Patent News

Oct. 9, 2014

Intellectual Asset Management: Alice decision a big reason for sharp fall in US patent litigation, says Mark Lemley, by Richard Lloyd

This article originally appeared in Intellectual Asset Management on October 9, 2014.

Yesterday the legal analytics company Lex Machina released its latest analysis of US patent litigation. This revealed that the number of cases filed in September was down 40% year-on-year. As luck would have it, IAM has been in Silicon Valley this week and was able to catch up with Lex Machina founder Professor Mark Lemley at Stanford University Law School.

In the first of a two-part interview (part two will be published tomorrow) Lemley discusses the fall in US litigation cases and why he thinks the recent US Supreme Court decision in Alice v CLS may be a large part of the reason why it has happened. He also explains why the future is going to be much tougher for NPEs and looks at the relationship between the CAFC and the Supreme Court.

What do you think are the reasons for the fall in litigation?

We’ve seen a number of changes coming together all at once in patent law. Maybe the most significant of those is the Supreme Court’s Alice decision which is, I think, having a real effect on both software and business method patents. We’ve seen in the wake of Alice 15 decisions in the federal courts involving software or business method patents – 13 of those have struck the patents down. The other two have said this is a motion to dismiss, come back on summary judgment. So I don’t think that no software patents will survive but I do think that a wide swathe of patents that were written in a period when we didn’t pay any attention to patentable subject matter are vulnerable. And if you combine that with a couple of other factors, like the increased willingness of courts to grant attorneys fees against plaintiffs if their cases are weak and the fact that it’s now a lot cheaper to go to the patent office and get IPR or covered business method review, I think a lot of the business model that was driving the growth in litigation which involved suing everybody in the industry with this very broad, general patent is just less attractive than it used to be.

When you saw the Alice decision did you expect this?

I expected a wave of invalidations and we have seen that. So my prediction at the time was that more than half of the software patents in litigation right now were invalid. I think that’s playing out and then the interesting business question is, “does that cause the suits not to be filed, does it cause them to be filed but for less money?” and I think that what’s remarkable about the Lex Machina data is that it seems that people are making the decision not to file those suits in the first place.