Total U.S. patent litigation more than doubled from 2005, peaking in 2011-2012 and declining significantly since then with two notable exceptions.
Disputes peaked about ten years ago but have halved since then. Most of that long-term trend, notes a recent report, ‘What 15 Years of US Patent Litigation Data Reveal About the IP Market,’ has been driven by specific NPE activity.
Most of that increase can be attributed to two particular NPE plaintiffs: IP Edge LLC, the most active NPE in the past ten years, which added approximately 550 defendants to litigation in 2020, an increase of around 150; and new litigant WSOU Investments, LLC (d/b/a Brazos Licensing and Development), which added over 130 defendants in 2020.
IP Edge is led by a team of three executives. LinkedIn shows its headquarters in McKinney, TX and that it s was established in 2010. Brazos Licensing and Development in Waco, TX, is led by a team of four.
Data from the patent litigation report compiled by RPX Corporation, a defensive patent aggregator, indicate that “roughly 70% of IP Edge cases terminate within 180 days of filing, with reported settlement amounts typically an order of magnitude lower than the cost of an inter partes review (IPR) (see, e.g., here)—suggesting that the NPE has adopted a business model of seeking settlement amounts that make an IPR challenge by defendant-petitioners economically unattractive.”
After bottoming relative to operating company litigation in late 2018, NPE litigation is rising faster than OpCo suits (see line graph below).
NPE Plaintiffs vs. OpCo Plaintiffs 2005-2020
While much patent litigation activity is attributed to dubious NPE activity the research does not explore why respectable licensing businesses continue to engage in filing suits.
Parties that IP CloseUp spoke to said the reasons range from the inability to enter into meaningful licensing discussions with other businesses of defendants’ financial viability of ignoring them (aka ‘efficient infringement’), increased dispute hurdles, such as the Patent Trial and Review Board, better patent quality and increased availability of litigation funding.
Return to 2006 Litigation Volume
Overall, indicates the ’15 Years’ report, patent suits have been flat since 2017 and are currently at about the same level as 2006. This is curious given the explosive increase in technology and inventions over the past 14 years.
The full RPX study can be viewed here.
Image source: RPXcorp.com