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Most Software Patent Trolls Lose Lawsuits 108

Posted by Soulskill
from the dismissed-without-prejudice dept.
An anonymous reader writes "A new study is out concerning patent trolls and software patents, which found the rather surprising news that the most litigated patents tend to lose nearly 90% of the time. When broken down into different categories, patent trolls and software patents lose their lawsuits most often. While some may suggest this means 'the system is working,' that's not really true. The data suggests that most companies, when threatened with a lawsuit, end up settling or licensing to avoid the high costs of litigating. But the fact that so few software patents and patent trolls do well at trial may be more incentive to fight back. Either way, what does seem pretty obvious is that all those ridiculous patents you see in patent lawsuits are, in fact, bad patents."
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Most Software Patent Trolls Lose Lawsuits

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  • by Caerdwyn (829058) on Friday September 24, 2010 @04:39PM (#33692572) Journal
    I guess this means business will be falling off in Marshall, Texas...
  • The problem is, in pharma or the car industry, patent threats get met by a legal team and a well-financed company, so patent holders don't launch as many spurious lawsuits. In software, where you don't need a legal team and a six digit bank balance, many developers get shafted because they can't use the court system. Patents shouldn't exist in domains where individuals and non-commercial entities can be mass producers.

    • by Moryath (553296) on Friday September 24, 2010 @04:51PM (#33692716)

      No.

      The underlying problems are twofold.

      First, that a major number of patents are being granted that never should have been granted. Either because they are overworked, or because they are not correctly able to evaluate patents due to lack of training in the fields they are analyzing, or because they have been indoctrinated into a "just grant it the courts can sort it out later" (and a friend I know who works in the USPTO has been told that several times by his direct superiors over the years) mentality, the USPTO is granting things that never should have been granted.

      Second, that the US court system is so fucked up and overburdened that most people who get hit with a troll lawsuit choose to settle, because fighting it is going to take years upon years, resources upon resources, and probably it's cheaper for them to just pay up. The legal system has ceased to be a venue where fair and equitable analysis of this sort of thing can take place, and instead is just a bludgeon for bullies with money and shyster lawyers willing to throw away the ethical codes to beat up on everyone else.

      • by Eternal Vigilance (573501) on Friday September 24, 2010 @05:45PM (#33693190)
        The "law" has always been just another way for those who write the law to control those who are required to follow it.

        "Law" is simply disembodied violence, physical force transferred to the domain of the mind.

        The notion of "fair and equitable analysis" is simply the system's own inflated self-image, like "all men are created equal" in 1776, or "freedom" in 2010.

        I agree with your statements, btw. I just want to make sure that in moving to something new we don't repeat the mistakes of our past.


        There's free as in speech, free as in beer, and free as in range. Americans are "free" in the final sense.
        • Re: (Score:3, Insightful)

          The "law" has always been just another way for those who write the law to control those who are required to follow it. "Law" is simply disembodied violence, physical force transferred to the domain of the mind.

          Intriguing rhetoric, but what alternative do you propose to Law? (And I'd call it more "passive aggressiveness" than "disembodied violence", but perhaps that's just a different face of the same coin. )

          • what alternative do you propose to Law?

            Not to be rhetorical, but in my country's history (and others), regardless of politics, guns seem to do well whether enforcing or abolishing "law".

            • by KDR_11k (778916)

              Guns favor the guy with more guns and men. Guns certainly aren't the solution to organized crime. Having a police force means at least the most guns are in the hands of people who are at least somewhat accountable to the people.

          • Re: (Score:3, Interesting)

            I don't know that I have an immediate alternative this evening (though I might and just can't remember it ;-) ), but I think societies reflect in a self-similar way the way the rules and agreements that describe them were fashioned.

            In other words, were a small group of people, no matter how gifted and altruistic, to create a framework for others to follow without participation and consent of those others during the framing itself, then eventually the society will come to reflect that inequity of that pro
            • Re: (Score:3, Insightful)

              by Sarten-X (1102295)

              That sounds like a great bit of logic there, if you ignore various facts along the way.

              Many of those founders owned slaves. Does American society today support slavery?

              Women were considered unfit to enter politics. Are American women still kept out of political offices and denied the ability to vote?

              Society's observed reflection of its laws is not the result of some poorly-understood natural process, but the intentional result of the society's trust in its governing body. Laws are merely standards for behav

              • by tepples (727027)

                To use the infamous car analogy, consider the laws requiring drivers to periodically stop and allow crossing traffic to move. If everyone follows the law, a few people get slowed down by a few seconds.

                I routinely see four-minute red lights at an intersection whose metal detector fails to sense my bike. Can you fit this into your car analogy?

                That's why American citizens (should) vote for representatives that they believe will support their views.

                The major publishers of non-free fictional entertainment own the means that representatives use for communicating to the general public. Can you fit MPAA news [pineight.com] into your car analogy?

                Want a bigger voice out of the 300 million Americans? Write your representatives!

                Who write back with a form letter stating that an expansionist position on copyrights and patents is good for America.

                Run for office!

                Rep. Ron Paul (R-TX) tried this. His campaign got buried by the mainstr

                • by Sarten-X (1102295)

                  I routinely see four-minute red lights at an intersection whose metal detector fails to sense my bike. Can you fit this into your car analogy?

                  Yes, actually. Occasionally, people get screwed by laws that don't account for them. The best solution is to propose an alternative that works for everybody. If you can invent a detector that works for both cars and bikes, yet still has the lifespan and approximate cost of the current detectors, go suggest it to the appropriate folks.

                  The major publishers of non-free fictional entertainment own the means that representatives use for communicating to the general public. Can you fit MPAA news [pineight.com] into your car analogy?

                  Yes, actually. Occasionally, there are greedy people who will do bad things that are not actually against the written rules, such as parallel parking in the exact middle of two

                  • by tepples (727027)

                    If you can invent a detector that works for both cars and bikes, yet still has the lifespan and approximate cost of the current detectors, go suggest it to the appropriate folks.

                    I managed to get one misbehaving intersection's sensitivity increased by calling 311 and reporting it. But the crack at the other, at the intersection of a low-traffic street and a major traffic artery, appears to be too long for such a quick fix. The long-term solution is to replace ring-shaped detectors with quadrupole detectors [humantransport.org]. This figure 8 shape concentrates the sensitivity in the middle of the lane, allowing traffic engineers to crank up the detector's sensitivity while still rejecting spurious signa

          • Re: (Score:3, Interesting)

            by Artifakt (700173)

            If you look at the real linguistic roots of the word anarchy, it means, not "no law", but "no rulers" - In essence, phrases such as "government by laws and not men" describe a form of anarchy. Having one group that is much less than the whole of the populace frame the laws, and be relatively immune from their penalties, is one, mostly inferior, option among some quite more acceptable alternatives.
            Supposedly, the Incans had a legal system where the penalties for acts grew if the

      • Last I heard (and I used to get and own patents, which I no longer care about) the flaw is this. You guys are missing it. It's up to the entity applying for a patent to find and disclose prior art. Period. If the examiner happens to know some and get back to them fine, but that's not how the system is set up. And the patent office runs off fees they don't get if applications aren't granted. Enough said?
        • by shentino (1139071)

          If people weren't afraid to defend themselves in court, you'd see a lot fewer patent trolls.

          However, it's usually cheaper just to roll over and settle.

      • Re: (Score:1, Interesting)

        by Anonymous Coward

        So isnt this just a case of the need for general tort reform ? It's not only patents that suffer from this kind of thing. Everything from liability lawsuits for slip and falls, to frivolous medical malpractice lawsuits burden the justice system and drive all costs up. It's rather narrow to focus on patents alone, when its a much wider problem.

        • by hairyfeet (841228)

          Hi MR AC! The problem with "general tort reform" is it ends up favoring the rich while screwing hard the poor, and sadly I have a personal example. My sister was horribly butchered by a surgeon, it took her 10 years to slowly fall apart and die. It turned out that not only was the surgeon negligent, but he had actually done the same exact thing to at least 4 other girls by rushing the procedure to try to squeeze more in and thus make more $$$. All of the medical care, which BTW got passed on to the state, p

      • because they are not correctly able to evaluate patents due to lack of training in the fields they are analyzing

        As an aside to your main argument - I've seen this meme come up repeatedly, and I'm not sure where it started, though I suspect it's on the patent reform side: most anti-patent people seem to think that biologists are reviewing networking patents, and that GUI programmers are reviewing chemistry patents. Two words: Art Groups. The USPTO divides Examiners into groups based on their specific areas of expertise, divides applications the same way, and only has people working on stuff they're qualified on.

        You c

        • by russotto (537200)

          You can call it incompetence within their field, but don't claim that Patent Examiners are examining applications outside of the field they have training in. That's demonstrably false.

          For a time, while software patents were being granted, a computer science degree was not allowed as a prerequisite for becoming either a patent examiner or a patent lawyer. So just who was examining those early software patents?

          • You can call it incompetence within their field, but don't claim that Patent Examiners are examining applications outside of the field they have training in. That's demonstrably false.

            For a time, while software patents were being granted, a computer science degree was not allowed as a prerequisite for becoming either a patent examiner or a patent lawyer. So just who was examining those early software patents?

            Computer Engineers and Electrical Engineers. For a time, when software was first being written, it was engineers doing the work, rather than computer science majors.

            But it's also finer grained than that - it's not one USPTO art group for "software"... Instead, there's more than a hundred, subdivided into areas of specialty, including AI, cryptography, network acceleration, UI design, etc: http://www.uspto.gov/patents/resources/classification/art/index.jsp [uspto.gov].

            • by russotto (537200)

              Computer Engineers and Electrical Engineers. For a time, when software was first being written, it was engineers doing the work, rather than computer science majors.

              Computer Science was not accepted until the 1990s. The field was quite well-established by then. They're still very restrictive on which CS programs they accept, requiring an accreditation that has only very recently become common, whereas they are not so restrictive with other technical degrees.

              But it's also finer grained than that - it's no

              • Computer Science was not accepted until the 1990s. The field was quite well-established by then. They're still very restrictive on which CS programs they accept, requiring an accreditation that has only very recently become common, whereas they are not so restrictive with other technical degrees.

                That's because some CS programs are little more than liberal arts programs plus some coding, populated by neckbeards who will never amount to anything more than a Helpdesk monkey. Others are serious engineering programs. Until there's some standardization, it's reasonable to not accept at face value someone who holds up a CS degree.

                There's no evidence, IMO, that any of the patent examiners in any of those hundred subfields are skilled in those subfields.

                I would disagree. Many of them seem quite skilled to me. How many have you talked to or otherwise communicated with? Or are you just basing your opinion off the fact that softw

                • MIT didn't meet the accreditation standards for the USPTO until 1996. That's a serious problem that has an incredible bias. As for the concern over evidence of skill, it's probably because of the number of obvious software patents that make it through. Of course, that could be attributed to adequately covering prior art being insane even for the most competent examiner.
        • Actually, there was a recent study [ssrn.com] I saw that showed that there is a strong bias against computer science majors at the USPTO. The results were that software patents have grown to the second largest category, while I think CS majors are 7th place (it might have been CS and computer engineering combined, computer engineering dealing mostly with hardware). This means that we've either got unqualified people granting software patents, or those granting software patents are incredibly overworked. Neither of
          • by shentino (1139071)

            Maybe software patents are simply the most requested, and the USPTO is so fee hungry that it's cracking down on people actually giving a fuck about prior art and obviousness and whatnot. Pissing off the corporate sector would mean less application fee bling, and that brings down the budget.

  • by N0Man74 (1620447) on Friday September 24, 2010 @04:44PM (#33692634)

    You can lost most of the time, but when you win, can't the winnings quite overshadow the actual effort in trolling the system?

    It's not completely unlike walking up to many random women and saying, "nice shoes, want to have sex?" Sure, the vast majority will think you are a schmuck and maybe even give you a slap, but to some having an extremely tiny percentage agree makes it worth their effort. ;-)

    • by russ1337 (938915)
      Agree. Also, if it was such bad business, why is it a growing industry?
      • Because more than 90% never go to trial--that's 90% of less than 10% that are losing, because going to trial for most defendants is more expensive, even if they win, than paying off the extortion racket.

    • And that's exactly it. RIM lost its lawsuit to the tune of several hundred million dollars. It doesn't matter if the patent troll ever won a lawsuit before or afterwards, they just received a lifetime payment for everyone who works there.

      That's the bad part about patent trolls. They're only business is lawsuits, so engaging in one isn't a cost as it is for other businesses. Losing one is just an outcome of their daily work. Winning one is the jackpot they're after.

      • Re: (Score:3, Insightful)

        by Moryath (553296)

        And what REALLY sucks is that anyone who actually worked on the patent gets precisely Jack Shit.

        The CEO, CFO, and the lawyers will suck up all the money. The rest get told "here's a grand or so bonus, now get back to work, slaves."

        • by KDR_11k (778916)

          Patent trolls usually buy up inventions of other people. They're purely parasitic on society.

    • by blair1q (305137)

      The judge in the losing cases should be making sure it's expensive to lose, as well. Countersuits should come into play, too.

      • by ciaran_o_riordan (662132) on Friday September 24, 2010 @05:49PM (#33693232) Homepage

        I bet a lot of patent trolls don't have much money in the bank.

        Acacia does a lot of troll suits under other names: IP Innovations, Acacia Technologies, or Acacia Media Technologies, among others.

        I wonder if this is a way to protect Acacia from having the pay the losses. Maybe when they lose, they just tear up the piece of paper on which that legal entity existed. ...and make two more.

        • by blair1q (305137)

          I'm surprised I don't know this, but I wonder what happens to the patent once you lose a case; can the judge invalidate it completely if he decides it's just wrong? Certainly you could never press the case against anyone making whatever the guy you just sued was making, but it's unlikely anyone would, so you could still sue people who are making slightly different things.

          As for the shell company bankruptcy thing, that's a major flaw in corporate law, IMO. If the owners of corporations were more on the hoo

          • Re: (Score:3, Informative)

            Depends. The patent holder can lose either by the judge invalidating the patent, or by the judge saying that the accused's usage doesn't violate the patent. The latter obviously leaves the patent intact.

            If the judge invalidates the patent, the patent holder can still go back to the USPTO and ask to change the wording and for a new patent with a different/narrower scope to be granted. (I'm not 100% sure, but I think this is a Reissued patent [swpat.org].)

            For example (although it's not the same situation), the Bilski

            • by tepples (727027)

              The patent holder can lose either by the judge invalidating the patent, or by the judge saying that the accused's usage doesn't violate the patent. The latter obviously leaves the patent intact.

              But importantly, the latter also leaves a workaround for the patent in case law.

    • You do not have to win at a trail to "win" the lawsuit.

      TomTom was a huge win for Microsoft, but MS did not win at a trial.

      HTC was a huge win for Apple, but Apple did not win at a trial.

      In fact, it's better to not go to trial, because then everything is nice and undisclosed.

    • by BitZtream (692029)

      What you say is so incredibly true its not even funny.

      I had a friend that more or less did exactly that, he was slightly more polite than 'nice shoes, wanna fuck' but the conversation was never more than a minute long.

      He pretty much could get laid any time he wanted, he just went through a LOT of women in the process, but he won often enough that you had to wonder if he didn't really have the right way to go about the process if you just wanted to have sex.

  • Either way, what does seem pretty obvious is that all those ridiculous patents you see in patent lawsuits are, in fact, bad patents.

    What seems obvious is that the *majority* of ridiculous patents are, legally, bad patents. This doesn't seem to suggest that *all* bad patents are caught by the judicial filter. It's a minor nitpick, for sure, but I'm 100% certain that the number of "bad patents" that have held up in court is non-zero.

  • With a success rate of 10% it must be certainly worth it.

    • Re: (Score:3, Insightful)

      by Penguinisto (415985)

      Given that the 10% usually results in a uber-massive payday, and that the company being litigated against usually settles anyway?

      Not sure of the odds, but it likely adds up to a HUGE reason as to why patent troll 'companies' are realizing a lot of investment money, ne?

    • With a success rate of 10% it must be certainly worth it.

      Actually, the success rate is much higher than 10%. They win 10% of what goes to trial. But for every suit that goes to trial, there are many more that are settled much earlier on. That is actually where the big money comes from. Patent trolls don't actually want to go to trial; they want a settlement. They end up having to go to trial because someone decides that they think they can win in court and refuse to be extorted for money. And as soon as they win at trial, they know that anyone else that was

  • While some may suggest this means 'the system is working,' that's not really true.

    How in the heck would a 90% reject rate indicate "the system is working"? If that number is correct, that supports the idea that the U.S. patent system under our current legal system is stifling innovation. I.e. "the system is broken" is a more sensible conclusion. With that kind of failure rate on a challenge, the patent trolls simply must not care that the patent is weak. They expect targets to just roll over and settle most of the time. Business model:

    1. Buy up patent with a domain applicable to tar

    • by Surt (22457)

      It means the court system is working to correct the problems in the patent system. You can't build a system the size of the US government without some pathological failures, so arguing that the 'whole' system isn't working is like suggesting that water is wet. Yep.

    • Re: (Score:3, Informative)

      by DDLKermit007 (911046)
      The big thing is how much it costs to defend these BS patents. My work got sued for infringement because we sell CPU heatsinks with HEATPIPES!!! They didn't go after the manufacturers of the heatsinks, not the distributors, but the end user sellers. Defending these things cost around $100,000 against some asshat working on commission IF they win. Not to mention, even if you ask for court costs you'll get nothing because the owner of the company likely has 10 other companies with other patents with each one
  • A thought (Score:4, Insightful)

    by webheaded (997188) on Friday September 24, 2010 @04:57PM (#33692774) Homepage
    If the system was working, these patents never would have made it through in the first place for them to sue anyone with. :)
  • maybe (Score:4, Insightful)

    by phantomfive (622387) on Friday September 24, 2010 @05:00PM (#33692802) Journal

    Either way, what does seem pretty obvious is that all those ridiculous patents you see in patent lawsuits are, in fact, bad patents

    Oh sure, I'll accept that they are bad patents, but I'm not going to accept that the law recognizes them as bad until Amazon's one-click patent is invalidated. Obvious ideas can be, and have been, patented, and that is a serious problem.

  • uhh (Score:5, Insightful)

    by nomadic (141991) <nomadicworld@NOSpam.gmail.com> on Friday September 24, 2010 @05:01PM (#33692810) Homepage
    The data suggests that most companies, when threatened with a lawsuit, end up settling or licensing to avoid the high costs of litigating. But the fact that so few software patents and patent trolls do well at trial may be more incentive to fight back.

    Of course we don't get a link to the paper itself, but the fact that where defendants decide their case is strong enough to go to trial, they tend to win, is not especially surprising.
    • by shentino (1139071)

      s/their case is strong enough/they are rich enough to afford a lawyer long enough to survive the trial/

  • Only 90%, huh? (Score:4, Insightful)

    by Zocalo (252965) on Friday September 24, 2010 @05:04PM (#33692818) Homepage
    OK, but what's the average return on investment for a successful patent troll lawsuit?

    Turning that 90% figure on its head, if the average ROI for buying up a patent and sucessfully suing some suitably wealthy potential infringers in court is more than nine times the outlay then unfortunately being a patent troll is still a viable business model.
  • by gront (594175) on Friday September 24, 2010 @05:04PM (#33692822)
    Sure, just assume that 90% of the lawsuits brought by patent trolls lose at final judgment. You can't work backwards from that factoid and conclude that 90% of software patents are crap. After several levels of filtering, only then is a case decided. And at each level, if the software patent i strong, the process ends. Demand letter gets reviewed. Strong patent? Settle. Initial lawsuit gets filed. Semi-strong patent? Cost-risk analyze defending the lawsuit and license if the numbers don't work. Lawsuit continues. Weak but possible bad judgment? Settle. So only the patents that the defendant looks at and decides that the risk of losing the suit, cost of the suit, _and_ the strength of the asserted patent are such that it makes sense to risk a final judgment are these 90% losses representative. Hardly a basis for a universal declaration that all software patents are weak and unenforceable. Sure, folks may have a beef with the concept of software patents, but that is a separate issue.
    • You also can't work backwards and assume that 90% of software patents are strong. After several levels of filtering with mounting costs, both monetary and the distraction from doing real business, a settlement is highly likely just to cut losses. Hardly a basis for making any qualitative statement about the merits of the software patent in question, or even software patents in general.

      The fact is that the statistics are limited, and the most solid statistics are about final judgments, because it's hard to

  • I'm a little ashamed that in the US we immediately turn to litigation without considering other options such as mediation law. In the UK mediation law is the norm, whereas litigation is more of a last resort. But in Soviet Russia, software patents litigate YOU!
  • How suits fair in court is nothing of real importance - the importance is what percentage settle out of court. I'd want to see those stats - I would assume they are the exact opposite, if not higher.
  • All the proves is that defendents settle unless they have a case they believe has a 90% chance of winning.

  • Statistics... (Score:4, Insightful)

    by Idiomatick (976696) on Friday September 24, 2010 @05:13PM (#33692902)
    90% of patent trolls defended against succeed. That does NOT mean that more people should defend themselves. Say 50% of patent claims are settled outside court, and we have the stat that 90% of patents that make it are successfully defended. What does this tell us about the success rate of the 50% that never make it to trial? Fuck all because of self selecting bias, this isn't a blind trial.

    The majority of people in marathons do fairly well. That cannot be extrapolated to say that the majority of people would do well in a marathon. Its stupid. This study is no different.

    Disclaimer: I didn't RTFA because stats scare and confuse me.
  • It's not surprising - you'd need to have a bulletproof case before you actually challenged a case in court and ran up the huge associated cost. For everything else you'd just settle.
  • Yes, I'll break out my vast fortune, right now... I mean it... I'm headed to be bank... You'll be sorry...

    Patent trolls have a 100% success rate of draining your account... They should have to post a bond to pay your expenses if you win

  • I'm writing some software for iOS. My lawyer told me last week that I should incorporate because of patent trolls. And he did TELL me in no uncertain terms.
  • Expected Value (Score:4, Insightful)

    by dcollins (135727) on Friday September 24, 2010 @07:40PM (#33693922) Homepage

    The probability of success is irrelevant if the expected value (success probability * average profit) is still positive.

  • Consider the scox-scam. The lawsuit was ridiculous from day one. There was no way scox could "own" UNIX. But, the scam is now well into it's eighth year, with no end in sight.

    If, like IBM, you happen to have around $50 million to $100 million to defend yourself against a bogus lawsuit, maybe that's not a big problem.

    But if you are a smaller company, like TomTom, it may be better to just cave in. Maybe it's easier for HTC to cave in to a bogus lawsuit. Those suits were not officially "won" at trial, but they

  • Once you step into a courtroom, check to see if you have a soul. If you do, then you're not a lawyer, and you've already lost.
  • Isn't this the little engine that could?

    the human struggle?

    Never going to give you up?

    err, sorry, guess i'll leave the rickroll out of this.

  • The JPEG standard (?) was put at serious risk because one company claimed it had a patent stake in the underlying technology. Turns out they had a bogus claim but not before they collected 105 Million dollars from hardware and software companies. Some 30 companies paid up. Of course when the USPO determined Forgent Networks (during a reexamination) withheld prior art from the application things went downhill. You can read about it in the Wikipedia JPEG entry.
  • The problem with this study is that it ignores several key advantages enjoyed by patent trolls over their targets:

    1. The patent trolls are experts in the field of patent litigation and being attorneys themselves have perfected their craft over the lifetime of their firm. In other words, they are very efficient litigators, able to pursue large and complex cases over years or even decades for bottom dollar while wearing down companies whose primary competency is something other than litigation; technology in th
  • that's why they called trolls.
  • What a waste of time.

  • In the case of Microsoft it seems to be the case anyway.

    They have used the news of a competitor being sued for IP infringement in their own interests numerous times now. Just recently with Google and Oracle over the Android Java implementation.

    Maybe if they concentrated on making their products better and gave people a genuine reason to upgrade then they wouldn't need so much FUD?

  • 90% of software patents that went to trial were invalidated. Obviously, the ones that go to trial are usually the ones where the defendant has a high expectation of success, otherwise they'd just settle.

    Nothing to see here, folks. Move along...

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