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01.15.17

Number of New Patent Cases in the US Fell 25% Last Year, Thanks in Part to the Demise of Software Patent Trolls

Posted in America, Courtroom, Patents at 11:29 am by Dr. Roy Schestowitz

The legal paper ‘industry’ is walking away, gradually

Moving paperwork

Summary: Litigation and prosecutions that rely on patents (failure to resolve disputes, e.g. by sharing ideas, out of court) is down very sharply, in part because firms that make nothing at all (just threaten and/or litigate) have been sinking after much-needed reform

IN ORDER to understand what goes on in the mysterious (or cryptic) world of patent trolls we often turn to IAM ‘magazine’, which is paid by some trolls to embellish or soften their image. We read IAM ‘magazine’ very critically and try to extract from it some morsels of information. The other day we saw IAM ‘magazine’ conflating patents with “markets” again, as if patents are products up on the shelf or something (to trolls they are). It was also writing about this patent troll which got fed by Stanford University, whose patents were derived from publicly-funded research. To quote some background to this:

WiLAN has stepped up its campaign against the growing personal digital assistant market filing six lawsuits before and after Christmas against a series of big tech companies including Amazon and HTC over patents that underpin Siri, the popular electronic assistant on Apple devices. The most recent case was filed on Tuesday against ZTE in district court in Delaware, bringing the total number of suits that the NPE’s subsidiary IPA Technologies has filed in this campaign to 11.

WiLAN acquired the patents in question in two tranches, including a package of nine grants in May 2016, from SRI International, a non-profit research institute which spun out of Stanford University more than 40 years ago. SRI began developing the technology for a voice-controlled electronic assistant following a grant from the US Defense Advanced Research Project Agency (DARPA), eventually setting up Siri Inc which was spun out as an independent entity in 2007 and was then bought by Apple in 2010.

We wrote about WiLAN many times before (6 years ago we named the person behind it, Jim Skippen). It’s regarded or understood to have become a pain in the bottom to a lot of Linux/Android OEMs, not just to companies like Apple. It’s a destructive entity which Canada should take shame — not pride — in.

The other day IAM also mentioned RPX, which is a massive troll that Microsoft joined 7 years ago. IAM wrote about it in the context of litigation decline — a subject which we covered here many times in the latter half of 2016. America Invents Act and PTAB had a lot to do with this decline, as IAM admits:

The headline numbers for the 2016 litigation year in the US were out last week and showed a big drop in the total number of new patent infringement cases. According to Unified Patents there were 4,382 new cases, a drop of almost 25% on the 2015 figure. That is the lowest level since 2011 when the America Invents Act (AIA) came into force and new joinder rules had a significant inflationary effect on litigation volume.

RPX also released some stats and included a numbers of interesting data points. Among them was a big fall in the number of NPE campaigns against companies with revenues of $50 billion or more. Those companies are, of course, typically among the most popular targets for licensing efforts but they’re also the ones most likely to fight back in long, drawn-out lawsuits.

RPX basically speaks of itself, as it tends to engulf and attack large entities. After Alice and some of the aforementioned reforms we don’t expect RPX to find quite the same level of ‘success’ (shakedown). In fact, like many other trolls we hope it will cease operations. We know for a fact that Intellectual Ventures is suffering and even laying off a lot of staff.

The patent microcosm, growingly irritated by the sharp drop in litigation, is already sucking up to Donald Trump, hoping that he will put someone corrupt like Randall R. Rader in charge, assuring regressions in law. On the other hand, Matt Levy, who opposes patent maximalism and calls for further patent reforms, has just published these suggestions to the Trump Administration, focusing in particular on patent trolls (a side effect or symptom of low patent quality):

What the new administration should be doing with patents

[...]

Continue to Fight Patent Trolls

It is true that patent troll litigation dropped in 2016, but according to a recent RPX report, nearly all of that drop is due to fewer lawsuits against very large, well-funded companies. Patent trolls seem to be shifting their focus to smaller businesses that can’t afford to defend themselves effectively. Trolls’ venue of choice continues to be the Eastern District of Texas, as I’ve written about a number of times.

A new paper by Brian Love and James Yoon confirms why this is true: patent trolls use the Eastern District of Texas (EDTX) because its procedures increase costs for defendants quickly. In fact, 90 percent of cases there are filed by patent assertion entities. The paper also shows that only 18 percent of EDTX cases have any local link to the original inventor, original patent owner, or the first named defendant. By comparison, nearly 88 percent of the cases filed in the Northern District of California (which includes Silicon Valley) have such a link to the district.

The reality is that we need venue reform. Congress needs to fix the patent venue statute so that patent owners can’t sue a company virtually anywhere. The evidence is simply undeniable that patent trolls are taking advantage of a court with overly friendly rules in order to extort money, and there’s no reason to allow this to continue any longer.

Do No Harm on Patentable Subject Matter

With recent Supreme Court decisions, there has been a lot of handwringing about the patentability of software, diagnostic methods, and certain biotech inventions. There have even been proposals to do away with the patent-eligibility requirement altogether.

Congress needs to let the law develop slowly. The courts are gradually coming to some reasonable interpretations based on previous case law, and that’s as it should be. There are a lot of stakeholders with competing interests, and the best way to develop this law is a bit at a time. Yes, it’s painfully slow, but it’s the way our legal system works.

These calls to “do away with the patent-eligibility requirement altogether,” (or at least weaken them) as Levy puts it, were often funded by companies like IBM and Microsoft, which paid a former USPTO Director (David Kappos) to become their lobbyist and undermine Alice, bringing back software patents in a crooked fashion that’s akin to bribery of officials.

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