Patent Trolling Has Been Crazy Profitable, But Thanks To Supreme Court, New Lawsuits Are Declining

from the a-good-early-sign dept

Mon, Oct 13th 2014 2:04pm — Mike Masnick

There's some new data out about patent lawsuits that paint an interesting picture. First, the law firm Goodwin Procter put out a new manual for fighting patent trolls (found via GigaOm), showing that patent trolling has been immensely profitable. It shows how the median damages awarded to trolls has been much higher than to operating companies, which is the exact opposite of what you'd think it should be -- companies that are actually competing in the space have at least a slightly more legitimate claim than those simply setting up toll booths. But it's the trolls who get rewarded:

It's worth noting that even this chart significantly underplays things, since very few patent trolling efforts actually reach court in the first place. Many, many companies just pay up when threatened, and many more settle after cases have been filed rather than actually allowing a trial to reach conclusion and have damages awarded (if any).

But... that all may be changing. We've been writing a lot about how the Supreme Court's ruling in Alice v. CLS Bank had resulted in the courts rapidly invalidating a bunch of crappy software patents, and that may be taking a toll. Legal analytics firm Lex Machina has been crunching the numbers and noticed a significant and noticeable drop off in September patent lawsuit filings. Historically, there's usually a summer lull in patent lawsuit filings, but they pick back up in September (back to school patent trolling!). And, each year the number of patent filings in September keeps going up and up and up. In 2011, there were 385 patent lawsuits filed in September, and in 2012, it was 460. In 2013, it was 548. And yet, here in 2014, there were just 329 cases filed in September, a noticeable drop. Lex Machina has a bunch of charts showing the data, but this one is the most telling to me:

You can see a bunch of lawsuits rushed to get filed prior to the Supreme Court hearing the case, and then a pretty steady stream over the summer. As we've noted, right when the ruling came out, it wasn't entirely clear how far reaching it would be -- but within about a month people began to realize that it really was going to invalidate a large number of bad patents, and then the lawsuits started dropping rapidly. It will be interesting to see how this plays out over the rest of the year.

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Filed Under: patent trolling, patents
Companies: alice, cls bank, lex machina

4 Comments

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Anonymous Coward, 13 Oct 2014 @ 2:15pm

The sad part is that whenever cases are settled out of court, there's often the demand for the settlement to be secret as well as final. So a victim who settles can't renew the dispute after a court invalidates the claim in some other case.
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Anonymous Coward, 13 Oct 2014 @ 3:09pm

Quick, pass TPP with ISDS so the trolls can save themselves from the Court's clear prejudice.
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Mark Noo, 14 Oct 2014 @ 3:43am

Re:
I didn't know that. Secret settlements cannot be renewed because they would lose their secrecy.
In a contract you can do a lot of things. Shouldn't a lawyer be able to protect the client from this thing.

I guess what I want to know is if now that the limitations are known has anyone found a workaround?
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Alexa Jackson, 14 Oct 2014 @ 8:33pm

Patent trolls had been indiscriminately filing lawsuits to trick victims for a quick settlements. But as supreme court approved the elimination of Rule 84, trolling lawsuits will have lesser chances reaching court. This will make way for more relevant issues to be addressed.
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