Transfer Pricing Associates

Patent Trolls? Serial Infringers?

post Friday May 4, 2012


Litigations over time
Patent lawsuits involving Non Practicing Entities (NPEs) have increased dramatically over the last decade. We define an NPE as any entity that earns or plans to earn the majority of its revenue from the licensing or enforcement of its intellectual property. In 2011, another record setting year, there were more than 4,500 occasions when a company found itself in litigation with an NPE, a number that has increased by an average of over 33% per year since 2004.

Operating Company Parties in NPE Lawsuits Over Time 

Source: PatentFreedom © 2012. Data captured as of January 9, 2012.

Patent Lawsuits Involving NPEs Over Time

Source: PatentFreedom © 2012. Data captured as of January 9, 2012.

The last part of the steep increase in 2011 in the graphs results from changes in joiner provisions that have come into effect with the America Invents Act. There are undoubtedly a number of causes of the increase in NPE litigation in recent years, including the growth in a secondary market for patents and the continued rise in patents issued by the USPTO. This suggests that significant levels of patent enforcement by NPEs is likely to continue.

Exposure by industry
NPE patent enforcement used to be an issue that really only affected companies in the classic high technology sector. That is no longer the case, as NPEs are increasingly bringing patent enforcement actions against the users and sellers of technology, as well the producers. In 2004-2005 63% of the operating company parties in NPE lawsuits were in high-tech sectors, in 2010-2011 this number dropped to 48%. Recently, companies in many industries are experiencing NPE litigation, some for the first time and others with increasing regularity.

Most Pursued Companies
There are clear indications that NPEs in recent years increasingly seek to enforce their patents against companies of all sizes and in many markets, though the most pursued companies by NPEs are large and high-profile companies. The most pursued companies by NPEs over the past 5 years are Hewlett Packard, Apple, Samsung, AT&T and Sony. All these companies were involved in over more than 100 NPE lawsuits in the period of 2007-2011. The NPE with the largest Patent Holding portfolio is Intellectual Ventures with US Patent Publications between 10K and 15K.


Image courtesy of vichie81


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