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Op-Ed: How patent infringers are seeking to hobble their victims in court
Judge Paul Michel
Judge Paul R. Michel

By Judge Paul R. Michel

More than 120 corporate giants just issued a joint letter putting themselves squarely on the side of patent infringers and against America's smaller innovative companies.
They present their case in the appealing sounding language of "disclosure" and "transparency." But when smaller inventors are in court trying to enforce their patent rights against infringement, the main effect of a sweeping new disclosure requirement would be lengthier proceedings, more expenses, and a big advantage for deep-pocketed infringers.
The letter's proposal, now under consideration in Congress in legislation known as the Litigation Transparency Act, is aimed directly at the ability of inventors to pay expenses they incur when they enforce their patents. The legislation would impose a disclosure requirement on sources of funding for their lawsuits. 
Yet such funding has nothing to do with whether infringement has taken place and, if so, what damages are due. For the sake of smaller inventors who depend heavily on intellectual property rights, this legislation needs to go back to the drawing board.
The letter-writers and Rep. Darrell Issa, the legislation's author, claim that withholding information about financing "fundamentally alters the dynamics" of legal cases. 
I disagree. Rather, imposing invasive disclosure requirements would reduce or eliminate funding, and therefore, access to justice. 
America's small businesses are facing unprecedented attacks on their intellectual property. Rather than taking steps to legally license patent rights, some wealthy corporations are simply appropriating the patented technologies they want. When caught, they call on their vast financial resources to prolong lawsuits and make them as expensive as possible. Such tactics have forced startups to surrender or, at best, settle out of court for a fraction of their losses. 
Though unfair, the practice is frequently effective. It's known as "efficient" infringement. Infringers simply treat any damages they end up paying as a cost of doing business. 
Outside financing in cases of patent infringement has given inventors a lifeline to fight back. Through these partnerships, third-party funders provide legal expertise and financing in exchange for a share of any favorable settlement. That makes it harder to succeed with a strategy of efficient infringement. It's no wonder big businesses are upset. 
In their letter, the companies argue that they have "no ability to expose to the court and jury when witnesses have conflicts of interest" in the case. 
Existing court practice and procedural rules, especially the rules of evidence, strike a careful balance between the relevance of information presented and the potential for undue prejudice. An invasive mandatory disclosure rule would place small businesses and startups at a disadvantage by revealing their legal strategies and financial resources. Infringers could exploit this information to prolong trials, inundate opponents with motions and challenges, and launch damaging harassment campaigns against third-party investors.
As one judge explained at a conference this year, "there are all kinds of things that go on in the world that have some influences on lawyers and clients and judge’s cases," concluding, "to think that disclosure is going to solve that problem is nonsense."
Let's not fool ourselves into thinking that calls for onerous disclosure merely promote fairness and transparency. They further tilt an already uneven playing field, disadvantaging smaller companies, startups, and individual inventors.

Judge Paul R. Michel (ret.) served on the United States Court of Appeals for the Federal Circuit from 1988 to 2010. He is a board member of the Inventors Defense Alliance.