CONTROLLING PATENT TROLLING WITH CIVIL RICO

Yale Journal of Law and Technology Volume 11 Issue 1 Yale Journal of Law and Technology Article 2 2009 CONTROLLING PATENT TROLLING WITH CIVIL RICO Blair Silver Follow this and additional works at: https://digitalcommons.law.yale.edu/yjolt Part of the Computer Law Commons, Intellectual Property Law Commons, and the Science and Technology Law Commons Recommended Citation Blair Silver, CONTROLLING PATENT TROLLING WITH CIVIL RICO, 11 Yale J.L. & Tech (2009). Available at: https://digitalcommons.law.yale.edu/yjolt/vol11/iss1/2 This Article is brought to you for free and open access by Yale Law School Legal Scholarship Repository. It has been accepted for inclusion in Yale Journal of Law and Technology by an authorized editor of Yale Law School Legal Scholarship Repository. For more information, please contact . Silver: CONTROLLING PATENT TROLLING WITH CIVIL RICO CONTROLLING PATENT TROLLING WITH CIVIL RICO Blair Silver* 11 YALE J.L. & TECH. 70 (2009) ABSTRACT The modern patent system is incapable of policing extensive faud. This inability to control fraudulent activity has created a system susceptible to abuse. The current remedies offered by the courts to counterbalancefraudulent conduct and trolling have not proved a sufficient disincentive to curb this behavior. Specifically, the remedies for faud, such as inequitable conduct, have not proven capable of deterringrepetitive abusers. Civil RICO may be that solution. RICO has been an avenue pursued as a defense to patent infringement ever since RICO was extended civilly over legitimate businesses. RICO can be used as an effective deterrent to repetitive abuse of the patent system and extortionate litigation schemes that threaten large segments of industry. RICO has such an effect because of the scope of its remedies: treble damages, attorney's fees, and investigation costs. While civil RICO should not apply where the Patent Office's standard remedies of unenforceability for inequitable conduct compensate for individual instances offraud, civil RICO can be used to limit repeated abuses of the system where these ordinarypenaltiesdo not work. This paper will address the questions of why RICO deters patent abuse, where RICO stands with patent law today, what the standards for applying RICO to patent holders should be, and what the future holds for RICO andpatent law. * J.D., Georgetown University Law Center, 2008; B.S., Tufts University, 2005. The author would like to thank both Professor John R. Thomas and Elizabeth Goergen for their generous help and guidance in preparing this article. Published by Yale Law School Legal Scholarship Repository, 2009 1 Yale Journal of Law and Technology, Vol. 11 [2009], Iss. 1, Art. 2 11 Yale J.L. & Tech. 70 (2009) 2008-2009 TABLE OF CONTENTS Introduction ............................................................ 72 I. Why RICO? Trolls, Lemelson, and Judicial Efficiency ........ 73 II. What Is RICO? ................................................. 76 A. History of RICO .............................................. 76 B. The Allure of RICO - Flexibility and Mandatory Damages ... ......................... 77 C. Elements of RICO ............................................ 79 III. Limitations on Applying RICO to Patent Law ................. 81 A. Civil RICO and Patent Law - Mail Fraud and Wire Fraud ... ............... 82 B. Limitations on the Pattern of Activity - Length of Time and Number of Victims ............................................. 83 C. Limitations on Racketeering Activity - Drawing a Line Between Pre- and Post-Grant Activity .................... 84 IV. RICO Applied ................................................... 86 A. Extortionate Litigation Schemes ............................ 86 B. Fraudulent Filers .............................................. 89 C. Civil RICO and Brand Name Pharmaceuticals .............. 92 V . C onclusion ........................................................ 94 https://digitalcommons.law.yale.edu/yjolt/vol11/iss1/2 2 Silver: CONTROLLING PATENT TROLLING WITH CIVIL RICO CONTROLLING PATENT TROLLING WITH CIVIL RICO INTRODUCTION Aggressive patent enforcement suits by patent holding companies have become commonplace in the modern patent system. Such holding companies acquire their questionable patents by abusing the patent office. These "patent trolls" engage in excessive litigation, assaulting industry after industry and extorting huge sums of money. The current system's counterbalances to fraudulent conduct and trolling are not adequate disincentives to curb this behavior. Patent trolling has become such a huge issue that Congress and the Patent and Trademark Office (PTO) have proposed a series of substantial amendments to the patent system to alleviate trolling. However, using current law in new, creative ways may inhibit some troll behavior: when the behavior becomes extreme enough, systemic enough, and prolonged enough, the Racketeer Influenced and Corrupt Organizations Act, also known as RICO, may help stymie costly trolling. The RICO Act was originally designed to prevent organized crime. However, the Act's broad reach due to its close relationship with fraud, mail fraud in particular, have led to a broad application of its provisions. Successful civil RICO plaintiffs receive huge awards: treble damages, reasonable attorney's fees, and investigation costs. The threat of such large damages will deter ambitious trolls from attempting fraud or extreme influence on the Patent Office and from engaging in overly litigious behavior. So far, however, the courts have met civil RICO challenges with little enthusiasm. Usually, civil RICO patent cases are dismissed for formalistic reasons. The Federal Circuit has also limited the conduct that qualifies for civil RICO to post-grant activity. However, a few key cases have refused to dismiss civil RICO challenges in the patent context; in particular, the Lemelson case lays a foundation for how RICO can be used to curb extreme trolling behavior. Therefore, because of modern systemic abuses of the patent system and the flexibility of RICO, civil RICO should be applied more often in patent litigation cases to curb extensive fraud on the PTO and abuse of the courts. This paper explains how Civil RICO can reign in extreme trolling behavior. Part I will discuss why there is a need to extend RICO into patent law by laying out the modern problem of patent trolling and discussing the public benefits of applying RICO. Part II will explore the history of RICO, why RICO is attractive to claimants, and the elements of a civil RICO claim. Part III will discuss how RICO and patent law overlap and what limitations have been imposed by the courts in applying RICO. Part IV will discuss specifically where RICO can and should be applied in modern patent law and how civil RICO may disproportionately Published by Yale Law School Legal Scholarship Repository, 2009 3 Yale Journal of Law and Technology, (...truncated)