Company Wants New Hampshire Supreme Court To Let It Sue Anyone Who Calls It A Patent Troll

Defamation

from the oh-really-now? dept

Over the years, there have been a few attempts — usually by companies that most of us would call patent trolls — to argue that calling a company a patent troll is defamatory. These arguments rarely get very far, because they completely misunderstand how defamation works. However, a company with some questionable patents around bank ATMs, called ATL, tried a few years back to sue a bunch of its critics over the “patent troll” name. Thankfully, the local court in New Hampshire correctly noted that calling someone a patent troll is protected speech under the First Amendment and is not defamatory.

ATL decided it was going to keep trying. Tim Lee, over at Ars Technica, recently wrote about oral arguments in front of the New Hampshire Supreme Court in this case.

In Thursday’s oral arguments at the New Hampshire Supreme Court, ATL attorney Steve Gordon urged the New Hampshire justices to overrule that initial dismissal of the lawsuit.

“The gist or sting of the statements at issue was that my clients were extortionists, shakedown artists, preying on small banks seeking to license patents that were of no value,” Gordon said.

Gordon argued that none of this was true. Critics said ATL wasn’t selling any products, but Gordon noted that his client did try to commercialize his patents many years ago. Critics said ATL was engaged in a shakedown. “This is not a shakedown,” Gordon said.

This seems like an incredibly iffy argument. There have been many, many cases on similar types of claims, and such statements are not defamatory, as it’s not possible to prove them directly “true” or “false” since they’re very much in the eye of the beholder. The Phantom Touring case is a key one here, where the court ruling noted:

Many of the statements cited in the complaint and appellate brief either constitute obviously protected hyperbole or are not susceptible of being proved true or false. Such, for example, is the language in “The phantom of the ‘Phantom’ ” quoting a critic who described the Hill production as “a rip-off, a fraud, a scandal, a snake-oil job.” Not only is this commentary figurative and hyperbolic, but we also can imagine no objective evidence to disprove it. Whether appellant’s “Phantom” is “fake” or “phony” is similarly unprovable, since those adjectives admit of numerous interpretations.

I can’t see how ATL can get past that bar.

Another standard seen in weak defamation cases is seizing on a small error of terminology. In this case, back in 2012 ATL had key claims in some of its patents invalidated in the federal circuit. That didn’t mean the entire patent was invalidated, but invalidating key claims can more or less kill off a patent. In this case, the defendants said that the patents had been invalidated, when it was actually just some key claims. ATL’s lawyers argue this is defamatory. It is not.

At one point, Gordon argued that one of the defendants had defamed ATL by claiming its patents had been invalidated. Gordon said that this was false and defamatory because only certain claims of its patents had been invalidated; others remained valid.

But justices seemed skeptical. “Wasn’t the gist of the statement correct?” one justice asked.

Indeed, having the gist of a statement being correct is a defense against defamation claims. That’s why I find it kind of amusing that up above, ATL’s lawyer used “gist” in suggesting that calling ATL a troll was defamatory. If you’re the defamation plaintiff, you’re generally not supposed to be the one bringing up “the gist.”

Of course, from the hearing, it really does sounds like (note to ATL lawyers: this is my opinion) ATL is just trying to cost the defendants as much as possible, as its focus seems to be getting past the Motion to Dismiss stage and into discovery — which can be the most expensive part of a case. Though, as Lee notes, ATL’s reasons for wanting to move the case into discovery seems to be… because they want to get into discovery.

Gordon argued that ATL should have gotten a chance to build its case via discovery before a judge decides whether the case has merit. But when a justice asked what information he’d like to seek during the discovery process, the attorney’s answer was a little vague. Gordon said that he’d like to depose defendants, asking questions like “what were the facts that you relied upon when you made a statement of shakedown?”

But it’s not clear that these kinds of questions would be all that illuminating. The core of the defendants’ case is that terms like “shakedown” are fundamentally matters of opinion. Courts have long held that opinionated terms like “rip-off” and “snake-oil” could not be defamatory. The defendants argue that labeling someone a troll or accusing them of blackmail falls into the same category.

Never read too much into how judges behave during oral arguments, but at least from Tim’s reporting, it sounds like they’re skeptical here. And they should be. Calling a company a patent troll is not defamatory. Nor is saying a patent was invalidated when it was really key claims. And trying to drive up legal fees by dragging a questionable case into discovery is quite obnoxious and an attempt to bully a company through abusive litigation.

Filed Under: 1st amendment, defamation, free speech, new hampshire, patent troll
Companies: atl