An Empirical Study of Patent Litigation Timing: Could a Patent Term Reduction Decimate Trolls Without Harming Innovators?

Abstract

This article reports the findings of an empirical analysis of the relative ages of patents litigated by practicing and non-practicing patentees. Studying all infringement claims brought to enforce a sample of recently expired patents, I find considerable variance. Product-producing companies predominately enforce their patents soon after issuance and complete their enforcement activities well before their patent rights expire. NPEs, by contrast, begin asserting their patents relatively late in the patent term and frequently continue to litigate to the verge of expiration. This variance in litigation timing is so dramatic that all claims asserting the average product-company patent are resolved before the average NPE patent is asserted for the first time. Further, I find that NPEs are the dominant source of patent enforcement in the final few years of the patent term. NPEs, enforcers of just twenty percent of all studied patents, are responsible for more than two-thirds of all suits and over eighty percent of all infringement claims litigated in the final three years of the patent term. These findings cast serious doubt on the utility of the last few years of the patent term and suggest that Congress should, at a minimum, consider increasing the frequency and magnitude of maintenance fee payments in the latter half of the patent term.

Keywords: patent term, non-practicing entity, NPE, patent troll, maintenance fees, solutions to the software patent problem

JEL Classification: O34