Patent litigation shows surprising rise in cases and parties

Make no mistake: Virtual reality, along with augmented reality, presents incredible levels of potential in the future of marketing, e-commerce, retail and, of course, gaming.

But if a company is not careful, playing with any new virtual reality technology (especially if it was not created in-house) can easily become your new virtual nightmare.

To support my argument, I will cite last week’s story in Home News Now, reporting that HNN 125 City Furniture became the latest furniture company to be sued for alleged patent infringement of a 3D interior design system filed in October 2003 and subsequently acquired by ARDI in April 2020.

As we detailed in our story, City was not the first home furnishings company to be dragged into court by ARDI. Previous defendants included Ashley, La-Z-Boy, Ethan Allen, IKEA, Wayfair and Walmart.

Hey, I guess the thinking if you are the plaintiff, is “Go big or go home.”

In doing some digging online, I came up with a couple of very telling statistics. I found them on a site called LegalJobs, which bills itself as a recruitment platform that aims to connect aspiring legal professionals with top-rated law firms on a global scale.

You can read the blog here, and it included some eye-opening figures.

For example, LegalJobs maintains that, on average, there are between 5,000 and 6,000 patent case filings each year in the U.S. They also say that U.S. courts awarded some $4.67 billion in patent damages in 2020.

The site also claims that the number of parties involved in patent litigation cases increased in 2020 by roughly 4,000, adding that the rise in patent case filings also saw an increase in the number of parties involved. 

Patent litigation statistics show a net gain of roughly 4,000 parties in 2020 compared to 2018 and 2019. Patent accusations also shot up by 3,000 between 2019 and 2020.

In doing some research for last week’s story, a few things became evident to me. One was that applications for patents are going nowhere but up. Not surprisingly, so is the incidence of lawsuits claiming patent infringement.

When I spoke to Ryan N. Phelan, a patent attorney with Chicago-based law firm Marshall, Gerstein & Borun LLP, he also explained that individuals and/or companies often secure patents, but opt not to incorporate those patents into a product or products that find their way to market.

According to Phelan, a company that holds a patent but chooses not to develop a product based on that patent is called a nonpracticing entity (i.e., an NPE).”

I learned that NPE is the “polite” term. However, it seems that a more commonly used term, and one perhaps less polite, is “patent troll.” That term was used in the LegalJobs blog when it shared insights regarding which district courts are dealing with the highest number of patent cases.  

The site reports that “As the aforementioned intellectual property litigation stats show, the U.S. District Court for the Western District of Texas hosted the highest number of patent cases in the U.S. This venue saw a 216% increase in the number of filed cases in the 2019-2020 period. The court handled a total of 803 cases, with 83% of them being assertions by non-practicing entities or NPEs.”

The site went on to report that more than 10,000 companies have been sued at least once by a patent troll. Patent assertion entities or PAEs, often called patent trolls, are responsible for a huge number of patent litigation cases. 

Patent litigation statistics also show that the number of intellectual property rights cases initiated by patent trolls grew by 500% in the last decade. This points to a serious problem in this legal sphere where companies constantly have to fend off these costly attacks, LegalJobs says.

I find it interesting that ARDI acquired the patent in 2020 but has seemingly done nothing with it other than as a vehicle to drive anyone it deems having infringed upon it into court.

Attorney Phelan offered this advice to anyone planning to use VR or AR technology offered by a third party:

“One of the best things that a company planning to use technology from a third-party provider should do is to make sure to include an indemnity clause that would essentially say, ‘if I use your software and I get sued I will be indemnified and be held harmless.’”

Caveat emptor.

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