There is no doubt about it. Even a casual glance at patent litigation statistics shows a sharp increase in the number of patent cases being initiated over the last several years. For example, see the following three charts. The data for which comes from the Office of Administrative of the United States Courts, and dates back to research I initially started in 1997 while working on my Master’s thesis, which dealt with patent litigation and the use of alternative dispute resolution.
Interestingly, however, where the real growth in patent litigation appears to be is before trial. Between 1980 and 2011 the number of patent cases reaching trial ranged between a low of 83 (in both FY 2001 and FY 2003) and a high of 114 (in FY 2008). Lest you believe this is out of the ordinary, in FY 1982 there were 106 trials and in FY 1983 there were 112 trials. Thus, for the time period from 1980 to 2011 the number of trials remained remarkably constant, averaging 100.03 trials per year. In FY 2012 the number of trials spiked to 139. Even the number of patent trials in FY 2012 is not extraordinarily high given the steep rise in number of lawsuits initiated in recent years. Remember, when there were only approximately 800 patent litigations initiated there were still more or less 100 patent trials a year.
So what explains the significant uptick in the number of patent litigations initiated? First, the prohibition against suing numerous defendants in a single case ushered in by the America Invents Act (AIA) is to blame for at least a portion of the increase that occurs after September 16, 2011. Additionally, the increase can in part be explained by the fact that there are more patents being issued. Of course, this has been a trend for years though. See chart below.
Still, there seems to be something more happening in recent years to account for the increase in number of patent litigations commenced. Many blame patent assertion entities, PAEs, which to some is synonymous with the pejorative term “patent troll.” Of course, it isn’t as simple as many in the popular press would like you to believe.
There is nothing inherently wrong or evil about enforcing patent rights that are being infringed. Patents are granted by the United States Patent and Trademark Office and give the owner the right to exclude. It cannot be illegal, immoral or otherwise inappropriate to exercise a right duly granted and recognized. Thus, there is nothing inherently wrong, immoral or evil about enforcement activities brought by a patent assertion entity (PAE) or patent litigator representing a patent owner on a contingency basis. The focus cannot be on those who engage in justified assertion. Frankly, if anything there is an extreme under-assertion of patent rights owing to the fact that so many patent owners who have rights that are being infringed cannot afford the exorbitant cost associated with pursuing infringers. That is why many are again working to attempt to create a patent small claims process.
As far as I am concerned the problem is not generically with patent assertion entities, or even the likes of entities like Acacia Research, or with patent litigators such as Ray Niro. Both engage in comprehensive due diligence before getting involved with a patent owner, turning away more than 99% of what is presented to them for evaluation. Actors like Acacia and Niro seek to enforce good patents that are widely being infringed. Somewhere along the way society has chosen to vilify them and the patent owners they represent as if striving to achieve a patent on an innovation of fundamental importance is evil incarnate. What a sad commentary on the cluelessness of the masses.
Fostering and encouraging fundamentally important innovations is exactly what the patent system is supposed to be doing. Crying, complaining or whining when it happens is ridiculous and practically un-American. Patents are grounded in our Constitution and were championed by none other than President George Washington, President James Madison and President Abraham Lincoln. See Celebrating Presidents. As a rule of thumb when folks challenge the believes of these most esteemed leaders I am immediately suspect, particularly when they seek to interject moral or intellectual superiority into the discussion. They would actually have you believe that their anti-patent sentiments are enlightened and far more intelligent. So does that mean Washington, Madison and Lincoln were mental midgets that didn’t understand basic concepts of government and commerce? Ridiculous.
As with so many things in life, the problem is with the bad actors. The trouble is that it is difficult to identify exactly who those bad actors really are in many cases. This is partly because of clever abuse of the system, but mainly because defendants when sued for millions of dollars greatly prefer opting for an extortion-like settlement of $25,000 to $50,000 when it is offered. Increasingly this type of extortion-like behavior is being recognized by the district courts and the Federal Circuit, but the system is not set up to suppose there will be bad actors manipulating the litigation process in a shake-down that would make Al Capone blush.
For more on patent litigation abuse please see: Chief Judge Rader Speaks Out About Patent Litigation Abuse and IBM Chief Patent Counsel on Patent Litigation Reform.