Reflections on Recent Developments of Statutory Public Interests in Patent-based Section 337 Proceedings (English article)
After the recent amendments in 2011 and 2013 of the Rules of Practice and Procedure by the International Trade Commission (ITC), at least from the procedural perspective, complainants presently have been burdened with an increased cost of collecting adequate information concerning statutory public interests even before putting forward the complaint, in order to justify the desired remedy by virtue of indicating no harm to statutory public interest. This reflects the ITC’s aspiration to make the final determination more precise and equitably justified on the analysis of public interest issues, so as to ultimately protect relevant domestic industries in terms of curbing intellectual property infringements in imports simultaneously without unduly sacrificing certain statutory public interest. Although the actual effect of the amendments in the long run still remains to be seen, the amendments possibly will generate some desirable results: first, from the perspective of law and economics, they are conducive to decrease the possible related adverse impacts in terms of negative externalities and increase economic efficiency; second, the amendments are also favourable to curb the existing ‘patent troll’ suits, although they are currently still not severe, by means of adequate considerations concerning statutory public interests, so as to optimally achieve the ultimate legislative goal of Section 337 and third, it is evident that an interest-balanced approach, in terms of more in-depth analysis of public interest, is better than the traditional all-or-nothing approach to some extent. Accordingly, a more equitable adjudication in terms of a better interests balance can be attained by utilizing the interest-balanced approach.
The Direct Costs from NPE Disputes
In the past, “non-practicing entities” (NPEs), popularly known as “patent trolls,” have helped small inventors profit from their inventions. Is this true today or, given the unprecedented levels of NPE litigation, do NPEs reduce innovation incentives? Using a survey of defendants and a database of litigation, this paper estimates the direct costs to defendants arising from NPE patent assertions. We estimate that firms accrued $29 billion of direct costs in 2011. Although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms. Moreover, an examination of publicly listed NPEs indicates that little of the direct costs represents a transfer to small inventors. This updated version of the paper includes a reply to critics.
The America Invents Act 500: Effects of Patent Monetization Entities on US Litigation
Any discussion of flaws in the United States patent system inevitably turns to the system’s modern villain: non-practicing entities, known more colorfully as patent trolls. For many years, however, discussions about non practicing entities have been long on speculation and short on data. In 2011 Congress directed the nonpartisan Government Accountability Office to study the effects of non-practicing entities on patent litigation. At the request of the GAO, we collected and coded a set of patent lawsuits filed over the past five years. This article presents our analysis of the data and its implications. The data confirm in a dramatic fashion what many scholars and commentators have suspected: patent monetization entities play a role in a substantial portion of the lawsuits filed today. Based on our sample, lawsuits filed by patent monetizers have increased from 22% of the cases filed five years ago to almost 40% of the cases filed in the most recent year. In addition, of the five parties in the sample who filed the greatest number of lawsuits during the period studied, four were monetizers and only one was an operating company. Of additional note, universities, which are sometimes grouped with non-practicing entities on the theory that they do not make products, were almost invisible and accounted for only 0.2% of the cases in our sample. Finally, Patent monetizers were unlikely to advance very far in the trial process, generally settling prior to a summary judgment decision. Our article details these and other results of the study.