Court Says Cisco Has No Right To Sue To Invalidate A Patent That Is Being Used Against Its Customers

from the that-just-seems-wrong dept

Yet another unfortunate patent decision has come out of the appeals court for the federal circuit. This involves a case where certain customers of Cisco products were being sued for patent infringement by TR Labs, and part of its argument was that certain Cisco equipment resulted in the infringement by those customers. In response, Cisco filed a lawsuit in federal court, asking for a declaratory judgment that TR Labs’ patents were invalid. TR Labs hit back that it had not sued Cisco, had no intention of suing Cisco, and thus Cisco could not sue for declaratory judgment. Unfortunately, the lower courts and now the appeals court have agreed that Cisco has no basis to bring a lawsuit, because there is no direct threat against it.

There are reasons why it makes sense to require an actual potential dispute before allowing someone to bring a declaratory judgment action, but it seems silly to argue that Cisco can’t file this lawsuit. After all, its business can clearly be impacted by TR Labs’ lawsuits. First, it automatically makes Cisco’s offerings more expensive, in that buyers may either face increased liability or direct licensing costs just to use those products. Thus, Cisco has a direct financial stake in the outcome of those lawsuits and has a very good reason to see the patents invalidated. Unfortunately, the court just doesn’t think that’s enough:

In the circumstances presented here, that interest is simply insufficient to give rise to a current, justiciable case or controversy upon which federal declaratory judgment jurisdiction may be predicated

Of course, a better solution all around would be to make it much easier for anyone to get bad patents thrown out, but that’s just not how our patent system works, unfortunately.

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Companies: cisco, tr labs

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Comments on “Court Says Cisco Has No Right To Sue To Invalidate A Patent That Is Being Used Against Its Customers”

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27 Comments
RonKaminsky (profile) says:

Re: Re:

Yes, but said customer would still be liable for any kind of judgment of the court, if, for example, the court found that the case was so frivolous that it wanted to award the other side’s legal fees. Not very likely in the US, but still possible.

IANAL, but I suspect that US law disallows any kind of indemnification by a third party for such fees or other monetary liabilities.

Todd Knarr (profile) says:

Either get one of the customers to ask that Cisco be joined as a co-defendant on the grounds that they’re the manufacturer of the equipment, or have one of them move to dismiss the case on the grounds that the defendant sued does not manufacture the equipment, they merely use it as intended by the manufacturer, and that any claims by the plaintiff are invalid due to patent exhaustion. Better yet, have all the defendants do this, forcing TR Labs to face Cisco’s attorneys in multiple venues and potentially multiple awards of costs and fees.

Nothing to see here says:

Re: Re:

I had the same thought. If TR labs is only going after Cisco customers, they are obviously not in it for the money, or they would go after Cisco directly, so they must have a goal of forcing customers to another vendor’s equipment. Right?

What if all of cisco’s customers filed a negligence suit against Cisco for making them vulnerable to the lawsuit? Could Cisco then go after TD labs?

Todd Knarr (profile) says:

Re: Re: Re:

I think it’s tactical. Cisco has the lawyers and the intimate knowledge of their products to successfully show that either a) the products don’t infringe or b) the patent is invalid due to prior art and such. For TR Labs, suing Cisco is a big risk. But the customers don’t have intimate knowledge of Cisco’s hardware and firmware. They’re not in a position to turn up prior art, nor to show that the hardware doesn’t work the way TR Labs says it does. Plus for the customers settling simply means an extra cost, another check to write, whereas for Cisco it’d damage their entire business. So the customers are more apt to settle while Cisco may see it as something they have to fight. That all makes the customers less risky to sue.

Nothing to see here says:

Re: Re:

I had the same thought. If TR labs is only going after Cisco customers, they are obviously not in it for the money, or they would go after Cisco directly, so they must have a goal of forcing customers to another vendor’s equipment. Right?

What if all of cisco’s customers filed a negligence suit against Cisco for making them vulnerable to the lawsuit? Could Cisco then go after TD labs?

Gwiz (profile) says:

Of course, a better solution all around would be to make it much easier for anyone to get bad patents thrown out, but that’s just not how our patent system works, unfortunately.

Did you catch that last paragraph of the article there, Blue?

That’s Mike offering up a solution to a problem he sees. He even wrote it in simple words that you can understand.

Steph Kennedy, IPTT (user link) says:

But wait...

“Of course, a better solution all around would be to make it much easier for anyone to get bad patents thrown out, but that’s just not how our patent system works, unfortunately.”

But wait, isn’t that what an ex parte re-exam request is? Couldn’t Cisco have filed that instead of DJ?

Oddly, this ruling makes perfect sense to me, given Cisco is not a party to the suit. They should be, it’s their equipment, but they are not named.

Besides which, this is exactly right:

“I think it’s tactical. Cisco has the lawyers and the intimate knowledge of their products to successfully show that either a) the products don’t infringe or b) the patent is invalid due to prior art and such. For TR Labs, suing Cisco is a big risk. But the customers don’t have intimate knowledge of Cisco’s hardware and firmware. They’re not in a position to turn up prior art, nor to show that the hardware doesn’t work the way TR Labs says it does. Plus for the customers settling simply means an extra cost, another check to write, whereas for Cisco it’d damage their entire business. So the customers are more apt to settle while Cisco may see it as something they have to fight. That all makes the customers less risky to sue.”

Personally, I would not want to set the precedent that people not part of a lawsuit can come in and say whatever’s being sued over isn’t valid. Think of what havoc grandparents could wreak on custody battles, just for example.

Just sayin’,

IPTT

James Burkhardt (profile) says:

Re: But wait...

Which doesn’t automatically shut down lawsuits. So even if Cisco files for an ex parte reexam and its granted, Shumk A is still getting sued during the multi year review process.

As for your concerns, You are grossly oversimplifying the case, and how the ruling could/would be phrased. That ruling could easily say that when a patent holder sues or threatens to sue an end consumer rather than a 3rd “middle man” party who functions as the de facto accused infringing party, the 3rd party has clear grounds to intercede on behalf of its customers and prove its product . It provides clear guidelines indicating a very narrow subset of cases in which a non-infringer who is unlikely to fight a suit is being sued in favor of the true infringer, who would have fight the suit.

staff (user link) says:

more dissembling by Masnick

‘make it much easier for anyone to get bad patents thrown out’

Invention thieves definition of ‘bad patents’: those we are sued over

Masnick and his monkeys have an unreported conflict of interest-
https://www.insightcommunity.com/cases.php?n=10&pg=1

They sell blog filler and “insights” to major corporations including MS, HP, IBM etc. who just happen to be some of the world?s most frequent patent suit defendants. Obviously, he has failed to report his conflicts as any reputable reporter would. But then Masnick and his monkeys are not reporters. They are hacks representing themselves as legitimate journalists receiving funding from huge corporate infringers. They cannot be trusted and have no credibility. All they know about patents is they don?t have any.

For the truth, please see…
https://www.facebook.com/pi.ausa.5
http://piausa.wordpress.com/

Gwiz (profile) says:

Re: more dissembling by Masnick

For the truth, please see…

I don’t think that word means what you think it means.

Karl has already dug into some of your so called “truth” here:

http://www.techdirt.com/blog/innovation/articles/20130412/09091522689/heres-another-inventor-who-willingly-gave-his-greatest-idea-away-order-to-establish-it-as-global-standard.shtml#c406

GrendelVS says:

It's about "having standing" to sue

If the court allowed Cisco to sue in this case, they would have to allow the EFF and ACLU to sue on behalf of all US citizens to halt NSA spying on them. The EFF and ACLU have been told in several cases that they have to have someone who can claim they KNOW they were spied on, and be able to PROVE it, before they can file a case.

BernardoVerda says:

It's about "having standing" to sue

“If the court allowed Cisco to sue in this case, they would have to allow the EFF and ACLU to sue on behalf of all US citizens to halt NSA spying on them. The EFF and ACLU have been told in several cases that they have to have someone who can claim they KNOW they were spied on, and be able to PROVE it, before they can file a case.”

I voted this “funny”.
But only because it’s “black humour”.

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