GAO Report Finds “Patent Trolls” Account for Only 20 Percent of Patent Litigation

As commissioned by the 2011 Leahy-Smith America Invents Act (AIA), the U.S. Government Accountability Office (GAO) released a report on the impact of non-practicing entities, or “patent trolls,” on the volume of patent infringement lawsuits. Patent trolls are entities that do not make products but acquire patents for the purpose of extracting money from third parties through claims and litigation. Apple, the biggest tech target of patent trolls, and other tech companies have argued that patent trolls are largely responsible for the dramatic increase in patent litigation. The GAO report, however, finds that patent trolls account for only one-fifth of all patent litigation, and that the focus on reforming patent litigation should be more on the quality of patents rather than on combating patent trolls.

The report finds that while the number of patent infringement lawsuits in federal courts fluctuated slightly between 2000 and 2010, there was a one-third increase of such suits from 2010 to 2011. Rather than patent trolls, the increase in 2011 was most likely caused by anticipation of changes to the U.S. patent system as a result of the AIA. One such change in the AIA was limiting the number of defendants in a patent lawsuit, forcing plaintiffs who previously would have filed one lawsuit against multiple defendants to break it up into multiple lawsuits. The report also shows that there was a 129% increase in the overall number of defendants in patent litigation between 2007 and 2011. About 89% of this increase in defendants involved lawsuits concerning software-related patents.

The report identifies several key factors contributing to the increase in patent litigation, none of which are patent trolls. Many patents, especially software-related patents, are overly broad or too vague, thus inviting litigation. Also, the realization of the value of patents, in part caused by the large monetary awards given for ideas that make only a small contribution to a product, have also contributed to the rise in patent infringement lawsuits.

Thus, while patent trolls are in part responsible for the recent increase in patent litigation, it appears that the focus on them is misguided. Rather, reforms in patent litigation should focus on the quality of patents, particularly software-related patents.

The GAO’s full report can be found here.