Patent Risk Digest

A monthly update on market activity, legal developments, and policy related to patent litigation

SUBSCRIBE SUBSCRIBE

Patent Trolls Persisted in 2015, Surpassing 2014 Litigation Volume

Year-end data show that despite legislative and policy developments aimed balancing the playing field between plaintiffs and defendants, patent trolls in 2015 still filed more lawsuits than in 2014.

According to data collected and analyzed through December 31, 2015, the number of defendants that patent trolls added to cases in 2015 was 5,349— compared to 3,882 in 2014. This represents a year-to-year increase of about 38%.

Year’s Most Active Trolls Targeted Broad Range of Companies

The most active patent trolls in 2015 targeted a variety of large and smaller companies in industries as varied as automotive and banking to retail, shipping, hospitality, and even agriculture. Just some examples include:

Olivistar

Online and mobile check depositing systems
After focusing first on dozens of alarm companies and a number of banks, this troll sued 20 large and small banks over this technology—all in a single day in March 2015.

Leigh Rothschild

Location services technology used in the defendants’ apps
50+ defendants have included automotive/transportation companies such as limousine and ride-share services, E-commerce and telecommunications suppliers and providers, and an agricultural equipment manufacturer.

eDekka

“Shopping cart” technology used in online checkout
100+ retailers of various sizes and types added to an ongoing campaign already targeting dozens more

Empire IP

Motion-detection systems in alarms; travel alert systems in cars
Subsidiaries and affiliates of this prolific troll have targeted large and small security/alarm companies and automakers in two newer, separate campaigns. More than
80 defendants were added to suits in 2015, between all Empire IP litigation campaigns.

CryptoPeak Solutions

Technology used in website security systems
65 companies including hotel chains, retailers, and E-commerce companies have faced suits filed by this entity in 2015

Patent Trolls: A Calculable Risk

For a long time, patent troll attacks were largely unpredictable and unquantifiable. For smaller and mid-sized companies, that unpredictability has made annual budgeting complex and difficult because a single patent lawsuit can run into the millions of dollars.

But gauging a company’s risk of getting sued—and protecting against that risk—is possible and feasible for companies of all sizes and budgets now, given the right data and intelligence. What was once a “black box” is now an increasingly transparent system of well-understood costs.

Here’s what every company should know:

Not all patents—and not all trolls—are created equal. Well-written, soundly granted patents represent greater financial risk. Similarly, every troll executes its monetization strategy slightly differently. Knowing the history of a patent, and the past behavior of the troll suing over that patent, informs the estimated length of a suit, cost of legal representation, and amount of the probably settlement demand.
A company’s risk of getting sued can be evaluated by looking at peer companies that are in litigation. It’s also helpful to study what patents have come up for sale—and patents that have been recently purchased by a troll.
Litigation levels and trends in the company’s business sector, as well as an analysis of the company’s operating results and product strategy, also figure into the equation.

Patent troll litigation creates a host of potential associated costs, including diverting management attention from key strategic imperatives, slowing or cancelling product launches, and diverting capital resource from research and development or hiring legal defense.

Any and all of these corollary costs should inform the calculation of a company’s forward-looking troll risk. This same information can be used to determine a company’s indemnity exposure or risk to portfolio companies.