The Supreme Court’s 8-0 decision issued yesterday in the TC Heartland case struck back at so-called “patent trolls,” attempting to address the much debated, but little understood, impact of non-practicing entities (NPEs) on the patent system. The impact of that case will disperse patent cases away from the Eastern District of Texas, which has gained a reputation as overly patent owner-friendly and where nearly one-third of all patent cases are filed, to districts where the defendant is incorporated. The landscape for patent infringement litigation is about to look dramatically different.
But just how different will that landscape be? And will it deal a blow to patent trolls? Without a comprehensive tracking method, the full impact of TC Heartland would be ambiguous at best. The new Stanford NPE Litigation Dataset can help answer those questions. The Dataset is the first comprehensive database to track how frequently—and where—practicing and non-practicing entities assert ownership rights in litigation. The database can show the impact of TC Heartland—as well as the America Invents Act and other major patent rulings—on the rapidly changing patent landscape. Future findings using the dataset may not only help judges and litigators better understand and manage their cases but also lead to more effective patent laws and policies that protect property rights and promote innovation.
Released publicly in mid-May at Stanford Law School, the Stanford NPE Litigation Dataset tracks the rising phenomenon of PAEs—firms whose business is to acquire and monetize patents by suing inventors and product developers for rights to their technologies. These entities are often pejoratively referred to as “patent trolls” accused of escalating patent litigation actions and costs with nuisance suits that undercut both the public interest and the private business interests of product developers.
Critics have come to believe that steadily increasing PAE enforcement activity including expensive lawsuits is harming innovation and serving as a tax on producers and consumers. But how widespread is PAE litigation? How can we define the threat it poses? Who even counts as a PAE? To answer these critical questions with the goal of evaluating recent reform proposals, the Stanford Law and Policy Lab Patent Litigation Practicum has released the Dataset, the first ever publicly available database to comprehensively track how frequently—and the venues where—practicing entities, NPEs, and PAEs claim patent ownership rights in litigation.
Four years ago, the research team undertook the arduous task of categorizing every patent lawsuit filed since 2000. Teams of Stanford Law students, under the guidance of William H. Neukom Professor of Law Mark Lemley, and Stanford Intellectual Property Research Fellow and Law Lecturer Shawn Miller, have classified nearly 50,000 patent plaintiffs—either as practicing entities, companies that sell products or services (e.g., Google or Pfizer) or as one of eleven categories of NPEs, companies that do not (e.g., universities, pre-production startups, PAEs, etc.).
“This four-year project will give everyone access to the tools that allow us to get beyond the ‘trolls vs. practicing entities’ debate by learning who actually files lawsuits and how they fare,” said Professor Lemley. “We have already learned a number of surprising things from the work scholars have done with the preliminary sample, and we look forward to seeing what scholars, policy-makers, and others do with this information, particularly as they merge our data with other excellent litigation and patent databases like that of our project partner Lex Machina and the USPTO.”
The Stanford Law student researchers tracked every lawsuit filed in U.S. district courts from 2000 to 2015 and identified each patent plaintiff as either a practicing entity or as one of eleven types of NPEs. The full dataset becomes publicly available in late 2017 and will continue to be updated with recent and future cases.
“The amazing Stanford students who have built this dataset should be incredibly proud of their work on this project. This has been an enormous undertaking but a crucial one,” said Miller. “Before the Dataset, we didn’t know how frequently different types of patents owners have filed suit over time. We can now see the whole picture and conduct rigorous analysis of time trends, including the impact of important recent patent law changes made by Congress and the courts.” The NPE Dataset enhances Stanford Law’s existing strength in databases, supporting empirical research for scholars, practitioners, and policymakers.
The currently available compilation represents a 20 percent random sample of more than 10,800 lawsuits. The full dataset will inform the debate about the role of NPEs in the U.S. patent system. One of the important findings discovered so far is that PAEs are now responsible for nearly the same share of patent disputes as practicing entities, whereas in the early 2000s they were only responsible for about a third of the share of practicing entities. This is an example of one instance where the data validates the speculation that PAE-initiated lawsuits are indeed on the rise.
Patent scholars, using a preview of the dataset, presented the first empirical findings at the May 10th & 11th Stanford Patent Assertion Entity Symposium. “Our PAE Symposium was particularly successful because of the unique opportunity for Congressional staffers tasked with patent issues to share with researchers and a representative group of stakeholders the kind of research that helps them move legislation forward,” continued Miller.
The symposium brought together legislative counsel, high-level researchers from the Patent Office, Federal Trade Commission, and General Accounting Office, patent experts from industry and practice, representatives of inventors and universities, as well as scholars, to think together about research with the data.
“It may be that TC Heartland will have a profound impact on patent filings,” said Miller. “But the extent and quality of that impact can only be fully realized with data collected through our dataset.”
About the Law and Policy Lab
The Law and Policy Lab at Stanford Law School offers more than 20 practicums a year, in which law and other graduate students from Stanford get to work on a real public policy issue for a real client under the supervision of a faculty member. The practicums give students opportunities to develop knowledge about particular areas of public policy and the skills of policy analysis, including the ability to communicate policy findings.
About Stanford Law School
Stanford Law School is one of the nation’s leading institutions for legal scholarship and education. Its alumni are among the most influential decision makers in law, politics, business, and high technology. Faculty members argue before the Supreme Court, testify before Congress, produce outstanding legal scholarship and empirical analysis, and contribute regularly to the nation’s press as legal and policy experts. Stanford Law School has established a model for legal education that provides rigorous interdisciplinary training, hands-on experience, global perspective and focus on public service, spearheading a movement for change.