PublishedMay 3, 2023

New Report Reaffirms Danger Patent Trolls Pose to Manufacturers, Small Businesses

People whose business models are threatened by strong post-grant review and improved patent quality continue to assert that non-practicing entities (NPEs) and the patent troll narrative is a myth or a fabrication of big tech companies. And yet, a new report by Hightech Solutions reaffirms what has long been known to be true: NPEs aggressively target manufacturers and attack businesses small and large alike in their pursuit of windfall profits. 

According to the report, NPEs concentrated more than half of their attacks on two sectors—manufacturing and services. The manufacturing sector was hit the hardest, targeted in nearly 30% percent of all lawsuits. And that’s not just high tech manufacturing, either.  HTS found as many lawsuits against wholesale durable goods makers as against computer manufacturers, and as many against non-durable wholesale goods as against automakers.  Lawsuits against retailers were even nearly as common as lawsuits against communication service providers.

The data is clear: while all industries are at risk of being targeted by NPEs, the manufacturing sector is greatly and disproportionately affected. The report also particularly notes that increased NPE activity in the automotive industry, stemming from the rise of smart-cars, is likely contributing to the manufacturing domains’ top placement.

HTS also looked at the size of NPE targets.  While companies with revenue of greater than $1 billion attract more suits per company, more than half of NPE lawsuits are filed against companies worth less than $25 million. The report notes that while small business owners may assume that their size makes them less at risk to NPEs than a massive corporation, it’s simply not true. NPEs do not discriminate based on business size.
Nothing in this report is a surprise to those who’ve been paying attention to NPE activities, but it is a cause for continued concern. The USPTO’s recent Advance Notice of Proposed Rulemaking proposes weakening the exact kind of post grant challenges that have helped in limiting the NPE problem over the past decade.  When considering the impacts of such a rule, this is exactly the type of data that needs to be kept in mind.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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