Much of the attention in patent law over the past five years has been on combating the so-called patent troll — patent assertion entities whose only business is suing other businesses. Patent trolls were one of the major impetuses behind 2011’s Leahy-Smith America Invents Act (AIA), which brought major changes to the patent system and patent enforcement practice. And even today, efforts continue in both houses of Congress to reign in the dastardly patent troll.
And while some would say more needs to be done, word this week may indicate that efforts to date have already had a major impact. But perhaps more interestingly, the effect of this pressure to limit and curtail patent troll activity may be affecting “traditional” competitor-based patent litigation.
Law360 this week reported that four major IP boutiques have shed between 9 and 20 percent of their attorneys. Representatives of these firms indicated that the decrease in head count was a response, in part, to dramatic reductions in the amount of patent litigation work in the marketplace. While other factors certainly played a role, the headcount reductions could be tied to a change in the frequency and way that patent enforcement actions were handled by businesses.
One theory is that patent litigation as a whole is less attractive to businesses, especially large businesses, because the expanded administrative review capabilities created by the AIA have made attacking patents easier and cheaper. The AIA increased the number of ways that issued patents could be challenged and made those challenges more attractive by statutorily mandating those reviews conclude in relatively short time frames. These options and incentives have, not unexpectedly, caused an increase in the number of administrative challenges to patents. This shift has meant that companies that sue competitors can expect to have their patent portfolio challenged administratively — and not just the patents raised in the litigation. This translates to a greater risk for patent plaintiffs, a risk that valuable patent portfolios will be invalidated in retaliation for patent litigation. Many judge that risk as a greater threat than isolated infringement.
This shift to administrative challenges has also changed the makeup of the legal teams involved in patent enforcement and defense. While patent litigation could often involve large teams of lawyers, with plenty of work for less experienced junior level attorneys, administrative challenges before the Patent Trial and Appeals Board can be handled with leaner teams and involve more complex and complicated legal questions requiring greater experience. This has resulted in a need for fewer, albeit more experienced, attorneys.
The question now is this: What effect will the additional proposed changes to the patent system being debated in Congress have on patent litigation in the future? Much has been made of the “unintended consequences” of patent reform. When the effects of the AIA are still not fully understood or appreciated, does it make sense to rush into further legislative reform? That question will need to be addressed in the current debates.
Jason Schwent is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of the Patent Billy Goat. You can find Jason on Google+, Twitter, and reach him at (314) 552-6291 or firstname.lastname@example.org.