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Patent Quality and Settlement Among Repeat Patent Litigants

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Patent Quality and Settlement Among Repeat Patent Litigants is a 2010 study which showed that software patents are much more frequently invalidated in court than patents in other fields, thus confirming that software patent quality is terrible.

The study was carried out by John R. Allison, Mark A. Lemley & Joshua Walker for McCombs Graduate School of Business, University of Texas at Austin.

Contents

[edit] About judges invalidating software patents

Page 5 (pdf page 6):

software patentees overwhelmingly lose their cases, even with patents that they litigate again and again. Software patentees win only 12.9% of their cases

Page 28 (pdf page 29):

If we consider just patent owner wins and defendant wins on the merits, non‐software patent win 37.1% of their cases across both the most‐litigated and once‐litigated data sets, owners while software patentees win only 12.9%. If we include default judgments, non‐software patent owners win 51.1% of their cases, while software patentees win only 12.9%. Each of these results is highly statistically significant. (...) Once settlements are included, non‐software patent companies win judgments in 4.0% of their suits, while software patentees win judgments in only 1.4% of their suits. Adding default judgments changes these numbers to 7.2% for non‐software patent owners and 1.4% for software patentees.

Page 48 (pdf page 49):

But it is important to recognize that software patents and patents asserted by NPEs are both taking disproportionate resources in patent litigation, and that the social benefit from those cases appears to be slight.

Page 50 (pdf page 51):

What might this mean for patent reform? On the one hand, it should give substantial ammunition to those who argue against software patents and who want to restrain patent trolls. If software and NPE patents are overwhelmingly bad – either invalid or overclaimed – the social benefit of allowing them may well be outweighed by the harm they cause.

Page 54 (pdf page 55):

But what we found was dramatic and unexpected: The patents and patentees that occupy the most time and attention in court and in public policy debates – the very patents that economists consider the most valuable – are astonishingly weak. Non‐practicing entities and software patentees almost never win their cases. That may be a good thing, if you believe that most software patents are bad or that NPEs are bad for society. But it certainly means that the patent system is wasting more of its time than expected dealing with weak patents. And it also suggests that both our measures of patent value and our theories of litigation behavior need some serious reconsideration.

[edit] About software patents being frequently litigated

(See also: why software is different)
The overrepresentation of software patents in the most‐litigated set is quite remarkable. Software patents constituted 20.8% of the once‐litigated patents but 74.1% of the most‐litigated patents. And again, these differences are even more dramatic if we measure not patents but assertions of those patents in litigation. Software patents accounted for 93.7% of the assertions of the most‐litigated patents.

[edit] About SMEs having a weak position

(See also: Inequality between small and large patent holders)

Page 18 (pdf page 19):

When the cases do not settle, large patent plaintiffs are significantly more likely than small ones to win, without regard to how the data are sliced. When we combine the two data sets, large entity plaintiffs win 53.1% of the cases decided on the merits (55.9% if default judgments are included), while small entity plaintiffs win only 12.3% of their cases (23.1% if default judgments are included). These differences are highly statistically significant. Adding settlements into the denominator naturally reduces the number of patentee wins, but doesn’t change the relationship: large entities win judgments in 6.5% of all cases in the combined data sets (7.2% if default judgments are included), compared to 1.4% of small entities (2.9% if default judgments are included). These differences too are highly significant.

Page 34 (pdf page 35):

when the plaintiff asserts a patent originally issued to a large entity, defendants are more likely to lose—large entity status is a significant predictor of plaintiff wins.

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