According to research conducted at the request of the U.S. Government Accountability Office (GAO), “patent monetization entities,” otherwise known as patent trolls or non-practicing entities, have increased their litigation activity from 22 percent of patent cases filed five years ago to nearly 40 percent of cases filed in 2011. Feldman, et al., “The America Invents Act 500: Effect of Patent Monetization Entities on US Litigation,” Duke Law & Technology Review (forthcoming). Congress required under the America Invents Act that GAO gather information on this type of litigation. GAO turned to the authors of this analysis to compile data on a random sampling—100 cases per year for five years—that GAO would use for its report to Congress.
The researchers, who decided that the term “patent monetization entities” better described parties that sue to generate income from patent rights separated from any product, conducted their own analysis. They concluded that (i) the impact of these “entities on patent litigation is both dramatic and growing across time; (ii) “of the five litigants who filed the most patent infringement claims in the period covered by the data, four were monetizers and only one was an operating company,” i.e., an entity whose main source of income is a product or providing a service unrelated to patent monetization; (iii) universities, which do not typically make or sell products, “barely registered on the scale, filing only 0.2 percent of the lawsuits in our sample”; and (iv) cases filed by patent monetization entities are “unlikely to advance very far in the trial process and generally settle early in the litigation.”
On the basis of their analysis, the researchers suggest that “lawsuits filed are only the tip of the iceberg, and a major operating company may face hundreds of invitations to license for every lawsuit. Much of the bargaining, posturing, and payment concludes without any party filing suit. Thus, one can only imagine the magnitude of the impact that patent monetization has on the patent system, and on the economy, as a whole.” They acknowledge limitations in their data, noting that the small sample size may affect any broad conclusions about case outcomes and that they excluded cases lacking sufficient electronically available information.