Last month we told you about an Idaho statutethat directly limits the ability of a U.S. patent owner to access Federal court to enforce a U.S. patent. Applying the Idaho state law, a Federal judge sitting in Idaho required the patent owner to post an $8 million bond to pursue a patent infringement lawsuit.
The problem with the Idaho statute is that everything about patents is Federal – the patent right is specifically authorized by the U.S. Constitution, set out in Federal statutes and regulations, administered by a Federal agency (the U.S. Patent and Trademark Office), and enforced in the Federal courts. In other words, the Founders, and subsequently the Federal Congress and the Federal Executive decided that there should be a uniform patent system across the country and that patent rights in Idaho should be the same as patent rights in New York, and Florida, and California, and Kentucky.
But patent rights in Idaho are not the same. In this case, the patent owner has to come up with $8 million to even get its day in court. If the patent owner can’t afford to put up the $8 million bond, then the patent is unenforceable and worth nothing, at least in Idaho.
The patent owner appealed the ruling to the Federal Circuit Court. The appeal was ‘interlocutory;’ that is, the appeal was filed before the case was over. Usually, appeals can only be filed after the final conclusion of the case or in a specific list of situations. The Federal Circuit refused to hear the appeal on grounds that it was premature, so the judge’s order stands – the patent owner has to pay $8 million just to have its case heard. There may never be a case and the final result may be that the patent owner walks away from the litigation because it’s too expensive.
Although not part of the appeal, the Idaho statute may change the economics of litigation. In the U.S., each party to litigation bears its own litigation costs including attorneys’ fees, unless one party or the other has done something really egregious during the litigation. The Idaho statute at section 48-1701 provides:
(1) A target of conduct involving assertions of patent infringement… may bring an action in district [state] court. A court may award the following remedies to a plaintiff who prevails in an action brought pursuant to this subsection:
(a) equitable relief;
(b) damages;
(c) costs and fees, including reasonable attorney’s fees; and
(d) exemplary damages in an amount equal to fifty thousand dollars ($50,000) or three (3) times the total of damages, costs and fees, whichever is greater.
The literal language of the statute says that anyone who enforces or threatens to enforce a patent can be sued in state court for treble damages and attorneys’ fees. Note that there’s nothing here about the patent owner acting in bad faith, or violating the statute, or losing the infringement action. Maybe that’s not how an Idaho court will interpret the statute, but that’s what it says, folks.
So why did the patent owner sue in Federal court in Idaho rather than, say, Texas? A patent owner cannot bring an infringement action just anywhere. The patent owner must go to the infringer – either where the infringer resides or is incorporated or where the infringer has a an established place of business and where infringement occurs. The defendant in this matter is Micron Technology, which is headquartered in Boise.
As we said last month, the Idaho statute is either preempted and invalid under Federal patent law or it is not. We may never find out, unless deep pocket patent litigation comes to Boise. Taken to its logical conclusion, the Idaho example may lead to a balkanization of the country, with state legislators and local judges who are hostile to the Federal government limiting access to Federal rights state-by-state.
— Robert Yarbrough, Esq.