Written By: Robert Wenzel
Since the start of the new millennium, there has been a sharp increase in patent troll lawsuits. Between 2003 and 2013, the number of defendants in patent troll cases increased approximately sixfold. However, 2014 will see a sharp decrease of lawsuits by “non-practicing entities” compared to last year.
Two key elements of a patent troll’s model are a costly discovery process for defendants and broad or vague patents that can be seen as covering common types of technologies. These factors can cause patent lawsuits to be expensive for the defendant, since they often have to spend a large sum of money defending themselves before the plaintiff reveals the supposed infringement is.
Additionally, the Court of Appeals for the Federal Circuit relaxed standards for patenting software in the 1990’s. The loosening of standards has resulted in the U.S. Patent Office has issued thousands of software patents that are both vague and broad. As a result, 89% of the patent lawsuits were related to software patents.
However, there are several United States Supreme Court cases that have hurt patent trolls. Two Court decisions from April of 2014 have made it easier for Defendants to recover their legal costs in a frivolous lawsuit. Then, in June the Court made it easier to challenge a vague patent.
In a decision from June of this year, Alice Corp v. CLS Bank, the Court stated that an individual is unable to obtain a patent if he or she implements an existing business method on a computer.
As a result of the Alice decision, two things have taken place. First, the number of patents issued has decreased by half. Second, the courts have disallowed 15 different business method patents not being patentable.
In addition to the Alice decision mentioned above, there are two other reasons for the decrease in patent troll lawsuits. One reason is new procedures that challenge patents at the Patent Office. The other reason is that the smartphone patent battles between Apple and other companies are no longer continuing.
While there has been a decrease in the number of business method patent troll lawsuits, the majority of patent lawsuits that have been filed are still concerning software patents.
There is a possibility that future Supreme Court decisions may have a greater impact on patent trolls in the future. At the same time, Congress may enact legislation down the road to correct the issue with patent trolls.