Gov’t watchdog report outlines disturbing patent battle directions

Patent trolls are an issue that needs to be addressed but here are many others

Can the quagmire that has become patent infringement law arena ever be truly be cleaned up? One has to wonder especially after reading through the Government  Accountability Office's evaluation of the patent litigation arena this week.

The 61-page report perhaps doesn't make any astounding recommendation to fix the problems but does do a nice job of spelling the issues out - particularly the issue of patent trolls - which in typical government-ease vaguely calls them or nonpracticing (NPE) or patent monetization entities.

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Clearly though it is these folks that cause the most concern for the future of patent litigation.  From the GAO report: "Some legal commentators, technology companies, the Federal Trade Commission  and Congress, among others, have raised concerns that patent infringement litigation by NPEs is increasing and that this litigation, in some cases, has imposed high costs on firms that are actually developing and manufacturing products, especially in the software and technology sectors. Among the concerns of some technology companies and legal commentators is that because NPEs generally face lower litigation costs than those they are accusing of infringement, NPEs are likely to use the threat of imposing these costs as leverage in seeking infringement compensation ...NPEs often claim that their patent covers an entire technology when in fact it may cover just a small improvement in an existing technology, and that it can be difficult for judges and juries to determine the patent's scope when complex technologies are involved," the GAO states. These NPE's however brought nearly 20% of the patent infringement cases between 2007-2011."

The Electronic Frontier Foundation writing about the  GAO report said: Many troll cases, the real identity of who is behind the lawsuit and who stands to benefit from it is purposely hidden and that an estimated 39% of suits involving software-related patents were brought against non-technology companies, such as retailers, hotel chains, public transit agencies, and other everyday businesses.

From the EFF: "Here's what the  [GAO] study failed to address: The harm that comes from patent trolls' demand letters, many (most?) of which do not even result in lawsuits. The study did acknowledge this problem, but failed to really understand it. It's not clear this was entirely GAO's fault, as it stated that "the extent of the practice is unclear because [GAO] was not able to find reliable data on patent assertion outside of the court system." Therein lies the rub: because lawsuits often never get filed, there is no public record. We're working hard to collect this data over at Trolling Effects, but until Congress requires that trolls publicly report the letters they sent, this problem likely won't get fixed."

Some other interesting notes from the GAO report:

  • From 2000 to 2011, about 29,000 patent infringement lawsuits were filed in U.S. district courts. The number of these lawsuits fluctuated slightly until 2011, when there was a 31 percent increase
  • GAO's detailed analysis of a representative sample of 500 lawsuits from 2007 to 2011 shows that the number of overall defendants in patent infringement lawsuits increased by about 129% over this period.
  • GAO's analysis of these data also found that lawsuits involving software-related patents accounted for about 89% of the increase in defendants over this period.
  • Several stakeholders GAO interviewed said that many such lawsuits are related to the prevalence of patents with unclear property rights; for example, several of these stakeholders noted that software-related patents often had overly broad or unclear claims or both.
  • Some stakeholders said that 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.
  • Several stakeholders said that the recognition by companies that patents are a more valuable asset than once assumed may have contributed to recent patent infringement lawsuits.
  • Some stakeholders we interviewed said that they experienced a substantial amount of patent assertion without firms ever filing lawsuits against them.
  • From 2000 to 2011, about 29,000 patent infringement lawsuits were filed in U.S. district courts. The number of these lawsuits fluctuated slightly until 2011, when there was a 31 percent increase (see fig. 2).
  • Representatives of several operating companies that we interviewed said they are being sued more often since the mid-2000s. For example, one former official at a large technology company told us that, in 2002, the company was a defendant in five patent infringement lawsuits, but in 2011, it was a defendant in more than 50.
  • Some legal commentators to the report said that such increases are common during periods of rapid technological change-new industries lead to more patents and the number of patent infringement lawsuits also increases because there are more patents to be enforced. Similarly, one researcher working on these issues told us that, historically, major technological developments-such as the development of automobiles, airplanes, and radio-have also led to temporary, dramatic increases in patent infringement lawsuits.

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