Predicting Patent Litigation

Patent litigation is expensive.  As a result, many firms often engage in broad, costly searches in order to avoid suit.  Other firms apply the opposite strategy, ignoring patents entirely. 

In her new paper entitled Predicting Patent Litigation, Professor Colleen Chien addresses this systematic problem by examining the factors that lead patents to be litigated.  Professor Chien focuses not on patents' intrinsic characteristics, which have been previously studied, but rather on characteristics acquired after the patent is born, such as changes of ownership, continued investment in the patent, and citations to the patent. 

The results of her empirical assessment are striking: patents that end up in litigation possess markedly different acquired characteristics from patents that remain unlitigated.  Professor Chien uses these differences to offer a model for assessing which patents are more likely to end up in litigation based on the use of both intrinsic and acquired characteristics.

The complete paper is available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1911579

42 thoughts on “Predicting Patent Litigation

  1. This gambit you identify as “I’ll waive my hands”. It sounds attractive but what does it mean. Are you telling me to talk to your hand, or are you telling me to ignore your waving hands?

    Now me, I might be wavering but I’m definitely not waiving anything.

  2. What for basics is so basic that it needs no further word in support is not so for me, despite my 40 years in this game.

    It’s not so basic for me either, even after all those years of law school and despite a certain misguided fondness of my own for property law.

    I suspect he only goes by “basics” because he’s so bitter.

  3. in response to obvious BS

    Ah, the “I’ll waive my hands too” gambit. That always works. Nicely played, sir.

    Except, for a few things – like concepts that patents are property and property law is steeped in the desire to maximise alienability.

    Well, then, not so nicely played, sir.

    Have a nice day!

  4. Max, I don’t know about mandatory registration to obtain damages, but most damages require an actual notice of infringement. This raises another possibility.

    I haven’t read a case on this exact point, but I think such a notice could be deemed inadequate unless the notice identified the real party in interest. Why? Because the accused infringer has or should have a right to sue for a DJ of invalidity, and that requires an identification of the owner to do so.

    (If the case law were no so, an anonymous owner could arrange that the firm delivering the notice be located in a jurisdiction where the owner could not be sued. If the DJ action was then brought there, it would be dismissable because the patent owner could not be joined, and his joinder is mandatory.)

  5. … if you need me to show you citations, then you need to go back to law school.

    Ah, the “You’re obviously not smart enough to understand” gambit. That always works. Nicely played, sir.

    Yours appears to be touchy-feely wanna-be stuff. Or amm I reading you incorrectly?

    If calling “BS” in response to obvious BS is your idea of “touch-feely wanna-be,” then you are reading me just fine.

    Have a nice day!

  6. Lulz – 40 years in the game should teach you first that you don’t learn the basics from a blog page.

    I’m here to learn” – Not buying that schlock. Not an ounce of it.

  7. Emboldened by Leo, Max (who has not been to law school) politely asks basics for “citations”. What for basics is so basic that it needs no further word in support is not so for me, despite my 40 years in this game. I’m here to learn and, basics, you haven’t taught me anything yet. So far, all I have from you is “touchy-feely” impressions you have gained from law school, and you know, to be frank I think those impressions are mere “wanna-be stuff”.

  8. Mine are basics in patent and property law – if you need me to show you citations, then you need to go back to law school.

    Yours appears to be touchy-feely wanna-be stuff. Or amm I reading you incorrectly?

  9. Sorry, but I must have missed the citations and/or reasoning in support of your absurdly broad assertions. You show me yours and I’ll show you mine.

  10. Anything driving that opinion, be it ever so humble? Or do you merely like to say “Baloney” to something you might not like?

  11. Regarding 4, Ouch!

    I have been in such situations too many times. Way too many times.

    I had one GC ask me every time I urged a settlement, “Has the patent been tested in court?” W. T. F.? Really!?

    The lawsuits were predictable. 100% certain, in fact.

  12. This is a fallacious argument because the owner of the patent right has nothing to do with the granting of the patent right and the granting of the patent right is the only thing of concern with the Quid Pro Quo and the Constitutional tie-in to the “promoting of the progress.”

    Baloney.

    Property concerns then drive all legal considerations and alienability of property is the prime driver.

    More Baloney.

  13. but their work is nonetheless relevant to a relatively broad audience.

    The point is that the topic may be relevant, but their work may nonetheless not be.

    Do not confuse the two.

  14. Although I do sometimes summarize articles that folks have emailed me, in general I actively search out and write about papers on topics that are particularly relevant to the broader patent law community, such as Professor Chien’s work on predicting patent litigation. Readers may or may not agree with these authors’ conclusions, but their work is nonetheless relevant to a relatively broad audience. The purpose of the brief summaries of these articles is just to give a quick impression of what the piece is about; those who are interested will seek out the piece while those who are not will not.

  15. In what way am I ignoring or running roughshod? It might be obvious to you, but it isn’t to me. Am I now to be told that I should look up what “ignore” means or “roughshod” means, or are you going to be a bit more precise about where exactly I am in error?

    BTW: creative (not in Webster’s) use of “hallow” there, other than as a verb. Refreshing.

  16. Your mentioning it in the context you offered only obscures the issue.

    Your inference of “any way it can” also obscures the point that the law must balance and not run roughshod over other rights. Property rights are considered hallow in this country and ignoring the boundaries of those rights (even for noble purposes) is not to be countenanced.

    So the answer to your question is NO – do not mention if you are not going to stay within the proper confines.

  17. Can’t I mention the promotion of progress of useful arts except when I stay within the confines of the precise text of the Patents Clause? Congress is supposed to provide for the general welfare of the United States. Should it not then promote the progress, any way it can?

  18. which ought to be encouraged, to promote the progress.

    This is a fallacious argument because the owner of the patent right has nothing to do with the granting of the patent right and the granting of the patent right is the only thing of concern with the Quid Pro Quo and the Constitutional tie-in to the “promoting of the progress.”

    In other words, by the time the patent right is granted, the promoting of the progress has been achieved and it simply does not matter who owns the property rights thus achieved. Property concerns then drive all legal considerations and alienability of property is the prime driver.

  19. Misunderstanding here Nerd. Where I come from, it is normal to assign, with ownership of the patent, the right to sue for accrued damages.

    Where I come from, if the assignee neither includes such a term in the instrument of assignment, nor bothers to register its new title then when, years later, it wants to sue for infringement, it is going to get an unpleasant shock,

    But if it had registered title promptly after acquiring ownership, the party contemplating infringement would not even have dared to start infringing activity.

    Of course, if you are a troll, you want to stay submarine for as many years as it takes, till the patented technology has become ubiquitous.

    So, the question for you, my friend, is whether you think such submarine lurking is a good thing, which ought to be encouraged, to promote the progress.

  20. “… industry-specific dynamics influence the weights that should be allocated to different characteristics, and also potentially skew the results presented here.”

    Hence, the main problem with this paper. Predicting litigation, if possible, is best done on an industry-by-industry basis. (Pharma/medical devices versus, e.g., auto industry). Generalization is almost pointless. The idea that industry-specific traits “skew” the analysis should have been the eye opener for the author. Such dynamics do not not “skew” the analysis but rather should have dictated the analysis towards specific industries.

  21. Nice factors, but the info needed to address some of these factors are not readily obtainable by a law professor, except the drug info (e.g., via the Orange Book–that’s a suggestion for Colleen and other academics who seem to publish with an eye toward drumming up business for “high tech” consulting gigs). Law professors can do statistical analysis only on info to which they have access.

  22. Your proposal to restrict recovery of damages is problematic. Your proposal suggests that at least some prior owners cannot assign the rights to collect royalties (or “past due rent”) to future owners. Such an restriction of property rights, of course, would lower the value of the property at issue.

    As someone who provides patent clearance to American Corporations, you are presumably counseling clients who are fairly sophisticated in patent matters. As such, my guess is that at least some of your clients are patentees as well. I’m not sure your clients would want the value of their patent portfolios lowered.

  23. Huh? What do you mean “most patent information are forced to be announced by the USPTO”? The USPTO keeps track of (and makes publicly available) patent info the same way county assessors track (and makes publicly available) information about real property.

    How do you think real estate ownership info is recorded? Title recordation works the same way with real property as with patents.

    The real problem is that the author of the paper confuses who recordation is intended to protect. Recordation is intended to protect the title holder from the “bonafide purchaser problem,” not the accused infringer. As a so-called patent expert, the author should know better. Her confusion calls into question whether she should be teaching at a university level in the first place.

  24. “don’t they have who owns a property on record down at the courthouse?”

    Yes, but the owner of record can be a corporate entity such as an LLC, which itself has only an attorney as the agent of record. This is sometimes done to disguise the true ownership of a home (e.g. Steve Jobs apparently bought a house in Tennessee in order to get on the organ transplant list there, but the house was listed as owned by LCHG LLC).

    Another example: Real estate developers sometimes use a set of shell companies to disguise the fact that they are buying up all the property in an area.

    So people play the same games with real property records as they do with patent assignments.

  25. I hope this blog is not becoming a receptacle for academics to e-mail Dennis or Jason asking them to post recent scholarship or a vessel for professors to self-promote.

  26. I can suggest off the top of my head from the real world at least four vastly more significant idicia of risk for one or more patent suits than the indicia of this paper:

    1. Copying a successful product of a competitor for a commercial product of your own without checking for the patent coverage of that product and at least trying to “design around” any patented features or obtaining a license first.

    2. Launching a new product in a new and commerically important technology (like “smart phones”) with numerous features less than 20 years old and thus covered by numerous unexpired patents, potentially even some basic or pioneer patents.

    3. Aggresively entering the generic drugs business

    4. Rejecting a licensing offer from an individual or small entity patent application or patent owner but then subsequently commerically launching a product allegedly using that invention.

    [Plus perhaps [unproven] being a large multi-product business which has developed a reputation as an easy “mark” for fast fat settlement payoffs in response to patent troll suits.]

  27. “By requiring recordation of title and/or licensing info for all patents, the author is effectively requiring weak patentees to paint a target on themselves. ”

    In other words, they might stop trying to set up shell corps to troll with?

    “I do not see the author volunteering to publish the address of her real estate holdings, e.g., home address, to strangers, i.e., members of the public.”

    Not that your analogy is relevant in the least, but don’t they have who owns a property on record down at the courthouse? Can you not obtain that?

  28. Eagerly, as one who routinely provides patent clearance opinions to American corporate clients, I scanned this Paper for material of interest. I was amused to read that patents kept in force (by timely payment of maintenance fees) are more likely to be litigated than those not kept in force.

    Then, on page 44, I found:

    “The risk associated with an individual patent depends not only on the patent itself and its traits but also the patent owner and the eventual owner’s willingness to litigate the patent”

    For me and my client, this is nothing new. But I welcome the Paper all the same, for the reason given in it, that a public Register of Patents which more often reveals the party of interest behind each issued patent will foster more confident investment in technological innovation, and so more effectively promote the progress of useful arts. You can’t force them, but it wouldn’t take much in the way of sticks or carrots, to encourage owners to incline more towards registering their title. How about restricting recovery of damages to the period when the Plaintiff was also Registered Proprietor?

  29. You see I know when the Political Pundit said the usual keep your friends close, and keep your Enemies closer. We all know who he was referring to when he gave that position to ahem! And I know that is a reason to be fighting in Congress. But you see that is just an excuse. Like taxes and oil,ideologues will fight over personal affronts more than what is important.. like Family. But Family is different. The Family you are holding up is a country.
    But I know that what was Mine was stolen. I know who is responsible. I know who the “Woman” is that is stealing from me. So I suggest all that Hot AIR may be better well blown out by honesty. I won’t say all is forgiven, but you may be surprised by what is expected. And that goes for all of you. And you D.E. you can hold your breath and stamp your feet just like the little one used to. And maybe the brittleness you offend people with will break.. and you’ll still be in the same position but broken. I know you took sides. Shame on you. But You’ll carry that in “whatever” you attempt. So as far as Family.. I don’t have any. And I never will again. But whether You want a monster enemy or just someone that you once knew and hurt….. that’s up to you.

  30. Please note that most patent information are forced to be announced by USPTO. In this case, I don’t think any same standard existing between patent and estate.

  31. Why is it “mean” to hold her to the same standard she proposes for others? Patents, in case you did not know, are a form of property whose title may be recorded, just like real estate. If she wants others to volunteer info to the public about what they own or rent, she should not be surprised or offended when other ask her to go first.

    Perhaps you should ask why she was “mean” first.

  32. to put yourself in her shoes, would you like to volunteer to the public your home address, email…etc.? I seriously doubt! Even though you see points you have doubts with, she still gets her freedom to say whatever she wants to say and you (as a bystander) may also deliver your opinions toward her works. What you may not do in this public area is to attack others in mean words.

  33. Inane paper.

    Of course a patent holder who intends to sue will do things differently from those who don’t. No sane patentee will sue an accused infringer without trying to contact the accused infringer ahead of time to work out a deal to avoid court. Patentees do not want to spend money on litigation anymore than accused infringers.

    If the author want to find a predictive “acquired characteristic” with 100% accuracy, just look to court records to see whether anyone actually files suit. If the author is so worried about who own patents involved in litigation, she should be reminded thatpatent suits still require identification of the “real party in interest.”

    The author is absolutely wrong when she states “if patents provide the right to exclude, the public is entitled to know who might do the excluding.” Trespassers only have to know that they do not own the property at issue in order to trespass. It does not matter who owns the property, just as long as the trespasser has actual or constructive knowledge that s/he does not.

    By requiring recordation of title and/or licensing info for all patents, the author is effectively requiring weak patentees to paint a target on themselves. I do not see the author volunteering to publish the address of her real estate holdings, e.g., home address, to strangers, i.e., members of the public.

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