Patent Law

Top Dogs

By Gary Odom and Jordan Kuhn

The most valuable patents are naturally the ones covering the most profitable technologies. It would be a facile conclusion that the most valuable patents might also be the most litigated. Take patented drugs as an example. Because only drug companies provoke litigation over drug patents, the number of litigations for such are low. Yet blockbuster patented drugs are worth hundreds of billions in sales, above and beyond what generics later prove to be. So, while the stakes over drug patents are quite high, the number of litigations for any single drug patent is quite low. But take a look at the roster of litigations filed over time, and see that a plurality involve drugs or biotechnology. So, with drugs, lots of litigations, owing to the value of patents generally, but no particular patent family is multiplicatively litigated.

Then there's the wild west of invention: software. Becoming a most valuable software patent almost always means widespread adoption. Software innovations spread like wildfire. Unlike drugs, valuable software patents are likely to be heavily litigated, in terms of number of assertions, because many companies infringe. Nature of the business.

Number bums John R. Allison, Mark A. Lemley, and Joshua Walker, with more number-crunching than analytic firepower, have published a biased and misleading survey, that unsurprisingly comes to a preordained conclusion, as the article title pronounces: "Trolls on Top?" This has nothing to do with trolls favoring the missionary position, at least literally. But figuratively, it's the entire voyeuristic spectacle. Which brings one to wonder - what is one to think of nincompoops, like these three, that are, basically, troll fuckers? One may wonder if they are filled with envy. After all, them trolls, with their patent booty, are making out like bandits. Pardon the pun (knowing some won't). After all, being in academia, with its publish or perish ethos, is only lucrative if spilling sensational beans. This "study" being a case in point.

The conclusion of the study is that software patents owned by trolls are most heavily litigated. Bring out the violins. And the shotguns.

We identify the patents litigated most frequently between 2000 and 2007, and compare those patents to a control set of patents that have been litigated only once in that period. The results are startling. The most litigated patents are far more likely to be software and telecommunications patents, not mechanical or other types of patents. They are significantly different from once-litigated patents in ways that signal their value up front. And they are disproportionately owned by non-practicing entities (aka trolls).

"The results are startling." Mock surprise.

The flaws in analyses of Trolls on Top? overwhelm whatever residual value remains. The survey is of patents, not patent families. The charts are of a meaningless comparison: once litigated patents versus most litigated patents. Any decent statistician can tell you that looking at the tails of a bell curve tells you nothing. And there is no assessment of value by either damage award or of profits protected by patenting.

As one might suspect, the whole point of the exercise to give the impression that trolls are a clear and present danger. There are at least a dozen different varieties of trolls, according to the three.

As noted in Part I, we divide the patent plaintiffs in our data sets into twelve different categories.

One of the biggest policy debates in patent reform has been over the nature and extent of "patent trolls. "

Actually, only anti-patent troll fuckers consider trolls worth more than passing mention, as the ownership of intellectual property is at best tangential to informing what patent public policy should be.

The first thing that stands out is the powerful evidence that the most-litigated patents have different, clearly identifiable characteristics that distinguish them from once-litigated patents (and distinguish them even more dramatically from ordinary, unlitigated patents). Notably, the characteristics that distinguish the most-litigated patents from other patents are also the ones that researchers have long used to identify the most valuable patents: more claims, more prior art citations, more forward citations, more assignments between issue and litigation, and larger numbers of continuing applications. A reasonable conclusion, therefore, is that the most litigated patents are also the most valuable patents.

Not so, at all. There is no established correlation between most valuable patents are most litigated patents. Practically tautologically, the most valuable patents are those covering the most profitable technologies. Given the profits of patented drugs, the patents in that area surely qualify as highly valuable, even as their litigation assertion numbers are quite low.

Full post as published by The Patent Prospector on June 11, 2009 (boomark / email).