Every retailer knows that patent litigation is growing rapidly.  And every retailer knows that more and more of that litigation is created by trolls.  A recent study analyzes a set of 500 cases, using data from Lex Machina - The America Invents Act 500: Effects of Patent Monetization Entities on US Litigation.  The study looks at 500 cases between 2007 and 2011, determining:

  • Troll litigation is on the rise, from 22% of patent cases in 2007 to 40% of cases filed in 2011.
  • Four of the five most active patent plaintiffs are trolls.
  • Trolls rarely get a merit-based resolution or perhaps it is better said that most defendants settle for cost of defense amounts rather than litigating to a decision.

What can retailers take away from this study?

  1. The old saw that defendants are not ready to litigate applies at least equally in both directions.
  2. One way for retailers, and defendants generally, to generate leverage is to show a willingness and (most importantly an ability) to drive cases effectively toward trial, as well as toward substantive decision points like summary judgment.
  3. With so many cost of defense settlements, it is doubly critical to drive down defense costs.  That can come from alternative fee arrangements and/or effective partnering between in-house and outside counsel.
  4. Another key cost reduction strategy should be focusing upon driving down discovery costs in any way possible - avoiding non-strategic discovery disputes, reducing discovery scope, (by agreement or by law), and by outsourcing or by inhouse / outside partnering.

Finally, a thank you to my friends at IP Wise and the Brann law firm for identifying the study.