10% Ain’t Bad – Most Litigated Patents Tend to Lose 90% of the Time

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By Aaron B. Thalwitzer

A new study is out concerning patent trolls and software patents.  The study found that the most litigated patents tend to lose nearly 90% of the time. When broken down into different categories, patent trolls and software patents lose their lawsuits most often.  While some may suggest this means ‘the system is working,’ that is not truly the case.  Instead, the data suggests that most companies, when threatened with a lawsuit, end up settling or licensing to avoid the high costs of litigating.  The fact that so few software patents and patent trolls do well at trial, however, may be more incentive to fight back.

Even so, as an astute commenter on Slashdot points out: “It’s not completely unlike walking up to many random women and saying, ‘nice shoes, want to have sex?’ Sure, the vast majority will think you are a schmuck and maybe even give you a slap, but to some, having an extremely tiny percentage agree, makes it worth their effort.”

The results must be tempered.  Even assuming that 90% of the lawsuits brought by patent trolls lose at final judgment, it does not necessarily follow that 90% of software patents are garbage.  It is only after several levels of filtering that a case can be decided. Generally, at each level, if the patent is strong, the likelihood that the litigation process ends is high.

Consider the following possibilities:

Demand letter reviewed –> Strong patent? Settle.

Initial lawsuit filed –> Semi-strong patent? Analyze the cost/risk of defending the lawsuit and license the patent if the numbers don’t work.

Lawsuit continues –> Weak but possible bad judgment? Settle.

This patent is too strong, and this patent is too weak, but this patent is just right!

As with most litigation, the cost of the suit must be weighed against the merits of the case and damages involved.  What is the endgame?  Does it really make sense to say that only those patent holders whose patents are not too strong or too weak, and in which the patent holder can afford litigation, will a case get to final judgment?  Of course not.  This almost sounds like a theory set forth by Goldilocks herself.

They are who we thought they were

This study is hardly a basis to declare that all software patents are weak and unenforceable or that trolls are “losing.” More of a reassurance that they are who we thought they were.

Comments

Posted On
Oct 11, 2010
Posted By
patent litigation

Bad news for NPEs (patent trolls). The disclosure of the results of this study likely weakens their bargaining position, as more defendants learn that NPEs have a disadvantage at trial. It’s starting to look like the ITC — which has proven itself quite NPE-friendly, of late — may be would-be trolls’ best bet.
http://www.fastcompany.com/1693197/why-apple-could-pay-more-than-625m-for-cover-flow-patent-infringement

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