According to our rankings, one of 2010's most prolific NPEs was Geotag, Inc., a Texas-based company. In 2009 it acquired a patent related to "geotagging" (the process of adding geographical metadata to media, like online photos) for nearly $119 million, according to research by IP analyst and blogger Florian Mueller. Then, last year, it sued at least 397 businesses for patent infringement in East Texas, Mueller's research reveals. Those suits were primarily against Google Inc., Microsoft Corporation, and assorted companies that use their mapping services (Google Maps and Bing Maps, respectively) for online store locators.
Nearly every firm near the top of our rankings profited from the Geotag boomlet, including our winner, Fish & Richardson. It defended against Geotag in seven related cases in East Texas.
While the decrease in damages awards hasn't yet deterred plaintiffs lawyers, it has started to affect settlement negotiations, says Columbia. "Anecdotally, we're seeing a bit of changed behavior and settlement amounts becoming smaller," she says. "And, over time, the crackdown on damages may make the NPEs more discriminating about the cases that they bring."
The ubiquity of the smartphone may also explain the uptick in new patent cases even as awards shrank. Apple, which makes the industry-leading iPhone, is pressing forward with a patent litigation campaign against rivals like HTC and Samsung. Many observers have called that campaign a proxy war with Google, because both companies use Google's open-source Android operating system. A soon-to-be-released official biography of Steve Jobs, Apple's deceased founder and exCEO, confirms that suspicion. Biographer Walter Isaacson reportedly quotes Jobs as vowing to "destroy" Android because he said it copies Apple's ideas. "I will spend my last dying breath if I need to," Jobs was quoted as saying. "And I will spend every penny of Apple's $40 billion in the bank, to right this wrong."
Unlike most patent holders, smartphone manufacturers aren't after big verdicts. Their strategy has been to ask federal judges to enjoin rivals from entering the burgeoning smartphone market in the first place. And for every complaint that a smartphone manufacturer like Apple or HTC files in district court, there is typically a corresponding complaint before the International Trade Commission, which can't award money damages but can lay down costly "import bans."
One firm that particularly benefited from the smartphone wars in 2010 was Quinn Emanuel Urquhart & Sullivan, which slotted in at 17 in our rankings. It defended Motorola, whose phones use Google's Android operating system, in two different Apple lawsuits in the Western District of Wisconsin. It also went on the offensive against Microsoft in a case in Seattle.
Thanks to NPE litigation and the smartphone wars, patent litigation could chug along for years to come. When discussing the future of patent litigation, lawyers say the elephant in the room is the America Invents Act, the sweeping patent reform bill signed into law in September.
In an effort to curtail and simplify patent litigation, Congress has created a new avenue for challenging the validity of patents in the Patent and Trademark Office, instead of the courts. The most intriguing new procedure is one called "postgrant review," because the PTO is statutorily required to issue a ruling within a year of such a challenge being brought, or 18 months in extenuating circumstances.
The IP lawyers at McDermott have been actively debating the impact that postgrant review will have when it goes into effect in 2012, says Columbia. "It's going to be fascinating to see how it plays out," she says.
Many patent litigators say they are wary of the new procedure. Unlike the courts, the PTO can't offer money damages, they explain. And the stakes are high: If an argument is raised in postgrant review, or reasonably should have been, lawyers are precluded from raising it in later litigation.