The world wants to blame so-called “patent trolls” for the lawsuits that have tied the intellectual property system into knots — but operating companies that make actual products are the ones running to the courthouse, government investigators have found.
“These data also show that companies that make products brought most of the lawsuits and that non-practicing entities brought about a fifth of all lawsuits,” the Government Accountability Office said in a report released Thursday.
That doesn’t mean that patent trolls — or patent monetization entities, as the GAO calls them — aren’t part of the problem, said Frank Rusco, GAO natural resources and environment-energy and science director.
“Although the companies filed the most suits, the PMEs tended to focus on software patents,” he explained to POLITICO. “That’s the space in which the PMEs operate.”
But Rusco said that focusing on patent trolls misses the bigger point.
“We think the focus on patent monetization entities is obscuring the bigger point, which is the quality of the patents themselves,” he explained.
The detailed analysis of 500 lawsuits from 2007 to 2011 shows that the number of overall defendants in patent infringement lawsuits increased by nearly 130 percent. The GAO found that there were 3,270 patent infringement lawsuits filed in 2011. That number was 2,491 in 2010 and 2,166 in 2000. Software-related patents accounted for about 89 percent of that increase, according to the GAO.
The report recommends that the Patent and Trademark Office consider examining trends in infringement litigation and consider linking that information to internal examinations as a way to improve patent quality and analysis. The PTO agreed with the GAO’s assessment.
“The USPTO currently uses information relating to cases involved in patent litigation, and agrees that it would be appropriate to consider making better use of such information by examining trends in patent infringement litigation,” the PTO wrote in its comments. “The USPTO also agrees that as part of its ongoing effort to improve the quality of issued patents and the patent examination process, it would be appropriate to consider linking trends in patent litigation to internal data on patent examination.”
Rusco noted that the nature of suits filed by patent trolls is different. Companies tend to file a single infringement lawsuit on one product, but patent-assertion entities sue a bunch of people at one time.
“They sue more people for a single patent,” he said. “They cast a wider net.”
Many suggest the increase in patent infringement lawsuits was caused by a rush to file suits before implementation of the America Invents Act, which made some significant changes to the law.
A coalition of industry and public interest groups seized on some the report’s findings and contended that an emphasis on the total number of lawsuits and who filed them misses the point.
Internet Association President Michael Beckerman said patent troll lawsuits are particularly pernicious because they hit people, tech start-ups and businesses outside the technology sector.
“We’re focused on the PAEs because of the increasing number of the suits, it’s a larger number of the defendants, but also it’s who the victims are, ” he explained. “It’s the PAEs that are going after the grocers, that are going after various retail entities. They’re going after restaurants and charities, in some of the most egregious cases, that are hurting non-tech, non-Internet companies across the country and are in fact hurting consumers.”
Russ Merbeth, chief policy counsel for Intellectual Ventures, said the report confirms that the company’s contention that patent-assertion entities aren’t the problem. The company holds about 70,000 patents.
“What it tells you that at this point in time there is a whole lot more litigation between operating companies than there is being brought by patent monetization entities,” Merbeth said. “The number of lawsuits relative to the number of patents out there has remained flat over time. … There’s just not the level of increase in patent litigation that critics of patent assertion entities would have you believe.”
While the GAO is critical of software patent quality, Merbeth contends that policy makers need to be careful that they don’t throw out the patent baby with the bathwater.
“It’s a bad idea to tar and feather all software patents as poorly defined or overly broad,” he said. “There may be a number of software patents out there that are lousy, low quality, and maybe those ended up in the hands of those who are doing unsavory things with them … but I don’t think the report should lead anyone to conclude that all software patents are bad or patenting software is a bad idea.”
GAO releases tale of the tape on patent litigation
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