GAO Study – Non-Practicing Entities are Not Bringing Most Patent Litigation

Tuesday, Nov 12th, 2013

The U.S. General Accountability Office calls into serious question whether there is a NPE patent litigation problem and, accordingly, whether broad new legislation constraining the activities of NPEs is necessary.

A long awaited and recently released study by The U.S. General Accountability Office calls into serious question whether there is a NPE patent litigation problem and, accordingly, whether broad new legislation constraining the activities of NPEs is necessary.

THE GAO Study: As part of the historic America Invents Act (AIA), Congress directed the GAO to study the “consequences of litigation” by non-practicing entities (NPEs). The unmistakable message and findings of the GAO report are that operating companies – not NPEs – are driving most patent litigation and that new legislation constraining the activities of NPEs is unnecessary.

The Innovation Alliance View:/b> While narrow legislation targeted at specific litigation abuses might be desirable, the GAO report fatally undermines calls for any broad legislation to rein in the activities of NPEs and should put a stake in the heart of any arguments that NPEs are inherently bad actors.

Highlights of the GAO Study
  • Companies that make products brought most of the lawsuits and NPEs brought about a fifth of all lawsuits.
  • The focus on the identity of the litigant — rather than the type of patent — may be misplaced.
  • The increase in patent litigation between 2010 and 2011 was most likely influenced by the anticipation of change to the U.S. patent system in AIA.
  • The U.S. Patent and Trademark Office (PTO) has taken several recent actions that are likely to affect patent quality and litigation in the future, including agency initiatives and changes required by AIA.
What Is Being Said About the GAO Study
  • Valley companies have argued that patent trolls are responsible for a big spike in patent litigation. That's not quite true. . . . The people pointing the finger at others for driving up their litigation costs are actually the ones doing most of the suing. LA Times (re-published by the Seattle Times) : 'Patent trolls' live to sue -- but they only file 20% of patent suits. By Chris O'Brien http://www.latimes.com/business/technology/la-fi-tn-government-report-smashes-myth-of-patent-trolls-20130826,0,1901885.story
  • The world wants to blame so-called patent trolls for the lawsuits that have tied the intellectual property system into knots — but operating companies that make actual products are the ones running to the courthouse, government investigators have found. Politico: GAO releases tale of the tape on patent litigation, By Brooks Boliek https://www.politicopro.com/go/?id=25122
  • This report will give Members of Congress a more sober view of the current state of play. [It] will be taken seriously at the highest levels of the government as an objective and thorough analysis of the problems and what can be done about them. Managing IP: Patent Trolls and Barking Dogs, http://www.managingip.com/Blog/3247850/Patent-trolls-and-barking-dogs.html