Patent Litigation Study Shows Rise in Suits, Awards

Patent Litigation Study Shows Rise in Suits, Awards

The number of patent suits filed in district courts continued to rise in 2013 and has more than doubled in the past five years, according to the first-ever patent litigation year in review published by the legal analytics company Lex Machina.

Using data from its popular legal analytics platform, Lex Machina published a report Tuesday that offers insight into judges, districts, patents, damages and filings. It focuses on major trends and developments in patent litigation during 2013.

Plaintiffs filed 6,092 new patent cases in the U.S. district courts last year, compared with 5,418 new cases filed in 2012, a 12.4 percent increase.

Not surprisingly, technology companies bore the brunt of this litigation. Apple Inc. and Amazon Inc. were the most common targets of lawsuits, named as defendants in 59 and 50 cases, respectively. AT&T Inc. ranked third with 45 cases, and the rest of the list was comprised of such technology giants as Google Inc., Dell Inc., HTC Corp., Samsung Electronics Co., Microsoft Corp., LG Electronics Inc. and Hewlett-Packard Co.

The data also revealed that the top 10 most-prolific filers of patent lawsuits in 2013 were all patent assertion entities, commonly known as patent trolls. The report, which calls these companies patent monetization entities, said ArrivalStar Inc. and Melvino Technologies Ltd. jointly filed 137 cases, making them the No. 1 patent plaintiff in 2013. They also asserted six of the 10 most-frequently asserted patents, all involving systems for monitoring or tracking vehicle status, travel or proximity.

The data showing the activity of patent trolls runs counter to claims by critics of patent reform and antipatent troll legislation, including former U.S. Patent and Trademark Office Director David Kappos, who says the patent troll issue has been blown out of proportion.

Owen Byrd, whose official title is chief evangelist and general counsel of Lex Machina, says patent trolls are clearly active. But he also says the data shows the top plaintiffs by number of distinct patents at issue in open litigation are mostly operating companies. Telefonaktiebolaget LM Ericssson is the leader with 103 patents in litigation in 2013. Apple Inc. takes the No. 8 spot with 52 patents being litigated. And Pfizer ranks 10th in the top plaintiff list, with 30 of its patents being litigated.

But even in this list, two divisions of the massive patent holding company Intellectual Ventures, often labeled a patent troll, ranked second and third on the list of plaintiffs with the most patents asserted in cases opened in 2013, with Intellectual Venture I asserting 100, and Intellectual Ventures II asserting 81.

Byrd also noted that 61 percent of the 4,917 patents at issue in all cases filed during 2013 had not been litigated in the past 10 years. “This suggests that the trend in assertion continues to involve cases of first impression,” Byrd said. “And the fact that so many of these patents that have never been litigated before are now the subject of disputes suggests that this is still a vibrant area of law.”

The numbers also show that plaintiffs continue to look at monetization strategies that include enforcement, he said.

Trends in how courts view patentable subject matter were also revealed by the data: The number of cases in which district courts have issued decisions invalidating patents on Section 101 grounds doubled between 2012 and 2013. At a time when the U.S. Supreme Court is considering what constitutes patentable subject matter under Section 101 of the Patent Act with its review of CLS Bank v. Alice, “it is important to note that district courts have issued an increasing number of decisions invalidating patents on §101 grounds,” the report says.

The Eastern District of Texas continued to be the most active for new patent cases, with 1,495, edging out the District of Delaware’s 1,336 new cases. Texas’ filings were up 20 percent from 2012, while Delaware’s rose 33 percent.

Byrd pointed out that Judge Rodney Gilstrap in the Eastern District saw 941 new patent cases in 2013, far more than any other judge in the country. Judge Leonard Stark in the District of Delaware was second, with 399 new suits.

The data also showed that cases went to trial fastest in the Eastern District of Pennsylvania, with a 255-day median time to trial. This was 12 times faster than the 2,423 days it took a case to get to trial in the slowest district, the Western District of New York.

The Eastern District of Texas and the District of Delaware each held 25 patent trials in 2013, and the Southern District of New York held 17. Those venues accounted for more than half of the 128 patent trials held that year.

The 10 largest damages awards in 2013 patent cases ranged from $1 billion to a little more than $15 million, with damages generally increasing from 2012 to 2013. Huge awards such as the $1 billion verdict won by Monsanto Co. that was finalized in 2013 made the average damage award increase 28 percent, while the median damage award increased 22 percent.

Finally, the U.S. International Trade Commission retained its stature as an important venue for resolving patent disputes, according to the report. There were 41 new ITC investigations filed in 2013, compared with 42 in 2012.

Lex Machina, which draws its data from publicly available information and then refines it, is used by lawyers to help predict the behaviors and outcomes that different legal strategies will produce. About one-third of the Am Law 100 firms are Lex Machina customers, Byrd said, noting that the report is a comprehensive treatment of information that emerged from work it did during the year. “Lex Machina was started as a public interest project by Stanford University’s Law School and Computer Science Department,” he said, “and we are still committed to providing information to lawmakers and academics to improve the practice of patent law.”

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