Patent Trolls by the Numbers

by Assistant Professor Colleen Chien, Santa Clara University Law School,, @colleen_chien (Download PDF of this at SSRN)

Following President’s Obama remarks and reintroduction of the SHIELD Act, today the House Judiciary Committee Subcommittee on Courts, Intellectual Property and the Internet is holding hearings on litigation abuse by patent trolls (aka patent assertion entities or PAEs). Companies J.C. Penney, SAS, Cisco, Johnson & Johnson, & Adobe, are testifying. Part of the discussion may focus on patent troll metrics, on which I have previously reported. These statistics draw heavily upon proprietary research as well as my own analyses, so, in the interest of full disclosure, below are the numbers and what I know about them.  Some say that the time has come to act, not to further study the PAE phenomenon but I believe in both – that to craft interventions that are both narrowly tailored and actually will work requires a deep understanding and careful analysis.

(It bears mentioning as well that much also can be learned from related experiences  — indeed, litigation abuse is nothing new and in fact the Judiciary committee that is hosting today’s hearing held a hearing on litigation abuse in non-patent contexts yesterday. In the patent troll context, many interventions, like fee-shifting, improving patent quality control, special defenses, and maintenance fee tweaking have been suggested/tried before – in the recent past (early 2000s) as well as in the late 1800s, against both farming and railroad patent trolls and related contexts. FWIW, in my paper on the topic,  I discuss other fixes like court leadership, industry organizations, collective action, and bolstering protection of users based on what has worked in these settings.)

1. PAEs brought 62% of 2012 patent litigations

According to RPX Corporation PAEs initiated 62% of all patent litigation, or 2,921 of 4,701 suits in 2012. RPX is a publicly-traded company that provides solutions to troll threats for its member companies and has great data, principally maintained by Seth Besse.

        PAE Suits (2005-2012)

Credit: © RPX Corporation 2013

Data checks on RPX numbers:

  1. Patent Freedom reports 2,923 NPE lawsuits in 2012, as compared to RPX's 2,921 PAE lawsuits, using a slightly different definition.
  2. I compared about 1,000 of RPX's codings with my own, and reported the result in Appendix C of this paper: "The share of disagreements between the databases was 7%, with the net number of trolls varying by 4%."
  3. Robin Feldman, Sara Jeruss, and Joshua Walker found that about 40% of 2011 suits were brought by patent monetizers in their study for the GAO. See comparison at page 17.

Comparison to 2011: The share of suits brought by PAEs in 2012 grew from 2011. However, the AIA's misjonder rules, which curbed the troll tactic of naming multiple unrelated defendants in a single suit which had artificially deflated troll suit numbers, are responsible. Thus, the increase in the number of troll suits, post-AIA, is most likely an artifact of the AIA.

2. In 2012, PAEs Sued More Non-Tech Companies than Tech Companies

Though the PAE share may surprise some, patented technologies like software are the building blocks of modern commerce. "Low-tech" industries like funeral homes, advertising agencies, and retailers like JC Penny which is testifying today are all taking steps to protect themselves from troll demands. Though historically a "tech" problem, in 2012 PAEs sued more non-tech companies than tech companies, according to the analysis below by Patent Freedom, which provides market intelligence on patent trolls. Retailers are hit the hardest by non-tech PAE suits, followed by automotive like Ford, which has also testified against trolls, financial services, and consumer products. So expect a broadening of the coalition to deal with trolls especially as many in these sectors are likely being sued over their use rather than making of technology.

3. Individual Inventor v. Corporate PAE suits

Not all trolls are created alike. Individuals get injunctions, corporate trolls don't. (See my paper with Mark Lemley, at FIG 3.) The SHIELD act would force corporate losing trolls to pay, but not individuals. "Non-practicing entities" can also include universities and startups, which is why I created the term PAE to apply to businesses that assert patents as their primary business model – universities and startups don't, they are focused on commercializing or transferring technology. (As Justice Kennedy put it in his eBay concurrence, trolls are firms that "use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.")

Based on data provided by RPX, 94% of 2012 suits brought by entities that don't practice were brought by corporate PAEs. Individual inventors were another 5% and the remaining 1% universities, based on data provided by RPX. However, PWC's excellent litigation report reports much higher "individual NPE" proportion – of 51% but for the 1995-2011 period and likely using a different methodology (the PWC university share is a bit higher). Because the SHIELD act turns on the individual vs. corporate distinction, it would be good to reconcile these numbers. 

The Distribution of 2012 NPE Suits by NPE Type (based on RPX data)

4. PAE defendants comprised 59% of all patent lit defendants

According to RPX Corporation, defendants to PAE suits represented 59% of 2012 patent litigation defendants, or 4,125 out of 6,934. (Patent Freedom counted 3,859 NPE defendants to RPX's 4,125).

    PAE Defendants (2005-2012)

Credit: © RPX Corporation 2013

Comparison to 2011: As the graph above shows, the absolute number of defendants named in PAE suits in 2011 shrank about 25% in 2012. However, that the relative share of troll defendants only declined by 4% (from 63% to 59%), supports that this trend reflects a general decline in new patent cases brought by practicing and non-practicing entities, rather than a fundamental shift away from the courts by PAEs.

The Success of the Misjoinder Rules

While the share of PAE defendants has not gone down significantly, I do believe, based on unreported analyses that I have performed, that trolls have changed their litigation tactics in at least one respect – they are less likely, because of the misjoinder rules, to name small defendants in lawsuits where they cannot be joined with other parties. In this way, the joinder rules can be said to be having their intended impact of making life harder for trolls. The small companies that actually are sued, however, are arguably worse off because they have fewer joint defense options. And even if they are not sued, many small defendants are receiving letters (see below).

5. 55% of Unique PAE defendants makes $10M or less

Based on my analysis of RPX's database, 55% of unique PAE defendants make $10M or less in revenue, and 66% make less than $100M a year. (previously I have erroneously reported the 55% number as associated with defendants making "less than $10M", it should be "$10M or less." Apologies for the error!). While small defendants have historically received less attention as troll targets, the patent woes of podcasters and small businesses that use scanners, not to mention bakeries (I love bread) have gotten recent attention.


Because small companies are sued fewer times than large companies – e.g. Apple gets dozens of PAE demands whereas a small company may only get a handful – the number of total demands is more heavily skewed towards large companies than the unique defendant count. However, I believe 55% to be a conservative estimate because I calculated it based on actual revenue estimates in the RPX database provided by Dun & Bradstreet and commercial providers, and excluded from both the nominator and denominator companies for whom no revenue is reported. If, on the other hand, we assume that companies without coded revenue likely have limited revenue – an assumption other scholars have made– the share would grow. Longer discussion of methodological issues and approaches to filling in missing data here. Also of note, because of the success of the joinder rules in discouraging suits against individual small cos., the 55% number has likely declined in recent months.

6.At the ITC in 2012, PAE complainants brought about 35% of patent complaints and about half of patent respondents.

337 Patent Investigations & Respondents



New Patent Investigations



PAE Share



New Patent Defendants



PAE Share



My research assistants worked with me to code the complainants in these cases, using data provided by the ITC. As with district court defendant counts, total ITC investigations and defendants (called "respondents") declined in 2012 from 2011, by about 40% and 20%, respectively. However, the PAE share of investigations and respondents actually increased from 2011 to 2012, from 43% to 48%.

Data checks:

  1. Last summer, the ITC published a report called "Facts and Trends" that tracks NPEs. It reported a combined NPE share of 19% of investigations, and 41% of defendants in 2011, versus my PAE shares of 23% and 43%, respectively (see above). The ITC report also notes that ITC numbers tend to vary greatly from year to year, given their relatively small numbers of investigations, which I tend to agree with.
  2. Covington & Burling's Robert Fram and Ashley Miller, in an excellent unpublished paper The Rise of Non-Practicing Entity Litigation at the ITC: The State of the Law and Litigation Strategy (Jan. 5, 2011), tracked the percentage of companies relying on their licensing activities to show a domestic industry from 13% in 2000-2006 to 35% in the first 8 months of 2010). Based on an extension of their database they shared with me, the rate in 2011 (through Oct. 1) was 41%.

Legislative reform?: Members of the ITC bar and ex-ITC officials remain deeply skeptical of the efforts to reform the ITC legislatively that tech companies are pushing for. Last summer, I argued that the ITC's decision-making was evolving, and recommended revisiting its record in six months to a year. However, the fewer cases and exclusion orders that the ALJs have issued since then have meant a slower evolution of the ITC's law, despite more attention from government agencies and others.

While we wait, I still find it puzzling that entities like Acacia, Industrial Technology Research Institute of Taiwan, Beacon Navigation GmbH of Switzerland, and Intellectual Ventures would put up the considerable funds it takes to bring an ITC case when the ITC can't award the licensing revenues they seek, but only an exclusion order. The best I can tell is that this trend reflects a deeper dissatisfaction of patentholders with the consequences of eBay, rather than a desire to stop unfair importation, particularly since PAEs name domestic defendants more often than foreign ones (see Appendix A).

7. Some High Impact PAE Patents Fit the "Buy and Sue" Pattern

SHIELD has put more emphasis on the provenance of patents, with Joff Wild at IAM estimating that SHIELD might only cover one in four NPEs based on Patent Freedom Data. I really respect Joff's blog and magazine, and recommend it to anyone who is serious about understanding the monetizer perspective (though the magazine is expensive). However, I have a different view of the numbers, that because patent impact is heavily skewed, what matters are high impact patents– that is to say, if just Lodsys and Geotag were discouraged from bringing their suits, many people would have been happy. Through our analysis of "high impact" patents I asked Patent Freedom to put together for another analysis, we found that the nine out of ten were purchased before assertion, rather than owner-asserted.

10 High-Impact PAE Patent Campaigns: 9 out of litigated patents were bought, not owner-asserted


Also, I understand that the Patent Freedom folks have a different view of their own data than IAM so if you are interested follow them on Twitter:@PatentFreedom.

8. PAEs are Less Successful than Practicing Entities in Litigation

PWC's excellent annual litigation report is chock full of statistics about patent litigation and in particular, with respect to NPEs, that: they look to juries more (but the differences are declining), a higher median damage award and a lower than practicing company success rate (34% practicing co v.23% NPE ) that is declining (Chart 5B).

John Allison, Mark Lemley, and Josh Walker's paper documents that the "most litigated" (8x or more) NPE patents lose more than 90% of the time in court. Data provided by RPX found that such repeat litigants dominate PAE cases – 61% of defendants named in 2011-2012 were sued by a PAE who had brought the case 8+ times (see page 33).

9. Public PAEs

My research assistant and I have been working on profiling public company PAEs – those which derive a majority or significant revenue from asserting patents. Depending on how you slice it, we have found about 16 of them (ACTG, ASUR, DEMO: OTC, NSSI, OPTI, RMBS, VHC, WIN:TO, VRNG, PANL, DSS: NYSE Amex , WDDD: OTC, BB,PCO, PRKR, UPIP); a number of the stocks are very volatile and live and die by litigation outcomes – invest with caution.

10. What We Need to Understand Better: Demands , Users, the Differential Impact of Interventions

Litigations are only a tiny part of the story. While good data on patent demand letters is lacking, here are a few data points:

  • In my survey of startups, among companies that had received threats (N=79), in some cases many threats, less than a third had been sued. This survey is being redistributed to a larger and more representative sample which should yield better estimates when it is concluded.
  • In its RICO complaint against Innovatio, Cisco reported that over 8,000 letters had been sent, even though there were only 26 named defendants, a ratio of 276:1.

We also need to understand how many of these suits are user based ones – in my survey (N=79), 40% of respondents said the demand was based on a technology they were using, not making. Such suits seem hard to justify as anything but nuisance-based.

Some will say that the time has come to act, not to further study the PAE phenomenon but in order to craft interventions that are both narrowly tailored and actually will work requires careful analysis and learning from the past as many interventions like fee-shifting, patent quality control, and maintenance fee tweaking have been suggested/tried before, in related and different contexts — some of them even to trolls of the late 1800s, as detailed in my paper, which also suggests: bolstering protection of and staying cases against users, industry organizations, and collective action.)

11. What Really Counts

What really matters is not PAE litigation itself but the impact it has on businesses, innovation, and the economy, and in particular how these impacts are distributed and also the justice or injustice of the claims – that is why there is so much heat on the PAE issue –because people who are sued feel that had no ability to anticipate or avoid it. My research has documented the positive impacts of a liquid IP market, and that startups are selling to trolls and benefiting from that monetization. However, it also documents a significant emotional toll: people said demands have "invoked rage over the waste of time," made a target "very very angry," "ruined family friends" and caused "stress" and "ill-will generation [sic]": "it was agonizing to hand over all the money we had earned from a product we had invented and created ourselves to a firm that invents nothing and creates nothing. Our founder has since lost his house, car [sic] all his assets." As the numbers of impacted companies and industries continues to grow, don't be surprised if the ranks of those who support curbing most egregious litigation abuses – the practices of going after end-users, rather than manufacturers and extracting from small companies nuisance-based rather than value-based settlements – continues to swell as well.

= = = = =


  • With thanks to my research assistants Aashish Karkhanis, Nicole Shanahan, Teri Karobonik, John Neal, and Coryn Millslagle and to RPX Corp., Patent Freedom, Gazelle Technologies, Robert Fram and Ashley Miller.
  • High impact patents discussed above include 7,222,078 (Lodsys), 7,346,472 (Bluespike), 5,937,402 (DataTern), 6,101,502 (Datatern), 5,930,474 (Geotag), 6,150,947 (Ogma), 5,223,844 (PJC Logistics), 6,185,590 (Project Paperless), 7,054,949 (Single Touch) 8,015,307 (Single Touch).

343 thoughts on “Patent Trolls by the Numbers

  1. 342

    CORRECTION: I am all for judging new and “useful” business methods under 102, 103, and 112 as long as the doctrine of Integration is applied at each inquiry.


  2. 341

    Ned: “it truly is a question only of novelty, obviousness, and the considerations of section 112 ”

    I am all for judging new and eligible business methods under 102, 103, and 112 as long as the doctrine of Integration is applied at each inquiry.


  3. 340

    Scott, Only people who have been on the receiving end of IBM fully understand the problem. I don't know whether they were the first troll (defined as patent licensing as a business), but they have perfected the model. No discussion of of trolls should ever ignore IBM. If we pass legislation to address trolls, we should not exclude them. Not at all.

  4. 339


    I agree. They don’t call it the IBM tax for nothing. IBM has an entire business on IP licensing and it is the most profitable part of the company. When IBM comes, you better worry. They’re worse than any troll.

    IBM has the most patents in the world for a reason-and that is to make you PAY LICENSE FEES. If you don’t initially infringe the patents they assert against you, believe me, they will endeavor to find some that will.

    IBM is worse than the IRS. God help you if they’re after you. I’d rather have a troll after me-at least they don’t have as many patents.

    BTW, they don’t go to litigation very often because they scare you with so many potential patents. Oh, you don’t want to pay for these 5 patents? OK, how about these other 30? I’ve personally witnessed it at two different companies and this was for products IBM didn’t even have! Talk about the ultimate “troll”. IBM is it!

  5. 338

     Well, 101, with laws of nature and phenomena of nature, I can see how one can think that claims to these subject matter's had to be viewed under §101, but with subject matter that is otherwise patentable in that it is not excluded, it truly is a question only of novelty, obviousness, and the considerations of section 112 including enablement and definiteness of claims.
    Since the court in Bilski specifically held that business methods are not excluded, there is no justification for handling business methods under section 101.
    Furthermore, I now disagree that mathematical algorithms present a 101 issue, because they are not excluded  as laws of nature.  Excluded subject matter is excluded because they are the common property of all mankind.  Mathematics surely is not that.  I would argue that Chakrabarty may have operated the overturn that part of Benson to the extent that mathematics is the creature of man and not the creature of nature.


  6. 336

    Ned: “101, I think the point is that the Government would not ban them, but would proceed under 102/103.”

    I did not see that proposal at all in the Government brief. Did I miss it? But even if it is the point is dead because the Supreme Court has expressly ruled 9-0 that the Government can’t proceed in this direction.

    And as your buddy MM is found of saying, a 9-0 decision is not going to be overturned anytime soon.

    So where that leaves us is business are allowed and Don Corleone ( The Court) will give it protection in the east. And that will be the peace.

  7. 333

    You should go back and look at the threads.

    I did. And sure enough there’s you and/or your li’l t–b-gger buds whining about how the USPTO doesn’t need more examiners, they just need to reject less patents.

  8. 331

    all politicans are… politicans – I care for none of them

    That’s nice. Do you vote? I assume you’ve passed the naturalization test.

  9. 330

    101, I think you confuse me with some other guy.

    I said I had reconsidered that position in that Bilski held that business methods were not excluded as were laws of nature, etc.

    As such, one does not have to examine such claims to determine whether they are claiming excluded subject matter, if we are to trust the words of the Supreme Court.

    But, in the final analysis, Bilski did seem to rely on preemption — which is only valid if what is being claimed is excluded subject matter.


    A claim is not abstract if it claims a practical implementation, as we know. The court has yet to clearly limit this, only saying that the MOT is a clue, but not the exclusive test. They are as vague as all get out in Bilski, not being clear as to just why the claims in that case were proscribed.

    The Stevens dissent pointed this out, that in essence the majority opinion was unprincipled, using preemption of subject matter they had just declared not to be excluded as the ratio decidendi for the decistion.

    Muddled — at best.

  10. 329

    Hello Ned:

    Thank you for the link. I read the entire brief. It’s just as I thought. There is nothing in there that would provide any legal support for the banning of business methods.

    Have any other ideas? I am eager to hear them!

  11. 328

    Ned: “12(f) expressly authorizes only claims with a combination of steps. That is two or more.”

    Are you simply trying to prove that 112(f) states the following:

    [ (f) Element in Claim for a Combination.— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof. ]

    Okay, you are right. Now, back to the topic under discussion.

    How do you propose to legally ban claims that manipulate price, currency, commodities, in a new, useful, integrated process, without a machine, apparatus or MoT sufficient transformation. And do not use “means for” or “step for” language. And can be done without preempting a concept or abstract idea????

    And please remember you have now failed to prove such claims are outside the useful arts, and can be invalid under 112 (f).

    Oh, if you simply wish to concede you have no legal foundation for banning these so called business methods then we can end the discussion. But of course if you have one more trick up your sleeve I am willing to see it.

  12. 325

    Hello Ned:

    Once again you are incorrect. First of all this is a 101 question. Not 112. 100 b defined process not 112. Section 112, paragraph 6 is not used for 101 statutory subject matter, and certainly not as a bright line test for claims that contain steps for conducting business, so called business methods. The law and the MPEP are very clear about when to use 112, paragraph 6. Please see the following:

    ** > If a claim limitation recites a term and associated functional language, the examiner should determine whether the claim limitation invokes 35 U.S.C. 112, sixth paragraph. The claim limitation is presumed to invoke 35 U.S.C. 112, sixth paragraph when it explicitly uses the phrase “means for” or “step for” and includes functional language. By contrast, a claim limitation that does not use the phrase “means for” or “step for” will trigger the rebuttable presumption that 35 U.S.C. 112, sixth paragraph does not apply. See, e.g., Phillips v. AWH Corp., 415 F.3d 1303, 1311 (Fed. Cir. 2005) (en banc); CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1369 (Fed. Cir. 2002); Personalized Media Commc’ns, LLC v. ITC, 161 F.3d 696, 703-04 (Fed. Cir. 1998). ”

    So Ned, that brings at back to the original point of discussion,

    “If a claim to manipulate price, currency, or commodities, ( what you call business methods) is new, useful and an integrated process, it is statutory subject matter under the useful arts, 101 statute, and Supreme Court case law.

    And your introduction of 112 into 101 has failed to provide you the legal foundation to bar your particular version of business methods at 101.

    Want to try another approach?

    I am willing to listen.

  13. 324

    Ned: “101, I urge you to read the government’s brief in Prometheus. I have urged you to do this several times actually.”

    Okay post the link to it. And when you post the link please explain how anything in the ‘government’s brief in Prometheus’ provides legal support for your proposed banning of business method patents, especially of the type in my post at Mar 20, 2013 at 02:08 AM. I

    also expect you to explain what if any legal principle in the brief overcomes the current law, as so stated in my post at Mar 20, 2013 at 02:08 AM.

    Thank you in advance,

  14. 323

    “Mental steps” is not applicable to machines.

    Machines do not think.

    Anthropomorphication. Ned, why is it that this word leaves you speechless?

  15. 322

      Mark, the information I am giving you about some of these companies I am talking about his personal history.  I have experienced it firsthand.
    Re: Microsoft and its so-called abuse of power, there was an article linked by Dennis that also linked a Barnes & Noble complaint about Microsoft and its abuse of power regarding his patents.


  16. 321

    101, I urge you to read the government's brief in Prometheus.  I have urged you to do this several times actually.  It will explain the problem you have with mental steps being a process.  Mental steps can be included in a process but a process requires a physical act, at least two according to section 112, paragraph 6 now paragraph (f).


  17. 320

    The trollsters will only pay about 1500 for a good concepton so its dificult to call them a inventors prosee legal representative there also just another ripoff of inventors except requiring bonds for them eliminates the potential of good trolls that help inventors may not exist in the real world theres none presently anyway. I dont see why the companies want to lose the products that the trolls file on though with this legislation move that will cut their bottom line profits due to indegent trolls not having the money for the bond therefor not attempting to create or buy the original conceptions or subinventions. The bill cuts their own throat in their greed to save money.

  18. 316


    The guy who singles me out on a routine basis is saying that my asking him to actually engage in a conversation he started is “a little creepy?”

    How about a better characterization, Leopold: you are running from the comments you made because the counter points reveal your actual motive in making the comments was not above board.

    Of course, this “stalking” as you call it is easily avoided if you simply responded on point. Is that so difficult for you?

  19. 315

    So you’ve been stalking me on multiple threads for three days, and now you’ve got a little sidekick who is publicly fantasizing about punching me. Don’t you think this starting to get a little creepy, anon?

  20. 312

    Ned: “business method patents do not promote the progress in the useful arts. Rather they harm the US economy.”

    The above assertion is illogical based on the fact that the US economy is dependent on business ability to improve quality, productivity and profit.

    Therefore any business method that could accomplish one or more of the above would in fact “help” the US economy.

  21. 311

    Ned: “One needs at least a computer program, or a spreadsheet or something else tangible that is manipulated.”

    That sounds like MoT, and, as you know, there is no machine or transformation requirement for process claims. You can manipulate price, currency, commodities, in a tangible process, without a machine or apparatus.

    This can be done without preempting a concept or abstract idea.

    This can be done without iron age transformations ( the kind in MoT).

    But none of the above can be done entirely within the mind so the claims as a whole can’t be to a pure mental process.

    So if a claim to manipulate price, currency, or commodities, is new, useful and an integrated process, it is statutory subject matter under the useful arts, statute, and Supreme Court case law.

    Now, Ned, if you are going to propose to declare all business methods of the type above as non statutory under the abstract idea exception you MUST overcome the above facts first.

    I am open to hearing your ideas on how you would accomplish this legal feat.

  22. 310

    so i’ve been looking for the article that talks about this comparing piles of patent documents but i can’t find it. I’m assuming this is where you’re getting that part from. Do you know which article it was that talked about that? I can’t seem to find it anywhere.

  23. 308

    Ned, no slight of hand. At all.

    Thus, no conspiracy, as no need exists.

    You do understand the difference between math and applied math, right?

  24. 307

    that can be described in terms of making and using under 112,…

    And like clockwork, the canard and bias of Justice Story and his (then) English-patent-Law-has-no-method-claims-so-I-am-stuck-in-the-OTHER-three-patent-categories comes out.

  25. 306

    I do not think a Product of Nature exception exists.

    It does, without question. See Chakrabarty“.

  26. 304

    Ned: “101, Unless something physical is done at some stage, I would think showing infringement to be impossible.”

    Sticking to eligibility for the moment. Exchanging money for a product is physical is it not?

  27. 302

    “101, every claim must be directed to a practical application, something that one can physically make, use or sell. You agreed with this in principle in an earlier post.”

    Yes, but you can “use” a process to “do” something. Your interpretation is too narrow. Remember the Court said,

    “defining “method” as “[a]n orderly procedure or process … regular way or manner of [doing anything;] hence, a set form of procedure adopted in investigation or instruction.”

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