Abstract

A North Dakota court recently prohibited the parties from referring to the patent owner during trial by using derogatory, disparaging, or pejorative references, such as "patent troll" or "pirate." The Court, however, permitted the parties to use neutral and factual terminology that accurately described the patent owner.

In a recent case,Energy Heating, LLC, v. Heat On-The-Fly, LLC,1the District Court of North Dakota granted, in-part, the defendants' motion to prevent the plaintiffs and third-party defendants from referring to it using derogatory, disparaging, and/or pejorative terms during trial. As to neutral and factual terms, however, the court denied the defendant's motion so that opposing parties could accurately describe the patent owner at trial.

Background

Plaintiffs Energy Heating, LLC and Rocky Mountain Oilfield Services, LLC filed suit against defendants Heat On-The-Fly, LLC, (HOTF) and Super Heaters North Dakota, LLC, (Super Heaters), asking the court to declare the defendants' patent invalid and not infringed. The plaintiffs alleged that HOTF was a "licensing company" with the stated purpose of licensing the water-heating method claimed in its patent.

Before the case went to trial, HOTF filed a motion asking the court to prevent the plaintiffs and third-party defendants from using certain derogatory or pejorative terms at trial, including "patent troll," "pirate," "patent assertion entity," "shell corporation," "privateer," "bounty hunter," "bandit," "paper patent," "stick up," "shakedown," "playing the lawsuit lottery," "corporate shell game," "company that doesn't make anything," "company that doesn't sell anything," and "company that doesn't do anything."

HOTF argued that these terms negatively describe companies who own patented inventions, but who do not, themselves, practice the invention. HOTF argued that allowing the plaintiffs to use such terms could improperly bias the jury against them. HOTF referenced Federal Rule of Evidence 403 and several decisions from the district courts, precluding the use of the term "patent troll" and other pejorative terms. Rule 403 permits a court to "exclude relevant evidence if its probative value is substantially outweighed by a danger of . . . unfair prejudice, confusing the issues, [or] misleading the jury . . ."

HOTF also pointed out that its business model was not relevant to any of the claims at trial since patent infringement and invalidity were not even issues that would be decided at trial. Even if the derogatory terms were relevant, HOTF argued, they were prejudicial to HOTF—courting the jurors' potential bias against patent licensing entities. HOTF argued that the court should prohibit the use of the terms in question under Federal Rule of Evidence 403 since any relevance of the terms in describing HOTF's business model was outweighed by the risk of prejudice to HOTF.

In response, third-party defendants Marathon Oil Corporation and Marathon Oil Company (Marathon) argued that granting HOTF's motion would prematurely and unnecessarily limit its ability to describe HOTF during trial, potentially presenting a one-sided narrative that would mislead the jury. While agreeing to not use the term "patent troll" during trial, Marathon contended that the court should not prevent it from showing the jury that HOTF's business model was limited to licensing, and that it did not practice the patent-in-suit—facts that Marathon contended were relevant to its position that the patent was unenforceable. Rather than granting HOTF's motion to prohibit certain terms and phrases, Marathon urged the court to use other available tools, such as jury instructions, to strike prejudicial statements.

TheEnergy HeatingDecision

The court agreed with HOTF that terms like "bandit" and "bounty hunter" carry negative connotations without much descriptive value. It emphasized that protecting and selling the right to use a patented product or service through licensing is not illegal or immoral. But, the court also refused to prevent the parties from using terminology or statements that accurately described the other parties' business. The court noted that HOTF did previously build water heating products, so it was inaccurate to describe HOTF as a company that "does not do anything" or as a company that "does not sell anything." Although the court had multiple tools available to it for resolving issues created by prejudicial statements made during trial, the court stated that it was interested in minimizing prejudice before it occurred.

Strategy and Conclusion

This decision illustrates the value in having a patent licensing entity ask the court to prohibit the other parties from using derogatory, disparaging, and/or pejorative references such as "patent troll" at a trial.