Literature Review: New Research Sheds Light on Patent Troll Litigation

January 26, 2010

New scholarship from prominent law professors confirms that patent trolls have become a tremendous influence on the legal system, and that their efforts have been targeted at a number of distinct industries and technologies.

While empirical studies are inherently subject to the interpretation of the researcher and open to the possibility of conflicting vantage points, this research may provide readers with a foundation for future discussion and research.

In Extreme Value or Trolls on Top? The Characteristics of the Most-Litigated Patents, noted law professors John Allison, Mark Lemley and Joshua Walker seek to provide real data in response to anecdotes as to the extent of patent troll activity. The article, published in the most recent edition of the University of Pennsylvania Law Review, focused on the patents subject to the most number of litigated patent cases between 2000 and 2007. The authors report that these patents are frequently in the software and telecommunications fields, as compared to other technological areas. More significant, the authors note these patents are “disproportionately owned by non-practicing entities (i.e., ‘trolls’).”

The authors go on to report the “most-litigated patents are overwhelmingly likely to be software patents,” finding that software patents account for nearly 75 percent of those cases involving patents subject to multiple litigation. It is no surprise to find that the related computer industry bears the brunt of the majority of such lawsuits with 72 percent.” By comparison, the authors found that using a sample size of patents, which were litigated only once, the computer industry accounted for only 34 percent of all cases. Similar incongruencies were seen in the telecommunications field as well.

In addition, the authors noted that many of the most litigated patents were owned by non-practicing entities, at a rate of more than 80 percent! The authors delineated between inventor-owned companies who do not produce the patented product, and pure patent trolls, who acquire and enforce patents. Of this 80 percent, approximately 74 percent of these cases fall into the former category, with pure patent trolls accounting for the remaining 6 percent.

While the article is an interesting read, it may only provide a glimmer into the realities of the situation. The article focuses solely on those patents which have been subject to the most number of patent litigation cases. It does not truly take into account (besides the random sample size of single litigated patents) those patents which patent trolls have asserted in a single case against a wide swath of defendants.

Additionally, in light of the thousands of patents that are issued yearly, the authors do not account for a situation where patent trolls acquire a collection of patents and sue on each patent separately. The prospect of a patent troll suing on eight separate patents is no less a drain on our patent system in comparison to a situation where the troll sues on the same patent eight times. However, the authors do provide anecdotal arguments that the patent troll business plan is exploiting a single strong patent multiple times against as many defendants available to extract the highest revenue possible. Nonetheless, the professors do correctly note the importance of non-practicing entities in the modern patent system is a crucial aspect of the system that needs to be further investigated and addressed.

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