Thursday, September 23, 2010

Heavily Litigated Patents Win Seldom: Software Patents only 12.8% of cases, Patent Trolls (NPEs, non-practicing entities) only 9.2% of Cases

The strongly held idea that heavily litigated patents were somehow "more valuable" than non-litigated or seldom-litigated patents can safely be put to rest as the result of study just posted at SSRN on September 16, 2010 as Stanford Law and Economics Olin Working Paper No. 398 by John R. Allison (University of Texas at Austin - Department of Information, Risk and Operations Management), Mark A. Lemley, Professor of Law at Stanford Law School and Joshua Walker (affiliation not provided to SSRN).

See Allison, John R., Walker, Joshua and Lemley, Mark A., Patent Quality and Settlement among Repeat Patent Litigants (September 16, 2010). Stanford Law and Economics Olin Working Paper No. 398. Available at SSRN: http://ssrn.com/abstract=1677785

The Abstract to the article reads as follows:
"Repeat patent plaintiffs - those who sue eight or more times on the same patents - have a disproportionate effect on the patent system. They are responsible for a sizeable fraction of all patent lawsuits. Their patents should be among the strongest, according to all economic measures of patent quality. And logic suggests that repeat patent plaintiffs should be risk averse, settling more of their cases and taking only the very best to trial to avoid having their patents invalidated. In this paper, we test those hypotheses. We find that repeat patent plaintiffs are somewhat more likely to settle their cases. But, to our surprise, we find that when they do go to trial or judgment, overwhelmingly they lose. This result seems to be driven by two parallel findings: both software patents and patents owned by non-practicing entities (so-called "patent trolls") fare extremely poorly in court. We offer some possible explanations for why a group of apparently weak patents nonetheless have so much influence over the patent system, and some preliminary thoughts about how these findings should shape the patent reform debate. "
The article is discussed at The 271 Patent Blog to whom we send a hat tip.

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