Patent Quality Improvements Could be Made by Reviewing Patent Infringement Litigation

From 2000 to 2010, the number of patent infringement lawsuits in the federal courts fluctuated slightly, and from 2010 to 2011, the number of such lawsuits increased by about a third, according to a study conducted by the Government Accountability Office.

The increase in 2011 was most likely influenced by the anticipation of changes in the 2011 Leahy-Smith America Invents Act (AIA), which made several significant changes to the U.S. patent system, including limiting the number of defendants in a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit with multiple defendants to break the lawsuit into multiple lawsuits.

The number of defendants in patent infringement lawsuits increased by approximately 129 percent over 2007 to 2011, according to analysis of a representative sample of 500 lawsuits. These data also show that companies that make products brought most of the lawsuits and that non-practicing entities (NPE) brought about a fifth of all lawsuits.

The governmental agency’s analysis also found that lawsuits involving software-related patents accounted for about 89 percent of the increase in defendants over this period. Stakeholders knowledgeable in patent litigation identified three key factors that most likely contributed to many recent patent infringement lawsuits. They said that many lawsuits are related to the prevalence of patents with unclear property rights, like overly broad or unclear claims or both. Second, the potential for large monetary awards from the courts, even for ideas that make only small contributions to a product, can be an incentive for patent owners to file infringement lawsuits. Third, patents are now recognized as a more valuable asset may have contributed to the recent uptick in patent infringement lawsuits.

According to GAO, the judicial system is implementing new initiatives to improve the handling of patent cases in the federal courts, including (1) a patent pilot program, to encourage the enhancement of expertise in patent cases among district court judges, and (2) new rules in some federal court districts that are designed to reduce the time and expense of patent infringement litigation. Recent court decisions may also affect how monetary awards are calculated, among other things. Several stakeholders said that it is too early to tell what effect these initiatives will have on patent litigation.

The U.S. Patent and Trademark Office (PTO) has taken several actions that may affect patent quality and litigation in the future, including agency initiatives and changes required by AIA. In November 2011, PTO began working with the software industry to develop more uniform terminology for software-related patents. Some PTO staff said that the types of patents involved in infringement litigation could be linked to PTO’s internal data on the patent examination process, and a 2003 National Academies study showed that such analysis could be used to improve patent quality and examination by exposing patterns in the examination of patents that end up in court.

Source: United States Government Accountability Office