Shift in litigation strategies
What was old is new again
New avenues for innovation – and private litigation
Comment
Technology remains the engine of the global economy, with companies churning out new ideas and innovations by the minute. With this constant flow of new offerings and business models, litigation has long played a prominent role in the industry. But that role is now evolving quickly. Historically, the industry's legal battles have focused on patent litigation. But tech companies large and small are turning to a broader range of litigation in the ongoing, often-intense struggle to gain advantage and keep competitors at bay.
Shift in litigation strategies
IP litigation between competitors remains critically important in the technology industry, but it is changing. In the past, if one company saw another as a viable competitive threat, it would file a patent infringement suit in an attempt to cripple that competitor. Those types of cases still exist, but now, the focus has shifted to litigation relating to copyrights and trade secrets to accomplish the same goal.
Overall, with the changing landscape of patent law, more and more defendants are prevailing on invalidating patents. Part of that changing landscape has included the Supreme Court's Alice decision, which made it more difficult to use patents to protect software – a key form of intellectual property in the industry – while copyright and trade secret laws can apply to software. In addition, the 2016 Defend Trade Secrets Act expanded a company's litigation toolset to include protection for trade secrets under federal law. And while the Supreme Court's 2021 Google v Oracle decision said that Google's use of Oracle's APIs was fair use, it left intact the rule that software is eligible for copyright protection (for further details, see "Google v Oracle: when clarification is not necessarily clear").
Increasingly, copyright and trade secrets litigation is being used as a defensive weapon by large tech companies, as the previous generation of disruptors now finds itself being disrupted. More established companies are increasingly going after start-ups and using copyrights, trade secrets and patents to try to protect their platforms and their control of their ecosystems. Thus, even as legal tactics change, the old Silicon Valley adage – "if you're getting sued, you must be doing something right" – still rings true. Tech companies are also using copyright and trade secrets claims on another competitive front – the war for talent. Trade secret claims take on even more importance in an environment where employees move regularly.
As large tech companies pursue claims against small innovators, smaller companies are likely to increase their efforts to push back in other areas in an attempt to gain access to key platforms and, by extension, broader markets and ecosystems. In addition, increasing government actions and regulation focusing on the tech giants may also embolden more start-ups to go to court.
New avenues for innovation – and private litigation
Competitor-to-competitor litigation is likely to keep increasing. For tech companies, the stakes are high in the struggle to control platforms and ecosystems, and many of them have the cash on hand to take that struggle to court. At the same time, emerging technologies will continue to open new avenues of innovation and litigation.
For example, as non-fungible tokens that are stored on blockchains gain traction among artists and content creators, questions will arise about how copyright protections apply, such as how the courts will provide remedies to prevent someone from continuing any infringing conduct.
As the tech industry continues to open these kinds of frontiers, legal departments will have to keep adjusting. It will become increasingly important to align and realign their litigation strategies with their technologies and business models to ensure they can survive in a vibrant, competitive and changing IP marketplace.
For further information on this topic please contact Warrington Parker at Crowell & Moring LLP by telephone (+1 202 624 2500) or email ([email protected]). The Crowell & Moring LLP website can be accessed at www.crowell.com.