Guest Post: Patent Troll Myths

(Professor Michael Risch of the Villanova University School of Law is a prolific scholar who is fascinated by patent trolls.  Given his interest in this subject, I invited him to write a short post on his current project examining conventional beliefs about patent trolls. – JAR) 

Guest Post by Michael Risch

Few players in the patent system (maybe none) are more hated than patent trolls. There is a lot of debate about what it means to be a patent troll, but the commonly accepted definition is a plaintiff that asserts patents (usually acquired ones) but makes no product. More accurate terms are non-practicing entities (NPEs) or patent assertion entities (PAEs), but I’ll keep using trolls here if only to be mainstream.

Commentators (including me) have intuitions about the types of patents that trolls assert; the media is filled with claims. The problem with these intuitions is that they are all anecdotal – we think we know what we know from the limited reporting we see about cases that hit the news. But trolls have been around for a long time (two of the entities I studied brought their first suit in 1986) and they file a lot of lawsuits.

I wanted more evidence to support my intuitions, so I set out to comprehensively study a group of trolls – namely the ten most litigious trolls. I don’t have space here to discuss why I chose this group, but the paper discusses my reasons as well as why I believe that the findings here apply to less litigious trolls. In all, I studied 10 trolls, about 1000 cases, and about 350 patents over a 23 year period. The full paper examines the type of patents, case outcomes, patent quality, venture funding, and other aspects of the cases and patents.

It turns out that most of what I thought about trolls – good or bad – was wrong.  But first, one area that fits conventional wisdom: the moniker “troll” is accurate to the extent that it means waiting before asserting a patent. The patents I studied were asserted for the first time on average more than seven years after issuance. That’s a lot of time for an industry to develop. That said, delay decreased as issue dates increased. In other words, older patents sat on the shelf much longer than new patents. Patents issuing in 2006 were asserted on average within 2 years. This could mean that trolls are acting more quickly, or it could be what we call a “selection effect” – only some recent patents were asserted early and there is a large group of patents yet to be asserted; 15 years from now, it may be that the average delay for patents issuing in 2006 is seven years, though I doubt it.

Perhaps the biggest surprise in the study was the provenance of patents. I thought most patents came from failed startups. While such patents were represented (about 14% of initial assignees were defunct), most came from companies still in business in 2010. Indeed, more than a third of the initial assignees were publicly traded, a subsidiary of a public company, or venture capital recipients. Only 21% were patent assertion entities at the time the patent issued, and many of those were inventor owned companies (like Katz) rather than acquisition entities (like Acacia). Further, about 26% of the patents were inventor owned, and a comparison with the percentage of individual inventors represented in litigation generally shows that trolls serve an important role in enforcing individual inventor patents. Of course, if you think individuals have no place in the patent system, this is not a good thing.

Another area of surprise was patent quality. While trolls almost never won their cases if they went to judgment (only three cases led to an infringement finding on the merits), the percentage of patents invalidated on the merits was lower than I expected. A total of 43 patents had validity adjudicated on the merits. Only 4 were found completely valid. Another 23 were held completely invalid, and the rest were partially valid. Thus, just over half were invalidated. This sounds high, and it is—but consider that most of these cases involve a group of related patents that stand or fall together. When viewed on a case by case basis, as most other studies do, 13 cases out of 46 cases that reached a final judgment (28%) fully invalidated a patent. Compare this with a study of all patent cases filed in 1995, 1997 and 2000, which found that 118 out of 584 summary judgment or trial rulings (20%) invalidated a patent. Viewed this way, the invalidation rate for patent troll cases is not that much higher than patent cases in general. The quality is worse, but not that much worse (and as discussed in the paper, methodology differences may mean that the difference is smaller than 8%). Of course, it is more costly to defend against multiple related patents, so litigation strategies still have a social cost.

These are just a few of the findings. A full draft of the paper, called Patent Troll Myths, is available on SSRN  and will be published next year in the Seton Hall Law Review. I am also planning a followup that looks more closely at outcomes and patent quality over time. Comments are appreciated.

83 thoughts on “Guest Post: Patent Troll Myths

  1. But, I agree that many are invalided only on the merits of the case because of overly broad claims, something most trolls go for. Many companies will settle out of court because it is not worth the cost and damage to business, even if you are right. So, the patent and its crazy claims stays “armed” for another victim.
    The broader question continues to be why so many patents are granted that should not be. By that I mean that someone vested in the art would look at it and say it is not novel or inventive and in many cases is either covered by prior art or is just reapplication of something applied in a different area, something the Supreme Court finally invalidated. That and overly broad claims make up way too many patents. The reasons are simple, although the solutions are not: too many patents to be examined so the examination is rushed, and the examiners at PTO often have no idea about the specific area of the patent and so have to believe the applicant on prior art and novelty of the invention. Their theory is that if wrong, it will get sorted out in the courts or PTO hearings, but that is what causes so much grief as it is expensive and can be harmful to business (investors, sales, being prevented from selling products, etc).

  2. I spent many years telling my Story,
    but demand was to get it just right.
    I wonder who else was held to that standard,
    while they trashed me with words to incite.

    And all of that time I was so called prose,
    with a Law they did not overcome.
    I’ll know I’ve hit fame when listed on Wiki,
    And the events show a prisoner, not dumb.

  3. An exciting write-up which does make you imagine about the larger picture here. I agree with the earlier mentioned remark and even though I would certainly consider myself to some degree less advanced in terms of understanding on the subject he evidently appreciates what he is speaking about as do you.

  4. Mr. Risch, having read the paper I see no indication that any NPE classification, consideration or evaluation or even mention was given to Phonar, Zerox, Wang, NCR or Harris (semiconductor). Indeed, how about Bell Labs? These were/are all NPE’s at the time of patent enforcement – and all have extracted license fees from the ‘industry’ that make the $ numbers in your study trivial. IMO it would add some perspective to your paper to at least attempt to get a handle on where the vast majority of licensing activity is taking place. It would be illuminating to see what percentage of the entire market value your paper has carved off to study.

    University activity is easy to find at AUTM. Granted NCR, IBM, Lucent, etc. and these other cats are going to be difficult to pin down as some bury their compensation in ‘product sales,” e.g., buy X amount of copiers and printers per year and get a license. I recall bell labs doing in about one quarter what your 20 year study does in terms of $. That to me means that you are missing the vast majority of the NPE activity.

  5. Ok, i’ll read the paper. However, the original definition of troll al la Peter D. was a demand for a settlement amount much less than the cost of defending, but with the certainty that the case would be brought (the cost incurred) if the settlement demand was not met – and then there would be a swing for the fence al la Ray N. That original definition would exclude many of the so called patent trolls.

  6. I’m not saying the outcome is in their hands, I’m saying the costs are in their hands. Claim constructions costs what it costs, as does a motion – you can budget and do it. A defendant may lose, but the costs are in their control. Perhaps most settlements are much less than these costs, and that’s why everyone settles.

  7. Patents are property, and property rights are well-established. When and where is the requirement that a patent owner must “practice” his/her patent??????????? Change the law if you want change, but I see no issue under the current legal scheme.

  8. Thanks Michael.
    In reverse order, a major obstacle to enabling your last sentence suggestion above is that too many corporate defendant officers or GC’s think they are safer [for themselves? and/or for their company?] in picking expensive “silk stocking” law firms as their patent litigators.
    As to your penultimate sentence (that defendant’s entirely control infringement issues) I have to disagree. Yes, of the small percentage of patents that get fully litigated and ended, non-infringment often prevails. But meanwhile trolls can often take a “nose of wax” approach to claim scope and interpretation for a long time unless and until a judge finally provides a sufficiently realistic claim scope Markman [or combined Markman-S.J. hearing]. The troll may also dodge S.J. by arguing that they need more defendant-costly discovery as to all the software and other details of what is in all the defendants products. Plus, as noted above, rarely do claims get struck down by the Fed. Cir. for being ambiguous.
    Few companies want to play Don Quixote against patents they can pay off for less than their projected patent litigation costs. Those litigation costs and how long they continue is to a large extent up to the judges, not the defendants.

  9. You know anon, if you are the same anon with whom I sometimes disagree, let me just say that I couldn't agree with you more regarding protecting trade secrets against issued patents.  It appears nothing that Congress has ever passed is so anti-progress of the useful arts that this legislation on any number of grounds.  While there is no obligation to file a patent applications or to publicly disclose trade secrets, there is a very basic assumption in the law that a patentee has the right to exclude all in exchange for disclosing the invention to the public.  If this basic right is undermined, our patent system is undermined.
     

  10. If you think Lemelson was a problem, just wait until the new fleet of U-boats start sending torpedoes up the bottoms of patent holders.

    In the Article “Prior User Rights Expansion: Congress, the Courts, and Constitutional Considerations” by Ellen Jalkut and Michael J. Remington in the Vol. 82, No. 2030 edition of BNA’s Patent, Trademark & Copyright Journal, the authors discuss in some detail several aspects of how the (soon-to-be) passed expansion in prior user rights maybe unconstitutional.

    I will leave there main argument for (hopefully) a P-O post, but the offshoot of their Section V discussion outlines a battle-plan for savvy large firms who will no longer have to use the patent system. Basically, free from any outside threat, the reliance on Trade Secrets will torpedo those who are brave enough to travel the surface of patenting. Not only will those on the surface pay the price of public disclosure (with greatly diminished returns), the U-boats will have carte blanche extendable to all of their own customers.

    Nothing like waiting for the small fry to develop the next great app, but then not only be impervious to an actual legitimate patent, but to be able to use your size and outgun the rightful intellectual property holder seems downright predatory in the most un-American way. So even if the Trade Secret cannot be maintained (and the article touches on the possibility of that happening), there is no risk, no reason for disclosure or cost for Big Co to share anything in the patent system.

  11. The assertion that “patents stifle innovation” has often been said, but the empiricle evidence is overwhelmingly to the contrary. The term “Yankee ingenuity” was a result of the strong US patent system. The Bayh-Dole Act, which greatly increased the patenting of unverisity-based inventions, also greatly increased the public use of university-based inventions. Since India repealed its prohibition on patenting medicine, the Indian pharma industry has, for the first time, started to come up with lead compounds instead of just manufacturing generics. Since living organisms other than plants were held patentable in 1980 the biotechnology sector in the US has flowered.

    Look around the globe, and you will see that the countries that are home to the greatest innovation have the strongest patent systems. Countries with weak patent systems do not foster innovation.

  12. That isn’t true. Publication is only one type of prior art that can render a patent claim obvious or anticipated. “Prior use or knowledge” by another in this country is one classic example.

  13. Fair enough. I was only tackling the myth that troll patents are somehow worse than others. I know that there may be plenty of crappy patents that get settled, but this data makes one wonder (me at least) why more defendants don’t take a shot at summary judgment on infringement before settling.

    I spent many years litigating patents, so I know what it costs, but I also know that infringement arguments are entirely within the control (and cost) of the defendant. As such, it seems to me that more defendants should find cheaper lawyers at small firms like the one I was a partner at and take a shot at non-infringement before caving.

  14. The short answer is that the legal costs are prohibitive. A single computer programmer can frequently produce a program that will sell a few thousand copies a year for a few dollars each and make a living. That programmer may come up with several patentable inventions each year, but patent prosecution costs five to six figures for each patent, which would eat the sole developer’s entire yearly profit and consume an excessive amount of time that could otherwise be spent actually developing software. Thus the only way for the developer to get a patent is to go into business as a patent licensor and abandon software development.

    As for publishing where patenting is unaffordable, the publication is only useful after you have been sued for infringement. You must still avoid infringing on the patent that should not have been granted because if you are sued the litigation will bankrupt you whether you win or lose.

  15. If I had produced the innovation five years before the person who got the patent (and yes, in most of the cases I cite I can document that), how am I the one who is accused of ‘copying’?

  16. I imagine pretty much all big industry would disagree with me. The patents system very effectively protects big industry against upstart innovators with disruptive technologies. A warchest of patents and a highly paid legal department can be used to crush pretty much any newcomer in pretty much any technical industry. That does not mean that patents confer benefits either on the innovator or on the community at large.

    I didn’t patent my innovations largely because it is (thank God) still not possible to patent software in the United Kingdom; but also because most of the ideas were obvious to anyone with the appropriate technology available. The US patent office has for years been allowing patents for any trivial idea in software, with grossly inadequate tests for the non-obviousness of the idea. This undermines the whole idea.

  17. If you cannot “innovate” because someone else has already “innovated” that, then you have not really “innovated”, you are merely copying.

    My guess is that you are an anti-software patent hack who does not understand that the “blocking’ effects of patents is one of the mechanisms for stimulating innovation.

    If you don’t like being blocked, come up with a new way to get around the block, just don’t throw up your hands and cry to Mommy.

  18. I imagine that the Biotech industry, and most other industries, would disagree.

    And why would you lament that you cannot use techniques that other people have patented? How can you say that they haven’t originated them? Unless you are arguing that they didn’t originate them “first”. Are you saying that they derived the invention from someone else? There can be independent invention by others.

    If you had “personally created prior art five years or more before the patent was first registered” (filed?), why didn’t you file for a patent? If you chose not to, why didn’t you at least publish it somewhere? If you had done either of those things, you would have been able to sell your work in the US. At some level, this might be the result of a lack of knowledge about how the system works. But the quid pro quo is based on disclosure. If you don’t disclose, you will not be heard to complain when your concealment works to someone else’s advantage.

    And it might be true that some patents stifle some innovation, but they do so for only a (relatively) short period of time. Perhaps if the subject matter is something that hundreds would soon also “invent”, then it is not the type of thing that should be patented. But arguing that “each patent that is issued is a drag on innovation and holds the whole economy back” smacks of hyperbole.

  19. I don’t believe the patent system either encourages or rewards innovation. Innovators innovate; I always have. There are twenty US software patents in existence to my certain knowledge where I had personally created prior art five years or more before the patent was first registered. All this means is that I can’t sell my work in the US.

    In fact patents stifle innovation, because you can’t use techniques which other people have registered, whether or not they originated them, because the cost of litigation is impossible for the lone innovator to bear.

    Having only ten patents in a year is not a good thing in itself, but it’s much better thing than having a hundred, which in turn is a much better thing than having several thousand. Each patent that is issued is a drag on innovation and holds the whole economy back.

  20. Prof. Risch, thank you for posting this very interesting and useful study and for bravely exposing yourself to the usual anonymous abuse in the comments threads for this blog. Most academics lack either the interest in practitioner views or the fortitude.
    My 2 cents is that an emphasis on “patent quality” and any differences therein, is misplaced, assuming you mean patent validity versus invalidity. The vast majority of patent disputes are settled based on avoiding patent litigation costs and/or non-infringement, with relatively little impact of validity or invalidity issues except in flagrent IC cases. A patent owner has to prove infringement, and the Fed. Cir. can reverse lower court claim interpretations. In contrast, the burdens on defendants to defeat a patent on invalidity are very high [outside of the limited scope and the frequent PTO delays until too late of reexaminations], very hard to win with juries, and a jury decision of validity is difficult to avoid [unlike non-infringement]. All trolls know all this.
    Thus, your really interesting data is “While trolls almost never won their cases if they went to judgment (only three cases led to an infringement finding on the merits).” I would suggest that what that data particularly demonstrates is a serious judicial system [not patent] problem in failing to provide effective sanctions against trolls bringing suits with no or inadequate prior infringement investigations and with no serious intention of taking the cases to trial, knowing that most defendants will pay them off just to avoid the high litigation costs for defendants, plus the paucity of D.C. summary judgments of invalidity and their frequently delayed consideration until defendants have already had to either settle or spend millions of dollars.

  21. “As for commercialization, there are many who propose working requirements, which definitely disfavor individuals.”

    I propose it. For the simple reason that “inventing” should be about more than “dreaming”. I literally dreamt up two perfectly good inventions night before last. (which Broje cannot have because I’m keeping them as trade secrits) Did I actually invent anything? Not really. And the devices I dreamt up could very well be the shape of things to come. Could I build one in my house? F no. If, by some absurd chance, I were to file on these devices and then in a few years it turns out my claims cover a whole new industry should I, as an individual, have the right to demand payment because I dreamt up the basics of the device first? That is, as a general proposal absurd.

    What’s more is that it just turns the whole thing into a lottery.

    And to be sure, I’m not just trying to predict what will be valuable 5-10 years down the line, I’m actually “inventloling” as we have it defined today.

    For those reasons what you might call “disfavoring individuals” I see as merely limiting the absurd.

    On the other hand, you have many independent inventors out there who do make their inventions, at least a prototype, and I have a lot of respect for those guys.

  22. “… the defender of trolls are, by and large, shills for their own interests, i.e., they are patent attorneys who work for trolls or they are trolls themselves.”

    “[Mooney], I think these are the kind of assertions that require cites to actual persons and their statements. Otherwise, it just seems like a lot of straw.”

    Next.

  23. Anon, the article also made the point that the troll seldom won in court. If their patents were invalidated at about the same rate as other patents, what does this tell you?

    It tells me that the problem was that they also had some difficulty in proving infringement.

  24. Malcolm, “I believe there is a difference between “inventing” and “trying to predict what a valuable patent claim will look like in 5-10 years and filing an application with an intent to assert that claim against actual producers or sell the claim to someone who would like to assert the claim against actual producers.” The latter “strategy” seems to have little to do with “promoting the progress” and more to do with the sort of parasitic skimming practiced by our nation’s beloved “investment broker”/insurance salesman types.”

    I largely agree with this notion. Note that both Seldon and Lemelson were patent attorneys who prosecuted their own cases, who knew how to keep them pending forever, and who knew long in advance that they intended to make money from the patent system by obtaining broad claims that covered established industries and by holding them up, not that much different that robbing a bank.

    May I suggest that the PTO adopt a rule whereby to practice before the Office, a licensed practicioner must agree to dedicate to the public, or to his co-inventors, as the case may be, any interest in any patent he may have as an inventor.

  25. Yes, I know assertions need cites, which is why the paper is chock full of them. The “individual” contributions studies abound, but the key one I cite to is discussed in the book Patent Failure by Meurer and Bessen. You can read that and make your own judgments.

    As for commercialization, there are many who propose working requirements, which definitely disfavor individuals.

    I realize people have their own interests and biases, which is why I have tried to focus on conventional wisdom and data. People who read the data differently or criticize it as incomplete or unrepresentative are certainly free to draw their own conclusions. Unfortunately, we can’t get all the information all the time.

  26. hire you? what for? and why would a non-profit, volunteer based institution “hire” someone?

    have you even read their site?

  27. Those who think individuals have no place in the patent system. For example, some think that individuals don’t come up with any important inventions anymore. Others think that individuals are a net drain because they don’t commercialize.

    Michael, I think these are the kind of assertions that require cites to actual persons and their statements. Otherwise, it just seems like a lot of straw. I’d be really curious who said “invididuals don’t come up with any important inventions anymore” and even more curious about what data the person making the assertion was relying on.

    Defenders of trolls here in these comments do tend to characterize critics of patent trolling as “anti-inventor” or “anti-patent” but that’s only because the defender of trolls are, by and large, shills for their own interests, i.e., they are patent attorneys who work for trolls or they are trolls themselves.

    I believe there is a difference between “inventing” and “trying to predict what a valuable patent claim will look like in 5-10 years and filing an application with an intent to assert that claim against actual producers or sell the claim to someone who would like to assert the claim against actual producers.” The latter “strategy” seems to have little to do with “promoting the progress” and more to do with the sort of parasitic skimming practiced by our nation’s beloved “investment broker”/insurance salesman types.

  28. Because I lulzed when I read the thing I was responding to silly. Either mentally or, all too often on patent sites, irl.

    I have infinite credibility sir, I can neither gain nor lose it.

  29. net drain because they don’t commercialize

    Have these people no respect for the law of the United States, trying to get a patent without commercializing?

    What? There is no requirement under the law of the United States to commercialize?

    Nevermind.

  30. Ouch! Perhaps I should have said “other” ways. Whether a patent is found invalid when tested is a pretty well accepted measure of its quality. I have some plans to do some non-litigation quality testing of continuation patents, but it will require some grant money I don’t yet have.

  31. After all, 1-click was eventually invalidated, no?

    Your academics at work.

  32. Not sure where you get the idea of bias. You’ll note in the paper that I use NPE throughout, and that I’m quite agnostic about the whole thing. More surprising is the thought that I have an anti-troll bias. Most people who actually read the paper think the bias (if any) runs the other way, which is also not true.

    As for quality, I look at several ways to define it in the paper, but invalidation rate is a pretty good one. I do agree that there is a lot of unknown information about those that don’t make it to judgment, but I don’t have the funds for an individual quality review of each of these patents.

  33. Well, there may be selection bias, which I address in the paper. But if you aggregate all of these that you mention, I suspect that the results would be the same. In any event, many of the ones you mention are in this data set.

  34. Those who think individuals have no place in the patent system. For example, some think that individuals don’t come up with any important inventions anymore. Others think that individuals are a net drain because they don’t commercialize.

  35. I thought three myths were implicit:
    1. That NPEs wait (true)
    2. That NPE patents are all invalid (false)
    3. That NPEs get all their patents from failed startups (false)

    The paper delineates and then tests 10 or so myths.

  36. heard a university panalist comment that they did not look at prior art…

    I heard the exact opposite from a university panelist who cited ethics concerns with not properly citing each and every possible prior art citation (and thereby padding the heft and wieght of the newly published work.

  37. Correct. Mandatory publication at 18 months (except for national security exceptions) to stop Lemelson-style industry ambushes with submarine patents is indeed what I was suggesting. But it is nothing new. It has been urged already for many years.

  38. Considering that the title of the post included the word “myths” I was disappointed to see not a single one mentioned, but just a link to another paper purportedly containing myths.

  39. Did the study compare invalidation at the district court level vs Federal Circuit? I wouldn’t be surprised if there was a large difference given the Eastern District of Texas. Maybe not though.

  40. Trolls would certainly have to include universities and the military. What would be interesting is to look at patent quality for these institutions. I heard a university panalist comment that they did not look at prior art because it interfered with the academic process.

  41. I think he was alluding to a solution to the Lemelson, Selden submarine patent problems discussed at the beginning of Ned’s post, rather than the indefiniteness problems in the second half.

    In that regard, even with patent term counting from the filing date, I suppose there is still the possibility that parties could deliberately drag out prosecution long enough to give a relevant industry time to unwittingly entrench itself in a new technology that it assumes is in the public domain, sacrificing as many years of the effective term of the patent as necessary to optimize the benefit of the surprise factor. In the U.S., unlike in most (all?) other countries with patent systems, you could still secretly delay issuance by filing a non-publication request, so perhaps Max is suggesting making 18-month publication in the U.S. mandatory. Whether this would be addressing a real-world or only hypothetical problem, I have no idea.

  42. I would not equate smaller pendulum swings with sophistication either – that assumes that a stilled pendulum, resting in the middle is the “correct” position.

    Nothing warrants such an assumption.

  43. Of course, if you think individuals have no place in the patent system, this is not a good thing

    Who was this ridiculous statement addressed to?

  44. Do your successive pendulum swings get bigger in amplitude? I hope not, because that would seem to indicate a system out of control.

    If they get smaller, that might signify increasing sophistication.

    If they get no bigger and no smaller, that might signify that we learn nothing from history.

  45. But, as we live and learn, we become more sophisticated

    I tend not to see “more sophistication,” but rather, a pendulum effect.

    Sophistication indicates that we are becoming more “correct” a much too much value laden term.

  46. The balance was enshrined. But, as we live and learn, we become more sophisticated about how much “weight” in “the balance” various considerations should have. The scales today incline more towards the public interest than they did 15 years ago.

    Only my opinion. Feel free to tell me I’m wrong. I’m used to it.

  47. At the same time that both sides of the ledger are affected, this is in no way indicative that this is a good metric for patent quality.

    Type I and type II errors abound.

  48. OA’s from the EPO, in the bygone era of being customer-friendly ie kind to inventors, would typically grant broad protection for a broad idea.

    But the EPO is not some ivory tower, unaware of the world-wide perception that Applicants helped by zealous prosecutors have been routinely grabbing more than what is “commensurate” with their contribution to the art.

    So, in recent years, EPO Examiners have become more parsimonious.

    It all depends how a Patent Office strikes the balance between i) giving fair protection to inventors while ii) giving the public reasonable legal certainty. That balance was enshrined in the European Patent Convention from its outset, in 1973 (see the Protocol on the Interporetation of its Art 69) but in recent years has inclined more towards the public interest.

  49. Ned: from what I read, the implication was that the “abuse” (your word) was non-assertion, i.e. patenting in order to wait around for an infringer to sue. You wrote nicely about the submarine patent abuse and broad indefinite claims (though from anecdotal evidence from cases disclosed in this blog, it seems the courts do limit scope to embodiments disclosed). From OA’s I’ve had in Europe, the Europeans only provide protection for what the inventor contributes, i.e. not some broad idea.

  50. Study of “1000 cases, and about 350 patents over a 23 year period.” and concludes: ” . . . trolls almost never won their cases if they went to judgment (only three cases led to an infringement finding on the merits).”

    Talk about your selection bias, just off the top of my head i can think of a half a dozen cases resulting in infringement, validity, damages, and second and third validity (re-litigating under the guise of reexamination) of the so called headline making trolls. Guess it’s all in how you define a ‘troll’ def (1) settlement of cases prior to full blown jury trial. Non-troll def (1) pioneering patent (family) fully litigated. Which one was NTP? Phonar? Zerox? Wang? NCR? Harris? The motorolla “go for the gold” modem wars? All NPE’s, all asserting patents.

  51. So, Ned, do I see it right? 18 month publication will shut out the abuse, always provided judges use with wisdom the available provisions of the Patent Act (any Patent Act) on the validity of individual patent claims?

  52. “the patents system would be greatly improved if there were a strict limit – say ten – to the number of patents which could be issued world-wide in any one year”

    How would this greatly improve the patent system? If you believe that patents spur innovation (overall, not individually), then this statement doesn’t make any sense. The so-called “top 10″ would get their reward from the market. But that doesn’t mean that #11 should get nothing since it’s quite likely that #11 brings a benefit to society as well.

    Unless of course you believe that #11 would have disclosed anyway, in which case I’d probably have to disagree with you.

  53. You would like Article 60 of the European Patent Convention then Simon. It begins “The right to a European patent shall belong to the inventor….” Good, eh?

    As to reasons for having a patent system, would we still have so many life-saving pharmaceuticals, if we had not had a patents system? Is there no single member of your family with reason to be thankful to those who set up a functioning patent system, and those who invested the millions of dollars to invent and then carry life-saving medicaments through clinical trials?

  54. > I’m not sure that the rate of invalidation is a good metric for patent quality.

    He’s comparing invalidation rates of patent troll patents to invalidation rates of other patents to establish ‘relative quality.’ The biases you mention are on both sides of the ledger, so they wouldn’t affect this.

  55. Useful review; I’m reading the full paper now. However, one comment:

    “Of course, if you think individuals have no place in the patent system, this is not a good thing.”

    The only possible justification for having a patent system at all – and personally, speaking as an innovator, I am not convinced that there is any justification – is to protect individual and small-enterprise innovators from having their innovation quickly copied by larger entities with better marketing budgets.

    So the primary entities who, in my opinion, have any place in a patents system, are individuals and small enterprises.

    As an aside, the patents system would be greatly improved if there were a strict limit – say ten – to the number of patents which could be issued world-wide in any one year, and that these were awarded to the ten innovations judged by an independent panel to be most significant in that year, in a manner somewhat similar to the award of the Nobel prizes.

  56. The problem I have with the word “troll” is that it is meant to imply that the patent owner is abusing or has abused the patent system in some fashion. When I think of known examples of patent abuses, I think of the Selden patent where the inventor of the “car” had intentionally delayed his patent in secret in the patent office something like 17 years while the industry developed, and then asserted his claims claims against all cars with any kind of a gasoline engine even though he had invented only one kind of gasoline engine for use in a car. Thus, Selden abused the system in two ways: by the intentional delay, and by the assertion of very broad claims, far broader than what he invented. Selden was an abuser, and was adjudged to be so by history.

    Another well-known abuser was Lemelson, who kept continuations and continuations-in-part pending in the patent office for generations, obtaining very broad and indefinite claims, and asserting the claims, like Selden, again subject matter he did not invent.

    These are the two best known examples of what I consider patent abusers. They abused in substantially the same way, by delaying the issue of their patents for a substantial time, and by asserting claims far broader than their inventions.

    Since it is no longer possible to extend the life of the patent by simple delay, the only remaining problem represented by the two known example trolls, is the assertion of broad and indefinite claims to subject matter the troll did not invent. Now there’s anything I have heard consistently about trolls is that they in fact assert very broad claims against whole industries. I have not studied particular patents to see whether the claims would support such broad patent coverage, but but I think it is unlikely that so many fundamental patents would be issued by the patent office. Therefore it is quite likely that the problem lies in the indefinite nature of today’s patent claims, and that is not a problem limited to trolls, but is a problem of the patent system as a whole.

    I think there are some on the Federal Circuit who recognize that indefinite claims are now pandemic and are causing havoc. The folks who are resisting addressing this problem are the usual suspects, particularly Rader and Newman. I think they ought to figure out that they are part of the problem and not part of the solution.

    In the end, the Selden patent in its final litigation was limited to the invention disclosed, and not to the broad claims the patent office granted. The court did so by construing the claim to a “gasoline engine” to be limited to the particular gasoline engine disclosed and equivalents. But what is this rule of construction? I have seen the before someplace. But where?

    See, Phillips v. AWH.

  57. but I’ll keep using trolls here if only to be mainstream.

    Commentators (including me) have intuitions

    Translation: I like my bias and don’t feel bad enough about it to not join in on the demogoguery.

    I wanted more evidence to support my intuitions, so I set out to comprehensively study a group of trolls – namely the ten most litigious trolls… In all, I studied 10 trolls

    Selection bias on top of bias. Academically decrepit.

    Of course, if you think individuals have no place in the patent system, this is not a good thing.

    Not that thinking so is “not a good thing,” but only the possibility of “non-large corporate entities who fund academics doing such studies” having a place inthe patent system being “not a good thing.” This undertow is not a surprise at all.

    Another area of surprise was patent quality.

    Another non-surprise to see “quality” so poorly defined. The only time litigation will ensue is when the matter is so evenly split as to warrant litigation (or even, as one poster has put it when the matter is more in favor of the defendants), thus the baseline expectation should be a 50-50 validity/invalidity ratio.

    But when you set about seeking proof of your known bias, this is the type of thing you run into…

  58. Michael,

    Thanks for the draft of the article (and ignore 6′s nonsensical comments). I’ve downloaded the draft and will come back when I’ve read it.

    6: why all too frequently is the first comment out of your mouth “lulz”? You sometimes have cogent views on the topic being discussed, but issuing “lulz” repeatedly doesn’t help your credibility.

  59. “Another area of surprise was patent quality. While trolls almost never won their cases if they went to judgment (only three cases led to an infringement finding on the merits), ”

    In other words they’re just a big pain in the arse for big business. A tax on business if you will.

  60. Don’t forget … even if you pile 1,000,000 examples that prove that the invention is commonplace and has been for thousands of years, the court won’t accept that as “prior art” unless it is “published.”

    Heck, they let Apple get a design patent on a rectangle with a drawing area in the center … the BABYLONIANS HAD THAT!

  61. I’m not sure that the number of patents partially invalidated is, by itself, telling you anything. What matters is whether the remaining claims still read on the product(s) of the defendant(s).

    It does not lead to the conclusion that a troll is doing something beneficial when it asserts a patent containing a few narrow, useless claims that no one infringes and a few other overbroad claims that read on the whole industry but are invalidated on the merits when tested. The inventor of that patent did not invent anything that anyone was infringing, so any compensation paid by the troll to the inventor should not be claimed as a benefit.

  62. Unless one party has reason to beat a dead horse (or offer it life support), I would expect patents to be invalidated half the time in litigation.

  63. I’m not sure that the rate of invalidation is a good metric for patent quality. With the strong bias for deferring to the patent examiner’s judgment, and for findings of prior art rather than common sense, it’s extremely difficult to invalidate a patent fully. I mean, just look at all the efforts surrounding Jeff Bezos’s 1-click shopping patent. (He’s not a NPE.)

    Also, I feel that a lot of the patents that are legally valid shouldn’t have been issued. But I don’t think that’s within the scope of this study.

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