Patent Law

Drama

By Gary Odom and Jordan Kuhn

Professor Dennis Crouch: "Over the past two decades, the number of patents being litigated has risen dramatically." Crouch then shows a graph that's clear as mud: one axis labeled "Patent Count;" the other "Year Complaint Was Filed." One has no way of knowing, either by graph or explanation, whether "patent count" represents number of complaints; or number of litigated patents total, irrespective of number of complaints. Regardless what "patent count" means, most damning is failure to normalize: to take into account the number of patents granted.

Most meaningful would be the percentage of patents granted litigated each year, if there were any meaning to be had. Keep in mind that patents aren't necessarily litigated out of the chute; it may be years from grant before a patent is infringed, and litigation initiated.

Regardless of past numbers, in the litigation department, expect drama on drama, if you care to call it that. Since the courts in 2006 made declaratory judgment actions easy, litigation is now the only avenue for opening licensing negotiations. Expect litigation numbers to now dance to that new tune.

The most interested statistic would be patent success percentage: what percent of patents were successfully litigated, either to settlement or judgment. That would convey a sense of the real junk patent rate.

Ignorance of proper statistical application is widespread and lamentable. The most important aspects of appropriate statistical application are: 1) using normalized numbers; that is, in the proper context; and 2) knowing when the right statistics tell a meaningful story, as contrasted to presenting graphical drama when the reasons behind the numbers are the real revelation.

Example - The government and the press report GDP (gross domestic product) changes to demonstrate the country's economic growth. But that GDP, according to the Economist, equals a Grossly Distorted Picture, because it fails to normalize for population changes. GDP per person would be a more proper output figure. The difference -

GDP growth figures flatter America's relative performance, because its population is rising much faster, by 1% a year, thanks to immigration and a higher birth rate. In contrast, the number of Japanese citizens has been shrinking since 2005. Once you take account of this, Japan's GDP per head increased at an annual rate of 2.1% in the five years to 2007, slightly faster than America's 1.9% and much better than Germany's 1.4%. In other words, contrary to the popular pessimism about Japan's economy, it has actually enjoyed the biggest gain in average income among the big three rich economies.

Full post as published by The Patent Prospector on March 17, 2008 (boomark / email).