Corporate Counsel - March 2010 (Sample Issue)

IP INSIDER
LESSONS OF THE PATENT TROLL TRACKER

Two years af Ter richard frenkel—a T the time an in-house Cisco Systems, Inc., lawyer and now of counsel at Wilson Sonsini Goodrich & Rosati—outed himself as the until-then-anonymous author of the controversial patent litigation blog, the Patent Troll Tracker saga appears to be over.

In January a libel suit filed by East Texas lawyer T. John “Johnny” Ward, Jr., against Cisco over the contents of an October 2007 Troll Tracker post was settled under confidential terms. Frenkel— dismissed as a defendant in the case last August at Ward’s request—has declined to comment on either Ward’s suit or a second, related defamation claim filed against him and Cisco by East Texas lawyer Eric Albritton. (That suit settled in September after a weeklong trial.)

While it’s clear now that at least a
few high-level Cisco employees knew
the Troll Tracker’s identity, company
lawyers say no one there besides Fren-
kel contributed to the blog. Still, because
Cisco is helping to lead the lobbying
charge in favor of reforming the nation’s
patent laws—with a particular focus on
lowering litigation payouts to nonprac-
ticing entities (a.k.a. “NPEs,” or “patent
trolls”)—those who advocate for small
patent holders sensed a Frenkel-Cisco
conspiracy.

“Pa Ten T Trolling” has i Ts rewards. Tech-sector executives and lawyers say privately—and an informed review of court dockets confirms—that so-called trolls aren’t just surviving, they’re thriv-

ing. The essential NPE tactic—suing a broad swath of companies for patent infringement, then settling with each defendant for less than the cost of fighting such a suit—is now an established business model. It’s so solid, in fact, that patent holders are starting to delve into previously untouched economic sectors, suing small retailers and even photographers.

Richard Frenkel

One statistic in the PwC study that supports this trend: Since 2002, NPEs have consistently won larger damage awards than operating companies [see chart next page]. That suggests that NPE lawyers are learning new techniques for maximizing payouts, says one of the study’s authors, forensic accountant Chris Barry.