Santa Clara Law Professor Brian Love and Wilson Sonsini partner James Yoon have written a thought-provoking article (slated for publication in the Boston University Law Review) arguing for the expansion of the customer suit exception as a mechanism to limit the disparate impact of patent litigation.  First, they identify the myriad problems with suing customers/end users instead of the manufacturers.  Most of these will be familiar to retailers:

  • Suing increases costs for manufacturers and customer (retailers) defendants alike.
  • The cost of defense incentivizes and, in some cases, forces customer defendants to settle.  That is even true when the customer believes the suit is meritless.

As a solution, the authors propose strengthening the customer suit exception, as follows:

  • Apply the exception where the claims are primarily directed at the manufacturer.  This will encompass more suits and avoid gamesmanship.
  • There are no more than nominal fact questions the customers are needed to answer.
  • In weighing the judicial economy, the Court should look at the exception’s narrowing impact not just on existing cases, but on preventing future cases as well.
  • Courts should weigh the relative ability of customers and manufacturers to defend themselves.  As retailers know from experience with internet widgets, software and computer hardware, that balance will almost always favor staying customer suits.

This is an interesting, valuable strategy for retailers.  And it could be enacted by the Courts without legislative intervention.