Study: Patent law changes, high-volume plaintiffs make for more litigation

By Jessica M. Karmasek | Aug 26, 2014

MENLO PARK, Calif. (Legal Newsline) – A combination of a change in patent law and an increase in high-volume plaintiffs have caused a surge in patent litigation, a recent survey found.

California-based Lex Machina, a now-private company initially set up by experts at Stanford University’s computer science department and law school, released its first Patent Litigation Year in Review report in May. 

The report, which mostly focused on 2013, provides insights about judges, districts, parties, law firms and patents, and highlights trends and developments in patent litigation — something, the company contends, is needed because of the lack of reliable, unbiased data.

“It’s critical for lawyers to make sense of the major trends in this space in order to be successful in their own suits,” Lex Machina CEO Josh Becker said.

Brian Howard, a legal data scientist for the company, said 2013 represented an all-time high for the number of patent cases filed, with 6,078.

But 2011 and 2012 also saw significant increases in patent litigation, with 3,530 and 5,415 cases filed respectively, compared to about 2,500 in previous years.

“Much of the increase we’ve seen is by high-volume plaintiffs,” he said of the trend, defining high-volume plaintiffs as those filing 10 cases a year (counting defendants).

Of those high-volume plaintiffs, Howard estimated that a “majority” probably could be considered so-called “patent trolls.”

Generally speaking, a patent monetization entity, non-practicing entity or patent assertion entity purchases groups of patents without an intent to market or develop a product.

In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as “patent trolls.”

So, why the uptick in these high-volume plaintiffs?

Howard pointed to a major change to patent law.

In 2011, President Barack Obama signed the America Invents Act, or AIA. The law switched the U.S. patent system from a “first to invent” to a “first inventor to file” system, eliminated interference proceedings and developed post-grant opposition. Its central provisions weren’t put into effect until March 2013.

In particular, the AIA changed the procedural rules regarding joinder, or the number of defendants a plaintiff can sue in a single case.

“One of the changes was that a single plaintiff could no longer sue a group of defendants,” Howard explained.

“So what used to be one case against 10 different defendants has now turned into 10 separate cases.”

In comparison, litigation by low-volume, infrequent plaintiffs has remained fairly consistent, Howard said.

“Old-time, company-on-company lawsuits haven’t changed very much,” he said.

In fact, over the past nine years, such low-volume plaintiffs have averaged only about a 6 percent change from year to year.

In contrast, in 2011 alone, the number of “frequent fliers” peaked at 11,617 — an increase of just under 50 percent from the year before.

About the study

Lex Machina mined the data for its report by “crawling,” or indexing, cases on PACER, an online service that provides access to federal court documents, and EDIS, the repository for all documents filed in relation to an investigation conducted by the U.S. International Trade Commission.

“We crawl every case on PACER every night, and then we have a relatively sophisticated system that processes that data and extracts higher level data,” Howard said of the process.

The company, which has a database of intellectual property cases going back to 2000, even has systems in place that can determine if a case has been marked incorrectly and can capture those cases brought alongside contract, trademark or trade secret claims.

Other highlights

Lex Machina’s report also found:

* Significant increases in cases filed in the Eastern District of Texas and Delaware, and the greatest decrease in the Central District of California;

* Judge Rodney Gilstrap was assigned 941 new cases in the Eastern District of Texas, while no other judge in any district was assigned more than 400;

* Law firm Fish & Richardson, with 308 cases, led all national law firms ranked by open cases (filed 2009-13); and

* The top 10 defendants were Apple — with 59 new cases filed against it in 2013 — Amazon, AT&T, Google, Dell, HTC, Samsung, Microsoft, LG and HP.

From Legal Newsline: Reach Jessica Karmasek by email

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