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Sharp Decline in US Patent Litigation so far in 2014


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: March 10, 2014 @ 5:08 pm
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According to data from Lex Machina, there has been a sharp decline in the number of patent litigation case filings so far in 2014. The obvious question this leads to is whether the patent litigation centric patent reforms presenting pending in the Congress are required if the number of patent infringement cases being brought is declining.

In January 2013, there were 490 new patent complaints filed. The number of new patent cases filed in January 2014 was 322. This represents a 34.3% drop in the number of new patent filings year to year, and represents the lowest number of new patent litigations since October 2011. See Patent Case Filings Drop Sharply in January to 322.

A source familiar with Lex Machina’s data tells me that the number of new patent lawsuits filed in February 2014 was also quite lower than during February 2013. During February 2013, according to Lex Machina data there were 548 new patent cases filed. The number of new patent cases filed during February 2014 was 456, which represents a decline of 16.8% year to year.

During the first two months of 2013 a total of 1,038 patent cases were filed, according to Lex Machina data, while the number of patent cases filed during the first to months of 2014 was just 778. This represents a decline of 25%.

It is a little early to tell whether this is a sustainable trend, but at the very least this has to raise significant questions about whether the current patent legislation pending in the United States Senate is truly necessary. The currently pending patent legislation, which as already been approved by the United States House of Representatives, nearly exclusively relates to alleged reforms of the patent litigation process.

This gives new credence to the position of the AIPLA as explained by Todd Dickinson when he testified on the Hill about patent reform in December 2013. Acknowledging that there are some studies that reach the conclusion that there is a problem with increasing patent litigation Dickinson explained in prepared remarks: “What is still under serious debate is how well the available data supports the conclusions of these studies, which are often based on confidential information and surveys.”

Dickinson also pointed out that the relatively new post-grant proceedings ushered in by the America Invents Act (AIA) were “are expected to decrease abusive patent litigation practices by reducing the issuance of low quality patents and by providing a lower-cost administrative procedure for challenging issued patents.” This lead the AIPLA, via Dickinson, to tell Congress: “It may well be premature to conclude that they are not doing the job.

This new data from Lex Machina supports the conclusion reached by the AIPLA. It is simply too early to know what the overall impact of the AIA will be. As a result, more patent legislation at this point is not warranted. It is particularly not justified given that the Government Accountability Office has concluded that there is no evidence of a patent litigation problem and that 80% of cases brought are brought by manufacturing companies. See GAO Unmasks Mythical Patent Troll Problem and GAO Report Finds No NPE Patent Litigation Crisis.

If you listen to those who want more reform you would mistakenly conclude that abusive litigation brought by unscrupulous actors (i.e., patent trolls) makes up 80% or more of the dockets, but the statistics tell a different story and now it seems patent filings are dropping.

For more on pending patent legislation please see:

 

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

10 comments
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  1. Jeez, I can’t imagine why!

  2. Gene,

    No doubt that the promoters of patent deform will take the position that if the mere threat of new legislation regarding abusive patent litigation has served to sharply reduce the amount of patent cases being filed, then just imagine the reduction when actual “reform” is passed! I know I’m being cynical but I recently went to Google News and entered the term “patent” (not patent reform or patent troll or patent infringement) and the overwhelming majority of the stories that were returned all dealt with this so-called “patent abuse problem” and the efforts in Congress to rein in this “problem”. When those that push the patent reform agenda get so much coverage in the press, I greatly fear for rights of inventors.

  3. And why do we need patents then ?
    To subsidize USPTO and patent attorneys ?
    thanks but no thanks

  4. Angry dude-

    Are you kidding? Patents are essential to encourage investment that enables innovation. No one in their right mind would spend millions, or in some cases hundreds of millions, only to donate the work to the public with copying by free riders.

    -Gene

  5. Gene,

    unfortunately, very unfortunately, I am not kidding

    what used to be true 10 even 5 years ago is not true anymore

    patenting nowaday is giving away valuable technical details in exchange for nothing (I am talking about valid patents, of course)

    trade secrets are much better choice for anything that can be kept a trade secret for some period of time
    (obviously something like kitchen utensil or garden tool cant’ be kept a trade secret for more than few hours)

  6. Alas, as much as I am an advocate for the patent system, angry dude has a very valid point.

    To my clients, one must consider the Trade Secret / PUR alternative route. I will note (strongly) that internal documentation cannot be lessened whatsoever as we have not yet witnessed court rulings as to any level of sufficiency for meeting the sui genereis, near patent, new right of PUR. But clearly, we have ushered in an era in which the Quid obtained is so much less certain that alternative paths must be considered. Combine that with the potential (unforeseen but still very real) benefits of PUR in that PUR is a submarine tactic** which works against the patent system – at potential great expense to those that do still choose to use the patent system, and I have a duty to counsel my clients to at least consider this path.

    ** The submarine effect stems from the fact that this un-shared ‘right’ will only come into effect after someone else spends the time, energy and money to obtain a patent, and then only after that person comes after you to enforce their patent will they discover that you are inoculated from their right to exclude. Not only that, but your customers are likewise inoculated, thus paving an easy and wide open path to a secondary market free from any reach of the person (entity) that did decide to share and obtain a patent. Clearly there is some risk, given that PUR only attaches under certain conditions, but if your technology can be “in the public” while still protected from reverse engineering for a year, then the power of PUR may be an attractive option.

  7. angry dude-

    You put your finger on something important, which is the disclosure for the benefit of society without any idea whether that disclosure will be rewarded with a patent.

    The better approach would be to file a patent application and request non-publication of the application. That way if no patent is granted everything remains secret. If rights are obtained then there will be a disclosure. If more people were doing that, which I think they should, things would change in a hurry. Yes, this waives foreign rights, but for many inventions US rights are what matter and some patent protection in the US if available would be beneficial. If no US rights can be obtained then a trade secret remains.

    -Gene

  8. Patent litigation declines in the Federal Court doesn’t mean that there is a decline in patent disputes overall. If fact, there may be an increase patent litigation. Disputes are migrating to the Inter Partes Review at the PTAB in Droves.

    Fancy charts and graphs here: http://www.preferredembodiment.com/1/post/2014/03/patent-litigation-declining-where-are-they-going-the-ptab.html

  9. Reed

    Unfortunately Inter Parte Reviews don’t pay legal bills much less the damages for patent infringement

  10. Reed,

    Nice graphs – can you add one? Can you show a graph of all disputes (combining the two graphs into one picture)?

    Thanks