Patent Litigation Should be Flat for 2007; But are the Number of Defendants Rising?
After peaking in 2004, with 3,075 patent cases, patent litigation took a dip in 2005 (2,720 cases), only to tick up slightly in 2006 (2,830 cases). It's looking like 2007 will be a flat year for patent litigation, with the likelihood that the number of cases will dip from 2006.
So far, according to data obtained from Justia, 2007 has seen 2,577 patent-related cases filed in the district courts around the United States. Broken down by month, the filings appear as follows:
- January - 201 complaints filed
- February - 181 complaints filed
- March - 262 complaints filed
- April - 219 complaints filed
- May - 265 complaints filed
- June - 280 complaints filed
- July - 225 complaints filed
- August - 222 complaints filed
- September - 214 complaints filed
- October - 288 complaints filed
- November - 220 complaints filed
One of the patent litigation trends that doesn't receive much coverage is the number of defendants that are named per case. While I haven't seen any hard data on this, it appears that the number of defendants per case may be rising.
Anecdotally, two recent cases illustrate this phenomenon. The first, filed in the ED Tex. on Nov. 27, is Harthcock v. MIPS Technologies Inc et al. (2:2007-cv-00515), where 91 defendants were named. It appears that the patentee sued the allegedly infringing manufacturer, along with every single one of the manufacturer's customers, and every single one of the manufacturer's customers' retailers. According to the Patent Troll Tracker, counting each defendant separately across all cases, the filings on Nov. 27 resulted in 113 new patent infringement suits in the ED Tex. This single day resulted in more companies being sued than have been sued in all of 2007 so far in Detroit, Dallas, ED VA, Minnesota, Boston, or Philadelphia.
The second is Technology Patents LLC v. Deutsche Telekom AG et al. (8:2007-cv-03012), filed on Nov. 8 in the District Court for the District of Maryland, in which 131 defendants were named in a lawsuit directed to SMS technology (see more from the Maryland IP Law Blog here). Considering the defendants individually, these two cases alone represent almost 10% of all patent litigation filed for the entire U.S. (I realize there are statistical anomalies in this approach, but you get the point).
While this is not a new phenomenon, it appears that defendant "clustering" should increase in the coming year, especially in light of the CAFC's Sandisk ruling that expanded the scope of DJ actions. In the case of non-practicing entities, the earlier practice of cherry-picking defendants one-by-one has now become increasingly risky. Also, as Jim Skippen, chief executive of Wi-LAN commented recently, there are "significant economies of scale" in suing multiple defendants.
See 271 Blog "Patent Litigation Statistics" (link)See 271 Blog post on PWC Patent Litigation Survey (link)
See also 271 Blog post: Kesan & Ball, "How Are Patent Cases Resolved? An Empirical Examination of the Adjudication and Settlement of Patent Disputes" (link)
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The man who rushes into a theatre auditorium shouting "Fire, fire, fire" when there isn't one is a man who is (no doubt about it)harming society. So too is a man who owns a patent, probably invalid, who nevertheless appears, years after "infringement" started, yelling to an entire industry "You infringe, you infringe, you infringe". Why is America so in thrall to the blackmailing owners of bad patents? Just because such owners have been(up to now) predominantly of US nationality is no guarantee that they always will be. If the patent issued by the USPTO is good, its owner should be willing to bet, at some financial risk to itself (or its insurer), that its claim is both valid and infringed. If it's not willing so to bet, then there's something wrong with the claim. One way to get settlement, instead of trials, is to increase legal uncertainty and pump the trial winner's bounty up ludicrously high. Another, more logical, is to increase legal certainty and render the consequences of defeat at trial more financially onerous. I know which makes more sense to me.
"Why is America so in thrall to the blackmailing owners of bad patents? Just because such owners have been(up to now) predominantly of US nationality is no guarantee that they always will be."
You've hit on a good point - the Patent Office is no longer capable of well-performing its Constitutionally mandated function, and it issues plenty of bad patents.
But is that a good reason to punish inventors? Wouldn't it be better to fix the Patent Office (i.e. "Patent Office reform")? Or are you now tasking inventors with examining their own applications? Why on earth do inventors bring their applications to the USPTO?
Our patent system is very different from that of Europe and of Japan in that an independent inventor with an idea *can* stand up to a large corporation. I've been wondering how much of a role this plays in making Americans (and American corporations) the most innovative people in the world.... And as much as non-innovative corporations like Microsoft may not like it, our system may *by necessity* keep healthy corporations on their toes....
To compare domestic and foreign innovation, see here:
http://corporate.britannica.com/press/inventions.html
In Europe (and in Japan), it's impossible for independent inventors to do what they do here with patents (e.g. because of post-grant opposition, incredibly high barriers-to-entry for the patent system, etc.)... but in Europe (and in Japan), the elimination of the independent inventor from the corporate decision-making landscape *hasn't* made large corporations any more innovative, and perhaps it has had a contrary effect (where the corporations can sit confortably relying on the EU's VAT).
Never have I read so much wishful thinking, as in that last comment. I can't comment on Asia, but independent inventors in Europe have much lower "entry costs" than in USA, and post-issue opposition is not what kills them off. The problem for the independent inventors is that Europe doesn't impose on corporate infringers the huge "damages" awards that companies in USA fear. And European courts revoke bad claims. So companies in Europe don't fear infringing little guy's issued patent (they'll maybe prove it invalid too). So little guy can't find investors willing to finance his intimidation. Now, whether Europe is better or worse off as a consequence of these public policy considerations in Europe: that we can usefully debate.
"...I can't comment on Asia, but independent inventors in Europe have much lower "entry costs" than in USA,"
Nope. See e.g.:
http://www.cerna.ensmp.fr/Documents/FL-Berkeley2006.pdf
http://www.solvay.edu/EN/Research/Bernheim/documents/WP06-002BVPetDF.pdf
From the second link:
"The USPTO offers a 50% reduction in fees for small entities."
"Chart 4 illustrates the cost differences across the three patent systems. The European patenting cost is clearly higher than in the US or in Japan. This is mainly due to translation and validation costs as well as to the renewal fees that the EPO applicant has to fulfil. The more the number of designated states for protection, the more expensive the patent is, as both renewal fees, translation costs, validation fees and external services increase with the number of countries. A European patent that is renewed for 20 years in 3 (13) EPC Member states costs more than EUR 43,000 (129,000), against about EUR 16,000 and EUR 21,000 for the US patent system and the Japanese patent system, respectively."
Ah, the translation cost point. I concede that I was contemplating the sort of invention a small entity would come up with, such as a widget, and not a pharmaceutical. The small entity, in Europe, would file at the EPO with say ten pages and ten claims, and validate (like Toyota Motor) in Germany and nowhere else or, if bolder, in DE, FR and GB. For his filing in USA, ten pages and ten claims is no entry ticket. It seems that you need 50 pages and 50 claims for credibility and enforceability. Translators all over Europe drink every day to the health of Applicants from USA, who obligingly go on writing 40 pages of boilerplate and paying for its translation into a slew of European languages where they are never ever going to be enforcing their patents. I concede the comparative cost data, and that I was viewing entry costs from my viewpoint here in Europe.
To NIGRA, two up, there's the question: what is the "Point of Entry"? In Europe it is the WO/A publication. That's when Inventor's scope of protection is settled (by the disclosure content of the app as filed). So, that's when Inventor can first succeed in attracting investors (or not). For owners of patents in Europe, defending validity against EPO Exrs pre-issue is one thing. defending against prior art attacks after issue, coming in from accused infringers, is quite another thing, and often a tougher thing. In Europe, innovative medical doctors do lucrative deals with medical device makers (usually American) soon after their WO publication. The Americans are usually quicker to spot potentially dangerous patent positions that their competitors might acquire, and quicker to neutralise them, by acquiring them themselves. The way I see it, whenever the US common law legal system runs to excess (litigation costs), a glance back at the continental European civil law system (no Binding Precedent) brings a bit of proportionality back to the landscape.
"To NI[P]RA, two up, there's the question: what is the "Point of Entry"?"
When an inventor comes to an attorney, the attorney advises the client of the "total cost of ownership" for the patent (filing/translation, examination, issuance/validation, maintenance/annuity). That determines whether the inventor will enter the process. (To paraphrase one more famous than I, you don't build a tower unless you consider the cost of completing it; otherwise when you have laid the foundation and are unable to finish it, others will begin to ridicule you.)
The cost to get to the WO publication stage means next to nothing, assuming you have no investors. Additionally, you can get to the same stage (publication) in the U.S. much more cheaply (just over $500 for a small entity, with another $1000 due at issuance) than in P.C.T.:
http://www.uspto.gov/web/offices/pac/dapps/pct/fees.htm
The question is why USPTO management is trying to *increase* the barriers to entry (for all applicants) to the U.S. patent system. I maintain that can't be good for U.S. competitiveness (though it will be good for Microsoft's competitiveness and/or anticompetitiveness) - and most fiscal conservatives would say the same once they look to Europe for the comparison. (P.S. I'm not trying to badmouth Europe because of its different public policy consideration. In many ways, the European approach to life is less pandering to the rich, which is good, and more "socialized", which isn't necessarily a bad thing. But that same socialization may (and I believe does) limit innovation (consider the old USSR for example).
The folks in Europe perhaps can't imagine what it's like to be a Google or a Boeing (when they were relatively small, before the 747) and risk everything for a piece of the American pie... the rewards are (or at least have been in the past) great. [Consequently, Airbus should love U.S. patent reform.]
As to "Cost of Entry" and building towers, how about the cost of securing unassailable title to the plot of land (next to Central Park perhaps) on which your dream tower is to be built? In a First to File patent system, you secure title by filing a patent application. Once you are A published, you are unassailable because everybody who filed before you did is also by then A-published (unless your invention is in atomic bomb widgeting). Then you talk to investors. No? You don't have to build the tower all by yourself, out of your personal bank account, do you? Don't understand this "Total Cost of Ownership" line that you serve up to inventors. Where did you get that from?
"Don't understand this "Total Cost of Ownership" line that you serve up to inventors. Where did you get that from?"
Then you don't understand the chances of an independent inventor actually finding investors. It isn't 50%, or even 10%, or even 5%. And even if you find investors, the battle of bringing a product to market isn't won yet just by finding investors.
"You don't have to build the tower all by yourself, out of your personal bank account, do you?"
Yep, that's what 95%+ of independent inventors end up doing. (But the lucky few will say the risk was worth it, and the unlucky many will often take the risk again for another chance at the slice of the American pie.)
Unfortunately, I don't think we're getting anywhere, so I'll have to stop.
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