The Debate Should Be Over: Patent Litigation Is Back Up

It looks like that dip in patent litigation last year is over: patent lawsuit filings are up, and they’re actually higher than the same periods last year.

According to Lex Machina’s data, in January this year, there were 442 patent cases filed compared with 334 cases in January 2014. That’s a 32% increase. In February this year, there were 500 patent cases filed compared with 440 cases in February 2014. That’s a 13.6% increase. For the year so far, there are about 22% more patent cases filed in the first two months of 2015 compared with the first two months of 2014.

The peak of patent lawsuits hit in 2013. The first two months of this year are about 10% lower than the first two months of that year. But if we include PTAB filings (which are almost entirely for inter partes review, with around 10-15% being for covered business method review), patent litigation activity is higher than ever.

In the first two months of 2013, there were 56 PTAB petitions for post-issuance review filed. In 2014, there were 135 petitions filed in the first two months, a 141% increase. This year, there have been 295 petitions filed in the first two months. That’s more than five times the number filed in the first two months of 2013, and more than double last year’s filings for the same period.

Moreover, patent trolls still dominate patent lawsuit filings. According to Unified Patents’ data, “NPE litigation made up 65% of February 2015 initiated District Court cases, compared to 68% in February 2014 and 58% in January 2015.”

It’s simply undeniable that patent troll litigation continues to take a toll on American businesses. A group of over 50 law professors and economics scholars recently sent a letter to Congress, in which they noted that there have been over two dozen empirical studies on the impact of patent litigation.

The preponderant economic picture these studies present is that patent litigation now imposes substantial costs, particularly on small and innovative firms, and that these costs have tended overall to reduce R&D, venture capital investment, and firm startups. Not one study of the economic impact of current patent litigation concludes that the effects are negligible.

Every time a new study comes out, opponents claim that its conclusions are flawed, but you do have to wonder how it is that there has never been an empirical study that found a benefit from our current levels of patent litigation, or any benefit from patent assertion entities. If the status quo is so good for innovation, surely someone should have seen such a result, no?

Again, here’s the professors:

Although each of these studies has limitations and none is conclusive by itself, a consistent picture emerges: the patent system provides strong protection without excessive litigation in some sectors such as pharmaceuticals, but substantial evidence highlights serious problems with patent litigation in many other industries. Even if the patent system on the whole promotes innovation, it does so despite the social costs that result from this litigation, not because of it.

If opponents of reform have enough money to plaster DC Metro stations with posters and produce a movie that they released in theaters, they certainly have enough to fund good quality research. The fact that anti-reformers spend their money on lobbying and PR instead of on empirical research tells you everything you need to know.

I have no doubt that we’re still going to hear the talking point that patent litigation is down (see here for a recent example). And some people will continue to attack one study and then conclude that there is no data showing a problem.

The reality is that patent litigation is back up. Patent troll litigation is back up. Study after study after study has shown that patent assertion entities are a serious problem, and not one study shows any benefit to innovation from PAEs.

The inverse of this is that if we put more balance into the patent litigation system, it can only encourage innovation.