Non-Practicing Patent Holders Winning Bigger And Bigger Awards -- And Why They Like East Texas

from the speed-or-success? dept

It's no secret that many non-practicing entities (i.e., patent holders who do not actually build anything, but just try to license their patent or sue others for infringement) tend to prefer jury trials. It's well-known that juries, who have been fed years of misleading (and sometimes blatantly false) stories of the mythic "sole inventor," are extremely sympathetic to stories of big bad companies "stealing" ideas from lone inventors. Of course, reality is a lot more complicated. It's extremely rare that there's any evidence at all that a practicing entity actually took the idea from the patent holder, and there's significant evidence that the use of patents by such NPEs is woefully inefficient and a drag on innovation. But juries sure do love those David vs. Goliath stories, and some new research shows how popular jury trials have become for such lawsuits -- and how the awards for NPEs have been growing rapidly because of that.

BearGriz72 points us to some new research on non-practicing entities from PwC that shows the end result of all of this:
Damage awards for NPEs have risen considerably in recent years. In fact, the median damages award for NPEs was more than triple the award for practicing entities over the last seven years ($12 million for NPEs, and $3.4 million for practicing entities). Contrasted with 1995-2001, the median damages award for NPEs was about the same when compared with practicing entities (roughly $5 million).

One obvious explanation could be that NPEs have become more sophisticated in selecting patents to litigate, and understanding the markets to sue against. However, another explanation may have something to do with the use of jury trials -- juries decided only 14 percent of the cases with damages awards during the 1980s and 24 percent during the 1990s. In this decade, juries have decided 51 percent of the cases with damages awards.

NPEs like juries -- trial success rates for patent holders are much higher when decided by juries as compared to bench trials. In fact, jury success rates have consistently outperformed their bench counterparts every year since 1995. Since 1995, 55 percent of trials involving NPEs have been jury trials, as compared to only 41 percent of trials involving practicing entities. In addition to the rate of success at trial, recent awards by juries have been significantly greater, running several multiples of the amounts awarded by judges.
It does seem quite odd that NPEs would generally win much larger awards than practicing entities. After all, it would seem like the clear losses for practicing entities should be much easier to establish than for NPEs. But, perhaps it has something to do with the fact that a real company suing another real company creates a less sympathetic story than a "lone patent holder" (rarely true in practice) suing a big company.

There's some other interesting data in the report. For example, it looks at the various district courts and how they handle patent lawsuits. As you know, it's become incredibly popular for non-practicing entities to sue in Eastern Texas because of the court's history of siding quite frequently with the patent holder. However, defenders of using the courts in East Texas claim it's actually because the "rocket docket" goes through patent cases much faster than other districts. Except, the new data suggests that's not the case. The Eastern Texas district actually came in ninth in time-to-trial. Interestingly, the report also suggests that the Eastern District of Virgnia may now be even more "patent friendly" than Eastern Texas, in a measure that tries to combine both time-to-trial and patent success rates. And yet, many more cases are still filed in Eastern Texas than in Eastern Virginia. Why? Well, if you separate out the two separate factors used in determining "patent friendliness" -- what the data shows is that while Eastern Virginia is much faster to get to trial, the success rate for patent holders is lower than in Eastern Texas. In other words, the claim that Eastern Texas is chosen due to speed? Bogus.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    icon
    Pickle Monger (profile), Feb 2nd, 2010 @ 2:46pm

    CwL+RtF

    I guess East Texas found a better way to Connect with Lawyers and give them a Reason to File.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Feb 2nd, 2010 @ 3:34pm

    Appointed vs elected judges

    In Texas, Judges are elected, not appointed. I think this changes the dynamics of the judicial system in that state.

    Think of it this way-- A bad ruling could mean a bad PR campaign come election season, so they may tend to rule in favor for "Rich Uncle Pennybags".

     

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    •  
      identicon
      JRC, Feb 2nd, 2010 @ 4:24pm

      Re: Appointed vs elected judges

      Patent cases are tried in federal court, not state court. Federal judges are appointed by the President, confirmed by the Senate, and serve life terms - even in Texas.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Spanky, Feb 2nd, 2010 @ 3:41pm

    Why?

    Why is it always something out of Texas thats screwing this country up?

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Feb 2nd, 2010 @ 4:54pm

    Hmm, where is RJR, speaking only for himself, 7 different shill organizations, a dead guy, and every patent holder ever?

    Or, better yet, Angry Dude.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Tom Anderson, Feb 2nd, 2010 @ 9:30pm

    "patent friendly"

    WTF, Eastern Texas is chosen due to speed of the trial itself, not the time to trial... Speed has different meanings, and you should reconsider your message.

    The underlying message of the linked article/study is that Eastern Texas is "patent friendly", second only to Virginia. In the US there are hundreds of such courts, so for one to be at the top of the list is really something.

     

    reply to this | link to this | view in chronology ]

  •  
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    Ronald J Riley (profile), Feb 9th, 2010 @ 2:42pm

    Mike is smocking something again.

    Mike is at it again, I wonder what is being smoked this time?

    Awards are larger because members of the Coalition for Patent Fairness who are otherwise known as the Piracy Coalition are stealing on the grandest of scales. Jurors recognize that when those companies steal inventions that they are also stealing American jobs and their jobs could be next.

    Texas Eastern District is popular because they do not tolerate abuse of the process of law in the way that courts who are beholden to Piracy Coalition members do. Steal and delay is the goal of the Coalition for Patent Piracy & Fairness.

    Ronald J. Riley,


    I am speaking only on my own behalf.
    Affiliations:
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.PatentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    jammie, Mar 29th, 2011 @ 10:14pm

    cool

    Great so where can I find a patent troll company to sell all my ideas to to stick it to the big companies for me?

     

    reply to this | link to this | view in chronology ]


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