Last year was a very busy year for . . . patent trolls.
A patent troll, as described by Wikipedia, is a person or company that attempts to enforce patent rights beyond a patent's actual value. Sometimes trolls buy up vague patents and, with no intention of ever using them, go after businesses that provide services that are at least vaguely similar to what their overly-broad patent defines. Litigation instigated by patent trolls–officially known as "non-practicing entities"–can have a devastating effect on small businesses.
Despite claims in some quarters that trolls have been reined in, a report by the RPX Corp indicates that troll activity was on the upswing last year. Ashby Jones recently commented on the report at the Wall Street Journal's "Intellectual Property" blog:
NPEs filed 3,604 cases last year, a sharp increase over 2014, in which NPEs filed 2,891. The number was down slightly from 2013, in which NPEs filed 3,733 lawsuits.
The authors of the study acknowledge that the uptick is somewhat counterintuitive.
In recent years, Congress, the Supreme Court, and the U.S. Patent and Trademark Office have all taken steps to curb litigation based on patents, especially those relating to computer software. Critics argue that many of these patents should not have been awarded in the first place.
The 2011 America Invents Act — Congress’s first overhaul of the patent laws in decades — established a new tribunal, called the Patent Trial and Appeal Board.
The PTAB allows a company embroiled in a lawsuit to skip the question of whether it infringed a patent and challenge whether the patent should have been issued in the first place. Parties have filed 4,314 patent challenges with the PTAB since the board launched in 2012, according to RPX RPXC -0.09%. And the PTAB has bared its teeth, according to the study: “Of 2,813 petitions that have reached an institution decision — the point at which the PTAB either ends the challenge or proceeds to trial — about 70 percent” have been allowed to move forward.
In a 2014 case called Alice Corp. v. CLS Bank International, the U.S. Supreme Court struck down a patent for software that reduces risk in financial transactions. Since then, lower courts have struck down dozens of software patents as invalid, disarming many NPEs who had used such patents in lawsuits against many large tech companies.
According to RPX, which helps companies reduce their exposure to patent lawsuits, “this combination of factors might have seemed insurmountable to NPEs; yet clearly, these and other defendant-friendly developments failed to slow the overall rate of lawsuit filings in 2015.”
Meanwhile, the Protecting America's Talent and Entrepreneurship Act, co sponsored by Republican Senator Chuck Grassley and Democrat Pat Leahy, which would curtail activity by trolls, remains in committee in the Senate.