Public attention is increasingly focused on the phenomenon of patent monetization entities. Known colloquially as “patent trolls,” these entities concentrate on generating income by licensing or litigating patents, rather than by producing an actual product.
In an effort to better understand the nature of patent monetization, Congress directed the nonpartisan Government Accountability Office (“GAO”) to study “the consequences of patent infringement lawsuits brought by non-practicing entities,” or those who do not make products. The directive was passed as part of the 2011 patent reform legislation: the America Invents Act. At the request of the GAO, two of the authors provided data on patent monetization entities using a database from Lex Machina, a data collection organization.
The GAO requested production and coding of a random sample consisting of one hundred patent infringement cases filed each year from 2007 to 2011, for a total of five hundred cases. Lex Machina co-authors Sara Jeruss and Joshua Walker were joined by Professor Robin Feldman of UC Hastings, College of the Law to code the five hundred cases in order to establish the types of entities involved in each of the lawsuits and to examine additional details of the suits. The GAO requested only the coded data without analysis, and the authors provided this with the understanding that they would publish their own analysis separate from the GAO report.
Given that one hundred cases per year is a small sample, we were curious to see what the data from the full set of cases would look like. Would the dramatic rise in litigation by patent monetization entities hold true when we looked at all of them? Would enough of the cases reach definitive outcomes that we could form definitive conclusions about case outcomes? How would passage of the America Invents Act, which included provisions intended to reduce the amount of litigation by monetization entities, affect the picture?
In addition to these questions, we also looked at the history of the patents asserted in each litigation. What could we conclude about the effects of monetization by looking at the trail of each patent?
To answer these questions, we looked at all of the patent litigations filed in four years: 2007, 2008, 2011, and 2012. This involved analyzing roughly 13,000 cases and almost 30,000 patents asserted in those cases. In this process, we were able to identify almost 99% of the entities in our dataset.
Observations and conclusions are described below. In particular, we offer a few observations from a case study of selected patent categories that are being asserted in the smart-phone wars.