01.17.15

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Strategy of Litigation With Patents Has Collapsed Since SCOTUS Ruling in Alice v. CLS Bank

Posted in Patents at 4:42 pm by Dr. Roy Schestowitz

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.” ~Upton Sinclair

Two monkeys

Summary: The latest figures from Lex Machina show a massive decrease (-18%) in patent litigation last month; lawyers look for ways to spin the data in their favour

Patent lawyers with their monkey business can lie all they want, but the matter of fact is — and the numbers speak for themselves — patent lawyers would be better off rewriting their resume/curriculum vitae (not the history of software patents and of Alice v. CLS Bank) and seek another type of job. The parasites are on their way out and their business is decreasing, making this space more crowded and more competitive. It will be getting hard to get away with a patent on [action] “over the Internet” or [action] “using a computer” because guidelines are being revised and junior patent examiners will grow into them, applying a stricter test of validity before endorsing something; a lot of applications will be thrown in the bin very quickly. The same goes for judges, who will phase in a better set of standards, potentially scaring everyone who wields patents in the courtroom (and can therefore have them altogether invalidated).

“It will be getting hard to get away with a patent on [action] “over the Internet” or [action] “using a computer” because guidelines are being revised and junior patent examiners will grow into them, applying a stricter test of validity before endorsing something; a lot of applications will be thrown in the bin very quickly.”Lex Machina was mentioned here years ago and Lex Machina continues to do a good job tracking patent litigation from a sceptical eye. The latest Lex Machina report says that “2014 has ended, though perhaps not yet for many court clerks who will continue entering paperwork from their backlog for another week or so, if history is a guide. These numbers are therefore preliminary and can be expected to rise slightly as the backlog is processed.

“441 new patent cases were filed in December, rising 32% from November 2014’s total of 335. These filings brought the total for 2014 to 5,010 new cases, an 18% decrease from the 6,083 new cases filed in 2013.”

In other words, placing some emphasis on the latter figure, for the second month in a row (if not for longer than this), post-Alice v. CLS Bank we see a very statistically-significant decrease in patent litigation. Steph from IP Troll Tracker said that even the pro-patents folks, “Dennis Crouch over at Patently-O and I AM reported the same thing, citing Lex’s numbers because why not? A 40% reduction in patent filings sounds all nice-like.”

Steph adds: “As I pointed out on Twitter, it’s not so much the number of suits that’s problematic, it’s who sues who and what it costs to defend. If there were only three patent troll lawsuits in a single year, but those lawsuits shut down three companies, if those three lawsuits cost hundreds of people their jobs because company owners were forced to deflect funds to lawyers (the only true winners in any litigation), would we be better or worse off?”

Well, all in all, given the size of the sample set (hundreds), it is safe to assert that the decrease is real. One could argue about the exact number and the way litigation is counted, but the statistically-significant figures are enough to support the conclusion and they apply the same definition to 2013 and 2014 litigations. The figures were assembled by a group that is academic (subjected to scrutiny from peers), not a bunch of software patents boosters or opponents. They profit from good research, not from selling an agenda of themselves (or a client).

Matt Levy, a lawyer who likes to focus on patent trolls, decided to spin it the other way, trying to (mis)use the aforementioned study not to compare year-to-year trends (as should be done), but month-to-month over consecutive months that are inherently different (December has holidays). He said: “According to Lex Machina’s data, there were 441 patent litigation filings in December 2014. The previous month, there were 335. That’s an increase of 32%!”

Complete misinterpretation of what was shown. That’s like comparing the sales of Christmas trees in November to the sales of Christmas trees in December. But nice try, Mr. Levy.

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