patentsuits0It’s been a huge week for patents — starting with This American Life’s follow-up on Nathan Myhrvold’s Intellectual Ventures and followed on Tuesday with President Barack Obama announcing plans to try to curb the activities of patent trolls. As part of Obama’s 5-point plan, the National Economic Council and the Council of Economic Advisers released a detailed report titled Patent Assertion and U.S. Innovation.

It goes into amazing detail on the rise of patent trolls, pointing out that the firms have had a “negative impact on innovation and economic growth.”

But here’s the stat, and accompanying chart (above) that kind of puts things in perspective and highlights the problem that the Obama administration is trying to solve.

Patent trolls, as described in the report as PAEs or Patent Assertion Entities, were responsible for 62 percent of all patent infringement suits in the U.S. last year. The number of suits stood at mind-blowing 2,500 last year. That’s up from 1,500 suits in 2011, or 45 percent of the total. Compare that to 2006 when they were responsible for just 19 percent. Obviously, a growing problem.

More from the report.

PAEs often threaten to sue with the intention of extracting license fees or settlement payments. The increase in the number of suits filed for patent infringement has thus been accompanied by an increasingly large number of suits threatened. PAEs assert broad patent claims against an unusually large set of potential defendants; these assertions are often not based on any evidence of infringement by an individual defendant, but are instead an attempt to find companies that will seek to settle the PAE’s claims rather than risk a trial. Conservative estimates place the number of threats in the last year alone at a minimum of 60,000 and more likely at over 100,000.

Full report here:

Patent Report

Comments

  • Doug Grady – Foster Pepper

    Yes, there were many more *lawsuits* in 2011 and 2012, but is largely because of new joinder rules (in the Patent Reform Act of 2011) that force a patent holder to file separate lawsuits against similar defendants rather than bundle them all into a single action. (see http://www.patentlyo.com/patent/2012/03/patent-infringement-litigation-complaints-on-the-rise.html). In other words, before Patent Reform, a so-called “patent troll” could file one lawsuit and name ~30 defendants; the new rules generally require that same patent troll to file ~30 *lawsuits*, naming ~1 defendant in each.

    In fact, compared to 2011, there was 11% decrease in patent *defendants* nationwide in 2012 – which is to say, there are actually far fewer companies that have to deal with patent trolls. While we can’t know for sure why this decrease is happening, many believe it’s an indirect result of the Patent Reform Act of 2011.

    Coincidentally, in the New York Times this morning, the Chief Judge of the appellate court for patent matters appears to encourage trial judges to use existing, under-used statutes to sanction patent trolls for “aggressive lawsuits and frivolous demands”. This is not an insignificant writing, and will probably have an effect on patent troll litigation. http://www.nytimes.com/2013/06/05/opinion/make-patent-trolls-pay-in-court.html?hpw

    Having said all of this, your broader point is true — there is evidence to suggest the patent system needs additional reform (especially WRT patent trolls) – but good data tends to facilitate good reform. (NB: I am a patent litigator that chiefly defends companies against ‘patent trolls’; these comments are my own.)

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