Patent trolls responsible for a fifth of US patent litigation
Up to 20 percent of patent litigation in the US was instigated by non-practicing entities (NPEs) between 2007 and 2011, according to a government watchdog.
The report, published on August 22 by the Government Accountability Office (GAO), reveals that in the period studied, one in five patent lawsuits were brought by NPEs, sometimes referred to as patent trolls.
The report, called Assessing factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality, reviewed lawsuits from 2007 to 2011.
Among the amin reasons for enforcing litigation outlined in the report was the prospect of financial reward.
“The potential for large monetary awards from the courts, even for ideas that make only small contributions to a product, can be an incentive for patent owners to file infringement lawsuits,” the report said.
“NPEs have many different characteristics and there are a spectrum of business models and behaviours, including operating companies that partner with NPEs to file infringement suits,” it adds.
Patent trolls have attracted controversy in recent years, particularly in the US, for buying patents and filing unnecessary, costly and frivolous lawsuits.
US President Barack Obama recently pledged to tackle them through legislative reforms.
Rory Radding, partner at Edwards Wildman Palmer LLP, in New York, told WIPR that, although the figures were surprising, they were probably to be expected.
“I think the figure is about right, but still surprising as 20 percent of all cases is a substantial number,” Radding said.
However, Radding added that as many of the litigation figures were compiled during a period of recession, it may have skewed how the results were interpreted.
“These figures were taken when the country was in the height of recession and more often than not, during such times, there are very little lawsuits, particularly between companies who stand to lose something.
“However, the patent trolls, when compared to big practicing entities, would have nothing to lose, so they would have continued filing regardless. It may be that the percentage looks higher because there were fewer cases overall.”
The report also found that there was an increase of around 900 more patent lawsuits in 2011 when compared to the average of previous years.
According to the GAO, its research indicated the increase may have been influenced by anticipated changes in the Leahy-Smith America Invents Act (AIA).
Radding added that he expected patent-related lawsuits to increase in the near future.
“Usually within a year after recession, IP litigation increases, with this it has taken a little longer possibly because of the severity of the recession. I think in the coming few years more competitors will start suing each other for proper market reasons and we will see more litigation.”
