Government report finds "patent troll" narrative not straightforward
Yesterday, the Government Accountability Office released a report on patent infringement litigation, but its findings didn't align precisely with what fighters of "patent trolls" might have been hoping to hear.
While the report did note that the number of patent infringement lawsuits increased sharply between 2010 and 2011 – up by a third, compared to only slight fluctuations over the previous decade – it also noted two points that attenuate the prevailing narrative from anti-troll groups, which holds that patent-holding companies that don't actually put their patents to use are running amok with unfair lawsuits.
Two points that jumped out from the report were:
1. Legislation is in part to blame for the increase in litigation.
Says the GAO:
Some stakeholders GAO interviewed said that the increase in 2011 was most likely influenced by the anticipation of changes in the 2011 Leahy-Smith America Invents Act (AIA), which made several significant changes to the US patent system, including limiting the number of defendants in a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit with multiple defendants to break the lawsuit into multiple lawsuits.2. While the number of overall defendants in patent infringement lawsuits increased by about 129 percent between 2007 and 2011,
These data also show that companies that make products brought most of the lawsuits and that nonpracticing entities (NPE) [aka "patent trolls"] brought about a fifth of all lawsuits.
This is not exactly the news that anti-troll groups want to hear. Groups such as the Electronic Frontier Foundation and the Applications Developers Alliance (the sponsor of our series on the patent reform debate) have argued that rampant patent trolls are terrorizing developers and small companies. As we have reported, that is certainly happening on some level, and supportive anecdotal evidence is not hard to find. However, the GAO's report suggests the majority of patent-infringement suits are actually brought by groups that legitimately use their patents for products, and that much of the increase in litigation is a result of government policy changes, and not necessarily emboldened trolls.
But the EFF and the ADA's points do hold when it comes to their chief area of interest: software. The GAO's report highlights that lawsuits involving software patents account for about 89 percent of the increase in defendants over the period of the study. And in software cases, which accounted for 65 percent of defendants between 2007 and 2011, trolls are very active. As Ars Technica has pointed out, other data has shown that trolls were responsible for about 61 percent of patent claims in 2012.
The GAO made some recommendations in its report, chief among them that the Patent Office work to eliminate bogus applications by matching trends in patent litigation to its internal examination data. Groups like the ADA have interpreted that as a signal to Congress to increase the urgency for patent reform. Jon Potter, the ADA's president, said in a statement:
We hope Congress will take note and enact reforms that will curb patent troll abuse, including a less expensive administrative alternative to costly legal battles and demand letter transparency improvements.
However, others say it's less important to focus on trolls and more important to focus on ensuring that patents meet a higher quality standard.
"We think the focus on patent monetization entities is obscuring the bigger point, which is the quality of the patents themselves," GAO's natural resources and environment-energy and science director Frank Rusco told Politico. (The story is behind a paywall, but it's mentioned in Politico's Morning Tech newsletter.) The report's recommendation, Rusco suggested, would help improve patent quality and analysis.
* Read our series on the patent reform debate.
[Illustration by Hallie Bateman]
* The PandoDaily series “Patent Troll Smackdown” is brought to you by the Application Developers Alliance. To join the fight against patent trolls and tell Congress that innovators need patent reform please visit devsbuild.it/fightpatenttrolls. (Sponsored message.)