The Prior Art

Patent Litigation Weekly: A Closer Look at a New Patent Study

Two years after Richard Frenkel—at the time an in-house Cisco Systems, Inc., lawyer and now of counsel at Wilson Sonsini Goodrich & Rosati—outed himself as the until-then-anonymous author of the controversial patent litigation blog, the Patent Troll Tracker saga appears to be over.

In January, a libel suit filed by East Texas lawyer T. John “Johnny” Ward, Jr. against Cisco over the contents of an October 2007 Troll Tracker post was settled under confidential terms. Frenkel—dismissed as a defendant in the case last August at Ward's request—has declined to comment on either Ward's suit or a second, related defamation claim filed against him and Cisco by East Texas lawyer Eric Albritton. (That suit settled in September after a week-long trial; see earlier coverage on The Prior Art here, here, and here.)

While it’s clear now that at least a few high-level Cisco employees knew the Troll Tracker’s identity, company lawyers say no one there besides Frenkel contributed to the blog. Still, because Cisco is helping to lead the lobbying charge in favor of reforming the nation's patent laws—with a particular focus on lowering litigation payouts to non-practicing entities (a.k.a. NPEs, or "patent trolls")—those who advocate for small patent holders sensed a Frenkel-Cisco conspiracy.

Putting aside the conspiracy theories aside and drama—two lawyers with a high profile in the Eastern District of Texas's lucrative patent litigation scene suing Cisco and one of its in-house lawyers for libel and defamation—it seems like an opportune time to take a broad look at the big issue at the heart of the Troll Tracker tale: that the huge piles of money at stake in patent litigation has created an independent class of IP professionals? As it happens, a PricewaterhouseCoopers study released in January on just that topic has some answers.

"Patent trolling" has its rewards.

Tech-sector executives and lawyers say privately—and an informed review of court dockets confirms—that so-called trolls aren't just surviving, they're thriving. The essential NPE tactic—suing a broad swath of companies for patent infringement, then settling with each defendant for less than the cost of fighting such a suit—is now an established business model. It's so solid, in fact, that patent-holders are starting to delve into previously untouched economic sectors, suing small retailers and even photographers.

Patent defendants aren't copycats. So who's the real inventor here?

Recently, I met up with a freelance photographer who was taking some photos for a patent infringement lawsuit I was reporting on. After I introduced myself, he asked me to sum up the story: "So the plaintiff is saying this company ripped off his idea, right?"

If you wanted a one-liner to capture the popular conception of what patent lawsuits are all about, that's a pretty good one. But here's the thing: it's nearly always wrong.

It's not just that defendants in patent lawsuits aren't found guilty of copying—with very few exceptions, they aren't even accused of copying, according to a new study by two leading patent academics. Taking that data as a jumping-off point, I took a closer look at the issue of copying and other popular misconceptions about patent lawsuits in my January IPLB story, "The Inventor's Tale." The story has now been published on Law.com as well, with a different title: "How Juror Misconceptions Affect Patent Trials."

In the course of reporting this story, I traveled to Marshall, Texas, where I watched my first full patent trial. Watching that trial, Mass Engineered Design v. Ergotron, I really started to see where the rubber hits the road in patent law. I will have more reflections from that trial and the trip that I'll share here. But today I want to take a closer look at the research on copying by law professors Mark Lemley (Stanford) and Christopher Cotropia (U. of Richmond). Their fascinating study, "Copying in Patent Law," is available on SSRN.

Patent Litigation Survey 2007

This year’s patent litigation survey is up on IPLB.com (free registration required). Here, I want to include a note about our methodology and the nature of  this survey. The patent litigation survey is an attempt to simply measure which law firms handle the most patent litigation in district courts, and this year (for the first time) at the appellate level.

We’ve refined how we try to measure this over the years; one result of those improvements is that comparing our surveys year to year isn’t an exact apples-to-apples comparison.

This year, there’s one major change worth noting here: we counted only patent cases filed in 2007 that were alive for at least two months. Last year, we counted patent cases filed in 2006 that were still alive in February 2007. Both rules are attempts to discount here-today, gone-tomorrow lawsuits. This year's method is more consistent, but probably resulted in slightly higher counts all around.

Two other things to keep in mind:

• We don’t differentiate between lawsuits. On our chart, a law firm that works a defense case that settles in three months gets the same credit as a case where a firm will see a client through a lawsuit that includes years of no-holds-barred court battles.

• We don’t count defendants. Big multi-defendant lawsuits are counted just once for a plaintiff, and count individually for the defense law firms. (but a defense law firm gets one “point” for the lawsuit, whether it defended 10 clients or just one.)

It’s worth mentioning here a different survey that did count defendants, the only one I am aware of—the data gathered by former Patent Troll Tracker blogger Rick Frenkel. He estimated a dramatic 31.5% increase in the number of defendants sued last year. His numbers are worth re-considering; I will re-publish them in my next post. Tomorrow, I'll put up some extra analysis of my own.

Monday Patent Notes: "Patent Elves," Naked Cowboys, and a big Microsoft verdict

• Did you know patent litigation actually increases competition? (Also, night is day, black is white, and 2+2=5, all to be addressed in future posts.) Who thinks more lawsuits are good for the economy? File that under "not surprising": Two consultants from litigation-support company LECG, joined by a partner from Howrey LLP. (Wait, isn't that the "no trolls" law firm? Hmm...) Read their new paper, which seems to suggest that so-called "patent trolls" should be renamed "patent elves." Reported Friday by IPlaw360 (subscribers only). 


• File this under "even less surprising." Not reported by IPlaw360 is the company that paid for the discovery of this new math: Qualcomm, a big-time patent licensor. (The authors did the right thing by disclosing this fact in a front-page footnote.)

• Today, an April jury verdict for Alcatel-Lucent and against Microsoft was upped from $358 million to $512 million, the AP reports. That makes this the biggest patent award of 2008 so far, even bigger than both massive verdicts against Boston Scientific. Microsoft will appeal.

• The Naked Cowboy, a New Yorker who claims M&M/Mars stole his outfit idea for an advertisement, still has hope, reports the WSJ law blog. A judge threw out his privacy claim but his trademark infringement claim lives on...