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Patent suits surge as US rethinks the rules

Congress may act to slow litigation; businesses divided

By Susan Decker Bloomberg News July 15, 2015

WASHINGTON — Patent owners are filing a record number of US lawsuits as Congress considers rules designed to curb the litigation trend.

Some 1,656 patent-infringement suits were filed in the second quarter, the highest of any period on record, according to figures issued Tuesday by Lex Machina, a Menlo Park, Calif., legal analysis firm. The report backs up an earlier study by Unified Patents showing the number of suits is on track to exceed 6,000 this year.

In 2014, the total was 5,010, down 18 percent from the previous year, Lex Machina said.

The lawsuit total is a flashpoint in the congressional debate over whether to change litigation rules. The House is scheduled to vote on a proposal next week to require patent owners to provide more information in lawsuits, make the loser pay the winner’s legal fees, and alter rules that might make it cheaper to defend against infringement claims.

The Senate Judiciary Committee has already approved its own version.

‘‘People just don’t know what’s going to happen because of the uncertainty,’’ said Josh Becker, chief executive of Lex Machina. ‘‘In times of uncertainty, if people are on the fence about filing, this could move them to file earlier.’’

The possible change in US patent law has split industries, generally along the lines of whether they are often sued or whether they rely on strong patent rights to protect products or revenue.

‘People just don’tknow what’s goingto happen because of the uncertainty. In times of uncertainty,if people are on the fence about filing, this could move them to file earlier.’

Silicon Valley companies, such as Google and Cisco Systems, and retailers — both of which are the most frequent targets of patent suits — say they need help getting rid of nuisance cases that are filed simply to extract cash.

On the other side, tech companies like Qualcomm that focus on research into how mobile devices operate worry their licensing profits will be hurt.

Drug makers are demanding that they be exempt from review procedures for issued patents at the Patent and Trademark Office.

Silicon Valley companies don’t want any changes that would undermine the procedures, which work more quickly than courts and result in a high rate of invalidity rulings.

A group that includes General Electric, Exxon Mobil, 3M, and Johnson & Johnson is calling for what it says is a more balanced bill that would appease both sides.

The House bill would make it harder to file lawsuits in Eastern Texas, which is considered a friendly district for patent owners. More lawsuits are filed there than anywhere else in the United States, reaching 1,387 in the first half of this year, according to Lex Machina.

The next most popular venue, the District of Delaware, had 254 suits in the same period. The Texas district saw a 166 percent rise in filings, while the number of suits in Delaware dropped 40 percent.

The study looked at the number of suits filed, not the success of past cases. The US Supreme Court and the appeals court that handles all patent cases have issued a number of rulings that make it easier to invalidate patents and reduce the damages fees that are awarded.

That hasn’t stopped patent owners who file numerous cases at once to extract small dollar figures from each company that will add up to a good payday.

Fifteen patent owners filed more than 10 lawsuits each in June alone. All but two of them filed their cases in Eastern Texas.

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