.
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