In this week's post, we look at questions to ask and considerations to make before deciding to hire an independent law firm or join a defense group, when being sued for patent infringement by a troll.

Also, the Corporate Transparency Act (CTA) and the proposed rules by the federal Financial Crimes Enforcement Network (FinCen) pose significant risks to start-ups, their founders, and potentially associated professionals. The CTA was the culmination of a multi-year effort by Congress, the Department of Treasury (Treasury), other national security agencies, law enforcement, and other stakeholders to bolster the US corporate transparency framework.

And, the Western District of Texas (WDTX) has issued new standing orders for patent cases.

The Problem of High Costs in Defending Patent Infringement Cases

One common tool used by patent trolls and NPEs (Non-Practicing Entities) to extract higher settlements is the exorbitant cost of defending patent infringement cases versus an early settlement offer. The average fee through trial for even medium-sized cases (measured by damages sought) can exceed millions of dollars. These cases also frequently involve expensive damages and technical experts, mock trials, and jury consultants. Defendants face additional risks of the case being deemed “exceptional” under 35 U.S.C. § 287 entitling the plaintiff to recover its attorney’s fees and costs. Or worse, a finding of willful infringement resulting into up to 3 times the damage award. 

Large companies face a potentially larger problem than a single patent troll case: like the Viking raiders a millennium ago, once gold is found, the trolls will come back again and again having learned that a company is an easy target for a high ROI settlement. We have seen this firsthand with clients and have even seen the same basic form settlement agreement used over different campaigns with different targets by different plaintiff’s counsel. Faced with high defense costs as well as risk of repeat claims by other trolls in the future, what options do companies have to mitigate risk and loss? 

Read the full article here.

What Start-Ups Need to Know About the Corporate Transparency Act

While start-ups have a lot to do in their first year, one thing that they traditionally have not had to mess with was disclosure of information related to their principals and underlying individual beneficial owners, nor keep up with this information as they accept additional investment. This has allowed start-ups to be formed quickly and start building value with minimal information disclosure requirements, especially around their senior management, ownership and control structures. That is now set to change with the enactment of the Corporate Transparency Act (CTA) and the proposed rules by the U.S. Department of Treasury’s federal Financial Crimes Enforcement Network (FinCen).  The CTA was the culmination of a multi-year effort by Congress, the Department of Treasury (Treasury), other national security agencies, law enforcement, and other stakeholders to bolster the US corporate transparency framework.  These stakeholders believe that the current lack of a corporate transparency framework allows illegal activity to be hidden behind corporate and other entities.

Find the article here.

Amended Standing Orders for Judge Albright (WDTX Local Patent Rules)

On March 7, 2022, Judge Albright of the Western District of Texas (WDTX) issued five updated standing orders governing cases pending before Judge Albright.

View these orders.

Click to read the previous Weekly IP Buzz on Thriving Attorney: SDTX soliciting comments on local patent rule changes by March 28, 2022

For more posts, see our Ideate blog for the latest news and insights into law, business, and culture.

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In addition to publishing Thriving Attorney, Darin M. Klemchuk is founder of Klemchuk LLP, a litigation, intellectual property, and transactional law firm located in Dallas, Texas. Click to read more about Darin Klemchuk's practice as an intellectual property lawyer. For more on the latest developments in IP law, see the blogs Ideate and IP Questions Answered.