New Report Finds NPEs Filed Majority of Patent Cases in 2012

Patent infringement litigation by non-practicing entitles (NPEs), also referred to as “patent trolls,” continues to rise dramatically.

In fact, NPEs filed 56 percent of all patent suits, according to a new report by Lex Machina Inc. and the University of California Hastings College of the Law. By comparison, patent trolls filed only 24 percent of patent infringement litigation in 2007.

The new study expanded on the group’s prior research regarding what it calls “patent monetization entities.” The latest report examined 13,000 cases from 2007-2008 and 2011-2012.

Below are several noteworthy findings detailed in the report:

• The number of defendants sued by NPEs decreased slightly from 2011 to 2012, which “may suggest that changes in the joinder rules from the America Invents Act had at least some initial success in pushing patent monetization entities not to cast the net so broadly.”

• Of the parties who filed the greatest number of patent litigations in the years studied, 9 out of 10 are patent monetization entities and only one is an operating company.

• Mechanisms for notifying the public when patents have been asserted in litigation are woefully inadequate. Despite federal requirements, the system was not operative for more than two-thirds of the patents asserted, which “puts small companies at a disadvantage because they cannot easily tell if a patent has been asserted and what territory is being claimed by the patent holder.”

• The newest patents issued are the most frequently asserted in litigation, which “could be an indication that parties are increasingly filing for patents for the primary purpose of assertion.”

This latest report provides new insight into a growing patent trend. NPEs have been a hot topic recently, prompting attention from Congress, the Federal Trade Commission, the U.S. Department of Justice and even the President.

How Can I Help?

If you, or someone you know, need any help with Intellectual Property issues, from filing a patent, trademark or copyright, or just need advice regarding how best to protect your inventions, ideas or your brand, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

Trolls Be Gone!

Rep. Peter DeFazio, along with Rep. Jason Chaffetz, have re-introduced the SHIELD Act (Saving High-Tech Innovators from Egregious Legal Disputes) in the House of Representatives. The SHIELD Act (H.R. 845, pdf) is designed to help the innocent victims of patent trolls.

Patent trolls (see my previous post here for another take on “trolls”)  of use the high cost of litigation as a means of getting companies to pay licensing fees without going to court.  It costs millions to defend a patent lawsuit. So while a few companies have fought back and won, there is a reluctant by most companies to spend time and money fighting a lawsuit.  The scenario goes something like this:

PT: You’re infringing our patent!

HTC: No we are not!

PT: Well, for an amount substantially less than fighting this in court, we will go away.  (Aren’t we nice?)

HTC: (grmble, grumble, grumble) Bean counters say to do the deal because it is cheaper than the alternative. (grmble, grumble, grumble).

However, smaller companies and start-ups usually cannot afford even the license agreement and might have to cease operations due to this type of pressure, even if the claims are weak.

The Shield Act, defines a troll as a patent owner who did not do the inventing behind the patent and does not exploit it by making a product. A patent owner that fits those criteria and loses an infringement case would be on the hook for its opponents’ costs under the bill.

The new SHIELD Bill makes it clear that the law applies only to companies that buy patents to assert in litigation.  However, this  may still apply to some large companies that have, and leverage, non-practising  patents that they own, ala Kodak.

kodak-logo-high

So, it is yet to be seen if this new and improved bill will make it past the lobbying efforts of some large companies that act like trolls as well as those entities that are traditionally considered to be trolls.

How Can I Help?

If you need help to defend yourself from a patent lawsuit, or help to enforce your patent rights, or know someone that can use my help, please contact me for a free 30 minute consultation by sending me an email or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities.  Connect with me on Google +

Norman