11 December 2012Patents

NPEs bringing majority of patent cases in US

For the first time, non-practising entities (NPEs) are behind the majority of US patent lawsuits, a recent study has found.

The paper, written by California law professor Colleen Chien, reported that 61 percent of all patent lawsuits were brought by NPEs, or ‘patent trolls’ as they are sometimes known, compared to 45 percent in 2011 and 29 percent in 2010.

The data was presented on Monday at a workshop hosted by Justice Department and the Federal Trade Commission (FTC), which explored the effects of lawsuits brought by patent assertion entities, often accused of impacting technological innovation.

The paper also found that NPEs are increasingly litigating against start-up companies.

Paul Sutton, founding partner of Sutton Magidoff LLP in New York, believes that there is no real evidence that NPE activity is harming innovation, recognising NPEs as a lifeline to inventors who cannot afford to defend their patents on their own.

He said: “If anything, it might be argued that NPEs provide a means by which individual inventors and small companies are able to battle large companies who are infringing their patent rights.

It is thought that as a result of the sharp increase in patent infringement lawsuits, described as “excessive” by Judge Richard Posner who dismissed the Apple v Motorola case earlier this year, there will be calls for curbs on NPE activity.

Though with the American Invents Act signed into law last year, and the switch from a “first to invent” to a “first inventor to file” system due in March, Sutton does not believe this will happen any time soon.

“With the patent bar and the public only now digesting these changes, the likelihood of another major patent reform in the short term is rather unlikely,” he said.

“However, the unhappiness with the tactics of NPEs will certainly lead to the introduction of legislation that will seek to strip them of their major weapons, such as injunctive relief.”

A recent Boston University study estimated that in 2011, the total cost of NPE cases in the US was $29bn.

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