Despite crackdown from courts, patent suits still battered tech companies in 2015

A new report found that tech giants such as Samsung, AT&T, and Apple were hit with an increasing number of patent claims filed by companies that hold patents but don't make products.

Denis Balibouse/Reuters/File
A visitor looks at Apple patents displayed at the World Intellectual Property Organization headquarters in Geneva in March 2012. A new report finds that tech firms faced an increasing number of patent suits by companies that hold patents but don't make products, despite efforts by Congress and the courts to crack down on frivolous patent suits.

Tech companies faced a growing wave of patent suits in 2015 from so-called non-practicing entities, which hold patents but do not create products based on them.

Despite growing calls for patent reform in Congress and a series of court decisions striking down patent claims, non-practicing entities filed 3,604 suits last year, according to a report released Monday by RPX Corp., which advises companies on reducing their risk of patent suits.

That’s an increase of nearly 25 percent from last year, but a decrease from 2013, when such companies filed 3,733 suits, the report found. The sharp increase initially seems misleading, the company says, given a series of recent court cases that aimed to curb what critics argue are frivolous patent claims, particularly for software and hardware.

But a spike in filings in a single court — the Eastern District of Texas — during the summer and a rise in suits due to new court procedural rules “highlighted the adaptive nature” of non-practicing entities (NPEs) in responding to changes in patent enforcement, the report says.

NPEs are a broad group that includes both research universities and some inventors, but they have also faced criticism as “patent trolls” — companies that buy up patents expressly to file suits for monetary gain.

Fears of patent trolling and debates over what constitutes a high-quality patent have led to a series of actions by Congress, the US Patent and Trademark Office, and the Supreme Court to crack down on patent suits.

Congress’ efforts, including the 2011 America Invents Act — a landmark bill that created a new tribunal called the Patent Trial and Appeal Board — have proved controversial, pitting tech companies and retail businesses on one side and universities, pharmaceutical companies, and biotech firms on the other.

Universities, which view holding and licensing patents as a key part of their research mission, have particularly argued against provisions in bills currently before Congress, saying the proposals go too far by potentially categorizing them as patent trolls.

Courts have also stepped in to curb what critics say are often frivolous patent claims.

A 2014 Supreme Court case, Alice Corp. v. CLS Bank International, struck down a patent for software that reduces risk in financial transactions, leading lower courts to also strike down several software-related patents.

In the court’s decision, which was unanimous, Justice Clarence Thomas wrote that the company’s claim rested on an abstract idea rather than a concrete innovation. “Merely requiring generic computer implementation,” he wrote, “fails to transform that abstract idea into a patent-eligible invention.”

RPX’s report also reveals that contrary to the perception of NPEs as mostly patent trolls, some inventors have also repeatedly filed claims, particularly for software and hardware.

A Florida inventor named Leigh M. Rothschild is the largest single NPE based on the number of defendants who have been added to patent lawsuits he filed, according to the the report.

Mr. Rothschild, who holds a patent on technology that allows smartphone users to share groups of photos wirelessly based on their locations, has repeatedly challenged tech giants such as Apple, Samsung, Sony, and LG in suits, seemingly to no avail.

In one 2014 case against Apple, the company argued the suit should be dismissed because Rothschild was not able to claim Apple had any knowledge of the patent before the suit was filed. It was later dismissed and moved to a Northern California court last year, court documents show.

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