2020: Economy down, patent litigation up

| Mar 16, 2021 | Intellectual Property Litigation |

Economic downturns like the one the pandemic produced last year tend to produce certain effects, such as rising unemployment, a decrease in gross domestic product, a drop in gasoline prices due to reduced demand, a tightening of credit and an increase in patent litigation, among others.

Looking back

According to an article in the New York Law Journal, patent litigation rose by slightly more than 10 percent last year to a four-year high.

There were 4,046 patent lawsuits filed in district courts in 2017, followed by a substantial drop the following year to 3,587, with a tiny dip down to 3,555 in 2019.

Last year’s surge resulted in a patent lawsuit total of 3,964.

According to the Journal author, past economic downturns had produced similar upticks in intellectual property litigation. A combination of “macroeconomic factors, coupled with a rise in third-party investment in patent litigation” contributed to the increase.

In difficult times, the national economy becomes less predictable, and companies and individuals view patent litigation in a more favorable light. After all, outcomes in patent litigation are not tethered to faltering markets or downward economic trends.

A rise in patent trolls

The New York Law Journal notes that the rise in patent litigation was also fueled by “patent troll cases . . . filed by companies that purchase patents with the goal of asserting and monetizing them.”

An article published by EFF (Electronic Frontier Foundation) on the last day of 2020 stated that patent troll lawsuits rose 20 percent over 2019 and were up 30 percent over 2018.

Lone Star concentration

The Law Journal said the bulk of last year’s patent litigation was concentrated in Texas, with the majority of new cases were filed in the Western District of Texas. In the past, most cases had been filed in the Eastern District of Texas.

In 2017, nearly 800 cases were filed in the Eastern District of Texas court – last year’s total in that venue had dropped by approximately half. Over that same time period, the Western District of Texas soared from about 100 new cases to approximately 850 in 2020.

The main reason for the rapid rise in the Western District: Judge Alan Albright (a former patent litigator) “has advanced specialized procedures for patent cases” and “a reputation for moving cases very rapidly through his court.”

When all is said and done, experts expect 2021 to mirror last year’s trends in cases filed and venues chosen for patent litigation.