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Originally published August 27, 2013 at 6:26 PM | Page modified August 28, 2013 at 11:38 AM

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GAO says ‘patent trolls’ file only 20% of patent suits

A report shows that the people pointing fingers at others for driving up their litigation costs are actually the ones doing most of the suing.

Los Angeles Times

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SAN FRANCISCO — One of Silicon Valley’s complaints is the rise of “patent trolls” and how they’re destroying innovation.

Patent trolls are companies that don’t make anything but own numerous patents and use them to sue firms that make products. Tech companies have argued that patent trolls are responsible for a big surge in patent litigation.

That’s not quite true, according to a new report by the U.S. Government Accountability Office (GAO), which looked at the effect of patent trolls, known technically as “nonpracticing entities” or NPEs.

NPEs appear to be contributing to a rise in patent litigation, according to the report. But overall, NPEs account for only 20 percent of patent litigation.

The other 80 percent? They come from “practicing entities,” or real companies such as Apple, Google, Samsung and so on.

“These data also show that companies that make products brought most of the lawsuits and that nonpracticing entities brought about a fifth of all lawsuits,” the report says.

That has important policy implications, not to mention public-relations ones. The people pointing fingers at others for driving up their litigation costs are actually the ones doing most of the suing.

But in terms of fixing the problem, the report essentially says that if legislators focus on NPEs and limit their power or ability to litigate, they’re going to address only 20 percent of the problem.

The real focus, the report says, is the quality of patents. Software patents account for 89 percent of patent litigation. The problem is that many patents are too vague or broad, essentially opening the door to endless litigation.

“The report says the focus on the identity of the litigant, rather than the type of patent, may be misplaced,” said Owen Byrd, general counsel of Lex Machina, the Menlo Park, Calif., firm that provided much of the data for the GAO report. “That’s additional fresh thinking.”

The GAO suggests that the U.S. Patent and Trademark Office find ways to mine the data from patent litigation as it considers new patent applications.

Overall, the report says the number of patent-related lawsuits between 2000 and 2010 “fluctuated slightly.” Since the patent reform bill, the number of suits increased by one-third. But that is probably because of a technicality that requires plaintiffs to sue companies separately rather than filing a single lawsuit against multiple defendants.

“I think what the GAO has done is pointed out that it’s a sophisticated problem,” Byrd said.

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