Patent wars: lawsuits on the rise

There’s no question that patent litigation is increasing every day. If it’s not the big guys fighting it out it’s a nonpracticing entity (NPE) suing on patents that it purchased in an attempt to get a big payday.

People argue that NPE’s should not be denigrated as patent trolls because they are just protecting their intellectual property rights.

I believe that maybe true in some instances where they possess intellectual property rights in patents that are clearly being infringed. But I also believe NPE’s sometimes act as bullies.

One of the bullet points below that popped out to me was the point that stated, “that much of the litigation consists of nuisance suits that settle out-of-court.”

James Bessen and Michael Meurer of Boston University School of Law research of innovation recently posted a paper saying that the Direct Costs from NPE Disputes was about $29 billion.

Here’s a few bullet points from the summary of their paper (.PDF):

•  The direct costs of NPE patent assertions total about $29 billion accrued cost in 2011 not counting diversion of resources, delays in new products, and loss of market share.
• Small and medium-sized companies are taking the biggest beating. The median company sued had $10.8 million in annual revenues. 82% of the defendants had less than $100 million in revenue and these accounted for 50% of the defenses. Small and medium-sized companies account for 37% of the accrued direct costs.
• NPEs do not promote invention overall. Publicly-traded NPEs cost small and medium-sized firms more money than these NPEs could possibly transfer to inventors. The money spent defending lawsuits reduces the net amount that firms of any size have available to invest in innovation.
• NPE litigation appears to consist of nuisance suits that settle for a few hundred thousand dollars. But some NPEs are “big game hunters” who seek and get settlements in the tens or hundreds of million dollars.

MPEs are not the only entities starting lawsuits. I found a few charts online showing who is suing whom.

Dan Rowinski of ReadWrite mobile posted a Chart of the Day: Who is Suing Whom In the Mobile Patent Wars? where he posts a chart that maps out the billions of dollars at stake regarding the sale of mobile phones. For crying out loud, everyone in the world has a mobile phone.

And just recently he wrote an article entitled “Patent Wars Turn Tech into a Battlefield” where he directed a link to a visual.ly infographic that was recently published to track the many patent lawsuits and cross suits. This infographic maps out the patent lawsuits by all the major players and it looks pretty cool.