Patent Law Practice Center

What is Causing the Rise in Patent Infringement Litigation?

Over the past week or so, there have been a series of articles on IPWatchdog.com that have taken a look at the rise of patent litigation beginning in about 2009, but really with an alarming growth in the number of patent infringement lawsuits brought in 2012. The first article in what is now a trilogy (and likely will be more) is The Rise of Patent Litigation in America: 1980 to 2012. The chart below sets the table.

But why would there be such an enormous growth in patent litigation over the past few years, and a rise of more than 25% between FY 2011 and FY 2012?

The rise in the number of patents issued certainly has something to do with this, but probably less than you might expect. The number of patents issued has been rising for decades, and would likely account for the growth in the number of patent infringement lawsuits between 1980 and 2008, given that the slope of the upward trajectory roughly matches in both the above and below graphs.

Ron Katznelson published his thoughts on the matter, suggesting that the American Invents Act is the major cause for the rise in patent infringement lawsuits. Katznelson cites the fact that, in FY 2009, the typical patent enforced via litigation was between 1 to 5 years old, but in FY 2012, the typical patent enforced was less than 1 year old. First, he points out that the AIA makes it harder to bring lawsuits with multiple defendants (i.e., the joinder provisions). Second, the AIA also provides that, if a patentee files suit for infringement within 3 months of the patent issuance, the court may not stay a motion for preliminary injunction on the basis of a post-grant review.

Additionally, pursuant to 37 CFR 42.101, an inter partes review cannot be filed more than one year after the date on which a defendant is served with a complaint alleging infringement of the patent. So a quick filing starts the 1-year inter partes review countdown. I wonder how much that influences the decision as well?

A new study by Professor Robin Feldman at UC Hastings Law School also finds that 58% of new patent infringement lawsuits are brought by patent monetizers. See Patent Monetization Entities Filed 58% of Lawsuits in 2012.

In his article, Katznelson questions whether the rise of patent litigation can be attributed to patent monetizers, although not directly challenging Professor Feldman. He points out that “NPE’s mostly acquire older patents,” which to me seems true. If Katznelson is correct, and more than 14% of patent litigations filed in FY 2012 related to patents less than 1 year old, the increase in patent litigation doesn’t seem tied to monetizers, who in many cases partner with the original innovators, as does Acacia Research.

What this suggests is that there is still a lot to understand and anyone jumping to the conclusion that the patent system is broken as a result of the rise in patent litigation is doing so without all the information and hardly a sense of the complicated structure of the overall patent system. It seems the incentives Congress has interjected into the Patent Act thanks to the AIA virtually ensured a rise in patent litigation, thus the system is not broken. It is working exactly as it was designed to work.

CAFC Chief Defends the Patent System and Defines “Patent Troll”

Recently Chief Judge Rader of the United States Court of Appeals for the Federal Circuit made a strong defense of the patent system in a chat billed as a fireside chat at the AUTM annual meeting in San Antonio, Texas. In his opening salvo into the issue of patent litigation abuse, the Chief explained:

Interestingly, that has been misdirected towards the patent system. Even earlier this afternoon I received an invitation from a House Committee to come and talk about abuse of the patent system. I’m not sure I’ll be able to attend, but if I could attend I’ll tell you exactly what I would say: There is nothing wrong with the patent system.

The patent system has a narrow focus. It is not a consumer affairs program. It is not a manufacturer’s guarantee compliance program. It’s not a competition program.  It has one objective, summarized well by the Constitution: promote the progress of science and the useful arts. It’s there to create more investment and more incentive for innovation and invention. The things that the patent system is criticized for are not its job.

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USPTO Seeks Comments on Patent Small Claims Proceedings

By: Gene Quinn (IPWatchdog.com)

The United States Patent and Trademark Office (USPTO) is seeking comments regarding whether the United States government should develop a small claims mechanism for patent enforcement. The USPTO is interested in receiving comments from the public regarding whether there is both a need and a desire for this type of proceeding, in what circumstances such a small claims proceeding would be needed (if any), and what features any adopted small claims proceeding should include.

The Federal Register Notice explains that the USPTO’s interest in examining the possibility of adopting a patent small claims procedure relates to recent discussions the agency has had with Federal judges, private practitioners and various stakeholder groups and bar associations.

Specifically, the USPTO is interested in receiving comments directed to what should be the core characteristics of a patent small claims proceeding, if any. The USPTO is interested in comments on matters relating to appropriate subject matter jurisdiction, venue, case management, appellate review, and available remedies. Stating what should otherwise be obvious, the Federal Register Notice also explains that if a small claims proceeding is adopted, it must conform to the requirements of the U.S. Constitution. The USPTO specifically cites the Seventh Amendment as an illustrative example. Thus, to be seriously helpful, any comments provided should be mindful of the fact that the Constitution does have provisions relative to trials that cannot be ignored.

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BlackBerry Maker RIM Loses $147 million Patent Verdict

Aside from being the maker of the popular BlackBerry devices, RIM is known throughout the patent industry as the poster child for those who are sued by non-practicing entities, having lost over $600 million to NTP. This historic settlement between RIM and NTP was achieved on Friday, March 3, 2006 giving RIM a license on the NTP patents moving forward. The final weeks leading up to this monumental settlement were marked by quite a lot of posturing, but ultimately everything was resolved and BlackBerrys around the U.S. did not go silent.

RIM is now back in the news at the end of last week for another patent infringement matter, this time being found liable for patent infringement for infringing Mformation Technologies, Inc.’s patent related to wireless mobile device management. The patent — U.S. Patent No. 6,970,917 — relates to a method, system and associated software that provides the capability to manage, control, and reconfigure wireless devices remotely over a wireless network with acceptable reliability and security. After setting an $8.00 per unit royalty, the jury awarded Mformation $147.2 million dollars in damages based on past sales of BES-connected BlackBerry smartphones in the US from late 2008, when the lawsuit was filed, through the trial date. There were 18.4 million units found to infringe. See Jury Verdict.

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Patent News from the Holiday Week

Last week, we in the United States celebrated the Fourth of July, which landed right in the middle of the week on Wednesday. Having a national holiday on a Wednesday typically leads to many taking vacation time and creating their own very long holiday weekend. So while you were away, or perhaps distracted by the scalding hot heat that more than half of the United States suffered from, there were a number of noteworthy patent stories. Yes, decision makers and deal makers did not take a break last week. Not by a long shot.

So while you were otherwise occupied, what did you miss? Here is a run down of five of the most noteworthy stories from last week.

 

1. WIPO Under Fire For Sending Computers to UN Sanctioned Countries

Earlier this year, the World Intellectual Property Organization (WIPO) came under fire for sending computers to North Korea in violation of United Nations sanctions. See WIPO Embroiled in North Korean Computer Deal. Now WIPO is under fire again. It seems they not only shipped computers to North Korea, but also shipped computers to Iran as well. Congresswoman Zoe Lofgren (D-CA) called this latest WIPO transgression “an outrage.” The United States Department of State is attempting to work with WIPO to make sure that new procedures are put into place to ensure this never happens again.

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