How Often Do Non-Practicing Entities Win Patent Suits?

• Published in: Berkeley technology law journal 2017-01, Vol.32 (1), p.237-310
• Main Authors: Allison, John R., Lemley, Mark A., Schwartz, David L.
• Format: Article
• Language: English
• ISSN: 1086-3818; 2380-4742

Non–practicing entities (NPEs), some of which are also labeled patent assertion entities or “patent trolls,” play a disputed role in our modern patent system. These entities, which do not make and sell products or services that embody their patented technologies, file a large percentage of all patent lawsuits. The perceived patent “troll” problem has dominated the discussion of patent reform in recent years. The policy debate is complicated by disagreement over who counts as a “patent troll,” and by debates over whether NPEs are inherently problematic or whether the real problem consists of entities (practicing or not) that assert weak patents. In this Article we present empirical results that provide insight into both questions. Drawing on a comprehensive data set we built of every patent lawsuit filed in 2008 and 2009 that resulted in a ruling on the merits, we find that the situation is rather more complicated than simply comparing operating companies to NPEs. While operating companies fare better in litigation than NPEs overall, breaking NPEs into different categories reveals more complexity. And once we remove certain pharmaceutical cases from the mix, no patent plaintiff fares very well. That is particularly true of software, computer, and electronics patents.