December 13, 2012

Individuals and companies that do not actually make anything, commonly referred to as "patent trolls," are filing a majority of patent lawsuits in the U.S., according to a new study by Santa Clara University in California.

The increase in patent lawsuits has contributed to the debate over reforming patent laws in the U.S. The increase in lawsuits has also led to more tension over patent issues and why patent reform is needed.

The study found that 61 percent of all patent lawsuits in the U.S. last year were filed by "patent trolls." Patent-assertion entities, or "patent trolls" are individuals or companies that assert patents as a business model instead of building their own technology. This year's increase is up from 45 percent in 2011 and 23 percent five years ago.

These companies became known as "patent trolls" because they usually demand licensing fees from unsuspecting businesses, like mythical trolls that wait under bridges to collect tolls from travelers. Despite being known as "patent trolls," many of these individuals or companies represent investors or researchers who cannot afford to defend their patents on their own.

More of the patent lawsuits are being filed against startup businesses, according to the study. Roughly 35 percent of startups that have $50 million to $100 million have faced a patent lawsuit. Many of the patent lawsuits never go to trial or they are settled before they reach the lawsuit stage, the study reported.

Many technology companies that face patent lawsuits want patent reform to make it more difficult to assert patents. The findings of this study will only fuel more debate for patent reform in the U.S.

Source: Reuters, "Patent lawsuits now dominated by "trolls": study," Sarah McBride, Dec. 10, 2012