SAN JOSE (Legal Newsline) - Recent data from a group whose self-described goal is “reducing the number of non-practicing entity assertions” shows that the number of patent infringement lawsuits brought by NPEs -- dubbed “trolls” by the group -- grew last month.
Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product.
In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as patent “trolls.”
According to an analysis by San Jose-based Unified Patents, a membership organization created to help companies counter the costs and risks of certain NPE activity, lawsuits brought by NPEs increased 62.4 percent in May from April -- that is, 367 cases compared to 226.
The group, which publishes monthly newsletters summarizing NPE activity against small businesses and technology companies, found that May also had 10 percent more federal district court cases initiated than last year and 45.7 percent more than last month.
In particular, the Unified data found that NPEs instigated 69.8 percent of all district court cases initiated during May, compared to 62.6 percent of cases in April and 57.9 percent in May 2014.
It also found that NPE litigation made up 92.3 percent of high-tech cases in May, compared to 84.7 percent in May 2014 and 83.3 percent in April.
No information could be found on how Unified gathers its monthly data.
The group was founded in 2012 by CEO Kevin Jakel, the former head of intellectual property litigation at software company Intuit, and Brian Hinman, who formerly worked as a vice president of wireless company InterDigital.
Like a trade association, members of Unified subscribe to a “zone” for a small annual subscription fee based on a company size.
The group, according to its website, occasionally purchases patents that pose a risk to a zone before they are acquired by an NPE; however, it does not purchase patents or licenses from NPEs.
National Retail Federation Vice President Beth Provenzano, on behalf of the United for Patent Reform coalition, said Unified’s data demonstrates the “desperate” need for patent reform.
“We need legislation to close loopholes that encourage more frivolous patent infringement lawsuits and extortive demand letters as the latter is often aimed at small Main Street businesses, like retail stores and restaurants,” Provenzano said.
Patent trolls, she argues, are dominating patent court disputes because they know they can get a quick return on a small investment.
“Congress has the power to end this abuse,” Provenzano said. “Lawmakers must act now.”
Last week, the U.S. Senate Judiciary Committee sent its Protecting American Talent and Entrepreneurship, or PATENT, Act to the Senate floor.
The U.S. House Judiciary Committee was set to markup its patent reform bill, the Innovation Act, Thursday.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.