A Cheaper Way to Defuse Patent Claims: Kill the Patent

When a tech company gets hit with a patent infringement lawsuit, the odds are high it will settle. So-called patent trolls—businesses or individuals who buy older patents, then sue infringing companies in search of big payouts—win more than half of cases that go to trial. A White House report says more than 100,000 companies were threatened with infringement suits last year by businesses whose sole mission is to extract royalty revenue, and the Government Accountability Office says those outfits filed 19 percent of all patent lawsuits from 2007 to 2011. In cases that went to trial in 2012, licensors were awarded a median $11.2 million per case, according to a PricewaterhouseCoopers study.

Google, Oracle, data-storage provider NetApp, and other tech companies have a new strategy for fighting back: petitioning the U.S. Patent and Trademark Office to revoke the patents they’re allegedly violating. These patent reviews, set up under the 2011 America Invents Act, can discourage frivolous patent claims by shifting the burden of proof to the plaintiff. The patent holder can’t refuse a review, overseen by administrative patent judges, even if a court case is already in progress. The outcome of a proceeding, required within 12 months instead of years, is legally binding; and although the trial judge isn’t required to put a case on hold while the Patent Office conducts a review, most do.