There’s No Data to Show That Many Inventors Are Being Ripped Off

The Innovation Alliance (an organization whose members include large patent trolls such as Tessera, InterDigital, and Qualcomm) has been pushing against patent reform in the name of the small inventor. They even have a Save the Inventor website set up. (And no, I’m not linking to it – you can find it easily enough.)

Their Twitter account puts out things like:

The Innovation Alliance is pushing the story that there are small inventors regularly being ripped off by big companies. For the Innovation Alliance, patent trolls are a small, if non-existent threat to industry. Of course, we know that there is, in fact, a large patent troll problem.

But what do we know about small inventors? Are they frequently having their inventions poached?

First, let’s make clear that we’re not talking about whether their patents are infringed. If a company independently develops a product that infringes someone else’s patent there’s no pilfering going on.

What I’m asking is, how often does a company deliberately copy someone’s patented invention?

Our Survey Says…

Turns out that patent owners don’t typically accuse defendants of copying their patents.

Cotropia and Lemley did a study of cases to find out how common allegations of copying were. They looked at a sample of 193 cases filed from 2000 to 2007. Of the non-pharmaceutical cases (pharmaceutical cases typically do involve allegations of copying, for technical reasons), only 4.5% (8 out of 177) alleged copying by the defendant.

Admittedly, that’s not a big sample size.

Lex Machina put out a terrific report on damages in patent infringement cases from 2000–2013, but it includes data only on willful infringement rather than copying specifically. Willful infringement occurs when an infringer knew about a patent and knew (or should have known) that its product was infringing, but infringed anyway. (That’s not quite the legal standard, but it captures the basic idea.) Willful infringement doesn’t always involve copying; sometimes a company can be held liable for willful infringement if it learned that it infringed a patent after a product was already introduced, but took no action to stop infringing. But deliberate copying is a typical type of willful infringment, so we can use findings of willful infringement as an upper bound.

One surprising finding from the Lex Machina report: compensatory damages (i.e., damages to make the patent owner whole) are quite unusual in patent cases. During the studied period, over 5,000 patent cases (out of over 36,000 filed) reached some sort of merits decision, either from the judge or a jury verdict. Only about 700 of those cases resulted in an award of money damages for compensation. That’s about 14% of decided cases.

From 2000–2013, there were a total of 160 assessments of enhanced damages for willful infringement. Even if we assume that all of those involved copying, that’s 3% of decided cases (about 0.4% of all filed cases), and it’s just over 10 cases a year on average.

Could there be more instances of copying? Sure, but we have no data showing that. And Cotropia and Lemley’s study strongly suggests that few patent owners even allege copying in the first place.

What we do have is data showing that there were over 3,100 patent troll suits filed in 2013 against over 3,700 companies.

Do the Needs of the Dozen Outweigh the Needs of the Many?

Patent reform does not make it harder for legitimate patent infringement suits. And should we really avoid helping 3,700 operating companies because about a dozen patent owners a year might be slightly worse off than they are now?

Seems to me it’s up to the Innovation Alliance to prove there’s really an invention-copying problem before we derail attempts to deal with patent trolls.