Under the American rule (as opposed to the English rule) loser pays is very rare. Specifically for patents the law only authorizes them in "exceptional cases". In this case they were ordered for filing numerous frivolous lawsuits. Nothing in the scenario you outlined suggests anything exceptional. Defendants are allowed to defend themselves.

If a court finds a defendant meets this high burden as to the plaintiff's actions, then yes I think the real parties in interest behind the corporate veil should be on the hook. What's the alternative? That defendants who were the victims of frivolous lawsuits have to pay hundreds of thousands of dollars out of their own pockets? Who knows what assets had to be sold to raise that money or whose livelihood was destroyed? How is that an equitable outcome?

We also do not want what we have now - where you can sue with impunity as a patent troll as a means for profit. Because you cannot hold individuals liable for their businesses, people can exploit that loophole for profit.

But what you touch on is a more fundamental issue that the "justice" system in the US is more often than not a competition between who has the most money on hand, and as a means for lawyers to profit generously, rather than anything righteous or just.

There's another angle to attack that particular problem - sanctioning the attorneys that bring and threaten frivolous patent lawsuits.

There is no better system, as long as two people have different opinions on what is righteous or just.

It's a great system in commonwealth countries. It discourages litigation from larger companies precisely because the judge has discretion to award costs. In some cases the judge can even award in favour of the plaintiff, and then award costs against them as well. Yes - you should want this.

It would be nice if it only applies to scummy patent holding shell companies though!