INTELLECTUAL 

PROPERTY

Assessing Factors 

That Affect Patent 

Infringement 

Litigation Could Help 

Improve Patent 

Quality

Report to Congressional Committees

August 2013

GAO-13-465

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-465, a report to 

congressional committees

August 2013

INTELLECTUAL PROPERTY

Assessing Factors That Affect Patent Infringement 

Litigation Could Help Improve Patent Quality

Why GAO Did This Study

Legal commentators, technology 

companies, Congress, and others have 

raised questions about patent 

infringement lawsuits by entities that 

own patents but do not make products. 

Such entities may include universities 

licensing patents developed by 

university research, companies 

focused on licensing patents they 

developed, or companies that buy 

patents from others for the purposes of 

asserting the patents for profit.

Section 34 of AIA mandated that GAO 

conduct a study on the consequences 

of patent litigation by NPEs. This report 

examines (1) the volume and 

characteristics of recent patent 

litigation activity; (2) views of 

stakeholders knowledgeable in patent 

litigation on key factors that have 

contributed to recent patent litigation; 

(3) what developments in the judicial 

system may affect patent litigation; and 

(4) what actions, if any, PTO has 

recently taken that may affect patent 

litigation in the future. GAO reviewed 

relevant laws, analyzed patent 

infringement litigation data from 2000 

to 2011, and interviewed officials from 

PTO and knowledgeable stakeholders, 

including representatives of companies

involved in patent litigation.

What GAO Recommends

GAO recommends that PTO consider 

examining trends in patent 

infringement litigation and consider 

linking this information to internal 

patent examination data to improve 

patent quality and examination. PTO 

commented on a draft of this report 

and agreed with key findings and this

recommendation.

What GAO Found

From 2000 to 2010, the number of patent infringement lawsuits in the federal 

courts fluctuated slightly, and from 2010 to 2011, the number of such lawsuits 

increased by about a third. Some stakeholders GAO interviewed said that the 

increase in 2011 was most likely influenced by the anticipation of changes in the 

2011 Leahy-Smith America Invents Act (AIA), which made several significant 

changes to the U.S. patent system, including limiting the number of defendants in

a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit 

with multiple defendants to break the lawsuit into multiple lawsuits. In addition, 

GAO’s detailed analysis of a representative sample of 500 lawsuits from 2007 to 

2011 shows that the number of overall defendants in patent infringement lawsuits 

increased by about 129 percent over this period. These data also show that 

companies that make products brought most of the lawsuits and that 

nonpracticing entities (NPE) brought about a fifth of all lawsuits. GAO’s analysis 

of these data also found that lawsuits involving software-related patents 

accounted for about 89 percent of the increase in defendants over this period.

Stakeholders knowledgeable in patent litigation identified three key factors that

likely contributed to many recent patent infringement lawsuits. First, several

stakeholders GAO interviewed said that many such lawsuits are related to the 

prevalence of patents with unclear property rights; for example, several of these 

stakeholders noted that software-related patents often had overly broad or

unclear claims or both. Second, some stakeholders said that the potential for 

large monetary awards from the courts, even for ideas that make only small 

contributions to a product, can be an incentive for patent owners to file 

infringement lawsuits. Third, several stakeholders said that the recognition by 

companies that patents are a more valuable asset than once assumed may have 

contributed to recent patent infringement lawsuits.

The judicial system is implementing new initiatives to improve the handling of 

patent cases in the federal courts, including (1) a patent pilot program, to 

encourage the enhancement of expertise in patent cases among district court 

judges, and (2) new rules in some federal court districts that are designed to 

reduce the time and expense of patent infringement litigation. Recent court 

decisions may also affect how monetary awards are calculated, among other 

things. Several stakeholders said that it is too early to tell what effect these 

initiatives will have on patent litigation. 

The U.S. Patent and Trademark Office (PTO) has taken several recent actions 

that are likely to affect patent quality and litigation in the future, including agency 

initiatives and changes required by AIA. For example, in November 2011, PTO 

began working with the software industry to develop more uniform terminology 

for software-related patents. PTO officials said that they generally try to adapt to 

developments in patent law and industry to improve patent quality. However, the 

agency does not currently use information on patent litigation in initiating such 

actions; some PTO staff said that the types of patents involved in infringement 

litigation could be linked to PTO's internal data on the patent examination 

process, and a 2003 National Academies study showed that such analysis could 

be used to improve patent quality and examination by exposing patterns in the 

examination of patents that end up in court.

View GAO-13-465. For more information, 

contact Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov.
Page i GAO-13-465 Patent Litigation

Letter 1

Background 7

Number of Patent Infringement Lawsuits Increased Significantly in 

2011 and the Number of Defendants Increased between 2007 and 

2011 14

Stakeholders Identified Three Key Factors Contributing to Many 

Recent Patent Infringement Lawsuits 28

New Initiatives in the Courts May Affect Patent Litigation 36

PTO Has Taken Actions to Improve Patent Quality and Implement 

New AIA Proceedings That May Affect Patent Litigation in the 

Future 39

Conclusions 45

Recommendation for Executive Action 46

Agency Comments and Our Evaluation 46

Appendix I Objectives, Scope, and Methodology 48

Appendix II Comments from the Patent and Trademark Office 55

Appendix III GAO Contact and Staff Acknowledgments 56

Table

Table 1: Evidence or Information Used to Review Lex Machina’s 

Plaintiff Classifications 52

Figures

Figure 1: Number of Software-Related Patents Granted per Year by 

PTO, 1991 to 2011 12

Figure 2: Patent Infringement Lawsuits, 2000 to 2011 14

Figure 3: Estimated Number of Defendants in Patent Infringement 

Lawsuits, 2007 to 2011 16

Figure 4: Estimated Patent Infringement Lawsuits by Type of 

Plaintiff, 2007 to 2011 18

Contents
Page ii GAO-13-465 Patent Litigation

Figure 5: Estimated Number of Patent Infringement Lawsuits and 

Defendants Associated with Software-Related Patents, 

2007 to 2011 21

Figure 6: Estimated Percentage of PME and Operating Company 

Lawsuits and Defendants Associated with SoftwareRelated Patents, 2007 to 2011 22

Figure 7: Distribution of Total Patent Infringement Lawsuits across 

U.S. District Courts from 2000 to 2011 24

Abbreviations 

AIA Leahy-Smith America Invents Act

AIPLA American Intellectual Property Law Association

AOUSC Administrative Office of the U.S. Courts

CPC Cooperative Patent Classification

EPO European Patent Office

FTC Federal Trade Commission

ITC International Trade Commission

NPE nonpracticing entities

PAE patent assertion entities

PME patent monetization entities

PTO Patent and Trademark Office

R&D research and development

SEC Securities and Exchange Commission

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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Page 1 GAO-13-465 Patent Litigation

441 G St. N.W.

Washington, DC 20548

August 22, 2013

Congressional Committees

History is filled with examples of successful inventors who did not develop 

products based on the technologies they patented. For example, Elias 

Howe patented a key component of the sewing machine––a mechanism 

for making a lockstitch––but it was Isaac Singer who most successfully 

brought these machines into the homes of thousands of Americans by 

obtaining crucial patents of his own and paying Howe and other inventors 

to license the technology described in their patents.1 In the United States, 

the party that owns a patent––the patent owner––is not required to put 

the patent to use in order to profit from it; he can also license others to 

use it.2 In some instances, patent owners may need to actively assert 

their patents in an adversarial context if another firm’s product infringes 

their patents.3 For example, Singer initially refused to obtain a license to 

Howe’s patent, but when Howe sued Singer for infringing his patent, the 

two parties ultimately entered a licensing agreement.4

 1

A patent is an exclusive right granted for a fixed period of time to someone who invents 

or discovers (1) a new and useful process, machine, manufacture, or composition of 

matter or (2) any new and useful improvement of such items.

2

In this report, when we use the term “patent owner,” it includes the real party in interest 

when that party is not the patent owner. A real party in interest may be, among other 

things, an entity that has a legal right to enforce the patent, such as a parent entity or 

exclusive licensee. 

3

Anyone who makes, sells, offers to sell, uses, or imports the patented invention during 

the term of the patent without the patent owner’s permission infringes the patent. Patent 

infringement is a strict liability offense—the alleged infringer’s intent to copy or act of 

copying the patented invention are not relevant to the outcome of an infringement 

lawsuit—so an individual who independently develops an invention that falls within the 

scope of a patent may infringe the patent. A patent owner can grant permission to use a 

patented invention by licensing others to use, make, sell, or import the patented invention.

Patent owners can also transfer title to their patents by assigning their patent rights to 

others.

4

For more information on the dispute between Howe and Singer, see: Adam Mossof, The 

Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 

1850s, 53 Ariz. L. Rev.165 (2011). See also Ryan L. Lampe & Petra Moser, Do Patent 

Pools Encourage Innovation? Evidence from the 19th-Century Sewing Machine Industry,

NBER Working Paper No. 15061 (June 2009).
Page 2 GAO-13-465 Patent Litigation

According to economists who have studied these issues, the U.S. patent 

system—authorized by the U.S. Constitution—aims to promote innovation 

by making it more profitable.5

In addition to individual inventors who may choose not to develop 

products based on their patents, there are other types of “nonpracticing”

patent owners, or nonpracticing entities (NPE). For example, some 

universities are NPEs, as they develop technologies in campus 

laboratories, and rather than producing and selling products that 

incorporate these technologies, they license their patents on these 

technologies to companies who use them in their products. In addition, 

some private firms are NPEs as they specialize in R&D, and rather than 

selling products, they license the patents for those products to fund 

further research. Some NPEs simply buy patents from others for the 

purpose of asserting them for profit; these NPEs are known as patent 

monetization entities (PME).

For example, a patent owner can generally 

exclude others from making, using, selling, or importing the patented 

technology for 20 years from the date on which the application for the 

patent was filed. By restricting competition, patents can allow their owners 

to earn greater profits on their patented technologies than they could earn 

if these technologies could be imitated freely. Due to the exclusive rights 

provided by patents, patents can help their owners recoup the costs of 

the research and development (R&D) of new technologies. On the other 

hand, any limiting effects on competition caused by the exclusive nature 

of patents may result in higher prices for products having patented 

technologies. The patent system, therefore, gives rise to complex tradeoffs involving innovation and competition. These trade-offs can be 

affected by decisions made by the United States Patent and Trademark 

Office (PTO), which issues patents; the federal courts, which decide 

patent infringement lawsuits; and the International Trade Commission 

(ITC), which can order imports that infringe U.S. patents to be excluded 

from entering the country.

6

 5

The Constitution grants to Congress the power “[t]o promote the Progress of Science and 

useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to 

their respective Writings and Discoveries.” U.S. Const., art. I, § 8, cl. 8. 

Other PMEs include companies that 

produced products at one time and still own patents on the technologies 

6

The Federal Trade Commission uses the related term “patent assertion entities” to focus 

on entities whose business model solely focuses on asserting typically purchased patents. 

As such, the PME term also encompasses entities that might use third-party NPEs to 

assert patents for them.
Page 3 GAO-13-465 Patent Litigation

for those products. Experts agree that NPEs have a variety of business 

models, which makes it difficult to fit them neatly into any one of these 

categories. For example, even companies that produce products related 

to their patents—known as practicing patent owners, or operating 

companies—sometimes assert patents that they own but that are not 

related to the products they produce, which further complicates defining 

an NPE.

Some legal commentators, technology companies, the Federal Trade 

Commission (FTC),7 and Congress, among others, have raised concerns 

that patent infringement litigation by NPEs is increasing and that this 

litigation, in some cases, has imposed high costs on firms that are 

actually developing and manufacturing products, especially in the 

software and technology sectors. Among the concerns of some 

technology companies and legal commentators is that because NPEs 

generally face lower litigation costs than those they are accusing of 

infringement, NPEs are likely to use the threat of imposing these costs as 

leverage in seeking infringement compensation.8

The Leahy-Smith America Invents Act (AIA), signed into law September 

16, 2011, made several significant changes to the U.S. patent system. 

Section 34 of the AIA

These technology 

companies and legal commentators also have noted that NPEs often 

claim that their patent covers an entire technology when in fact it may 

cover just a small improvement in an existing technology, and that it can 

be difficult for judges and juries to determine the patent’s scope when 

complex technologies are involved.

9

 7

FTC’s mission includes prevention of and enforcement against anticompetitive, unfair, or 

deceptive business practices including, potentially, patent assertion activities.

mandates that GAO conduct a study on the 

8

This is not unique to patent infringement litigation. As discussed later in the report, in civil 

lawsuits, the parties must exchange certain information relevant to the litigation, a process 

known as discovery. Discovery costs in complex litigation, including patent infringement 

litigation, can run into the millions of dollars. Because NPEs do not make products, they 

generally have less information to disclose and thus have lower discovery costs. They 

also cannot be countersued for patent infringement. This asymmetry in litigation costs 

(which exists in other types of complex litigation) can give NPEs leverage in seeking 

financial compensation from operating companies.

9

Pub. L. No.112-29 § 34 (2011).
Page 4 GAO-13-465 Patent Litigation

consequences of patent litigation by NPEs.10

To address all four objectives, we reviewed relevant laws, including the 

AIA, and interviewed officials from PTO, FTC, ITC, and 44 stakeholders 

knowledgeable about patent litigation. These included representatives 

from companies and industry groups that were recently sued for patent 

infringement, PMEs, judges, various legal commentators (including law 

professors and patent litigators representing operating companies and 

PMEs), economists, representatives from research universities that 

license patents, patent brokers who help others buy and sell patents, 

venture capitalists, and individual inventors.

Our objectives in conducting 

this study were to determine: (1) what is known about the volume and 

characteristics of recent patent litigation activity; (2) the views of 

stakeholders knowledgeable in patent litigation on what is known about 

the key factors that have contributed to recent patent litigation; (3) what 

developments in the judicial system may affect patent litigation; and (4) 

what actions, if any, has PTO recently taken that may affect patent 

litigation in the future. 

11

 10As noted in a September 7, 2011, letter from the Comptroller General to the chairs and 

ranking members of the congressional committees with jurisdiction over patents, the bill 

being considered at that time would have required a GAO study involving several 

questions for which reliable data were not available or could not be obtained. The bill was 

enacted without change, but the Chair of the Senate Judiciary Committee, responding to 

these concerns, stated that GAO should note data and methodology limitations in its 

report prepared in response to the mandate. 157 CONG. REC. S 5402, S5441 (daily ed. 

Sept. 8, 2011) (statement of Sen. Leahy). Consequently, we developed report objectives 

consistent with these limitations, and we have noted specific data limitations in appendix I 

and throughout this report, as appropriate.

To describe what is known 

about the volume and characteristics of recent patent litigation activity for 

2007 to 2011, we analyzed patent infringement litigation data from Lex 

Machina, a firm that collects and analyzes data on patent litigation. Lex 

Machina provided data for all patent infringement lawsuits filed in federal 

district court from 2000 to 2011. From these data, Lex Machina selected a 

random, generalizable sample of 500 lawsuits (100 per year from 2007 to 

2011), which allows us to estimate percentages with a margin of error of 

11We identified some of these stakeholders from patent infringement litigation data from 

2000 through 2011 that we reviewed. Representatives of companies and PMEs we talked 

with had regularly been sued or had regularly sued others over the past decade. Other 

stakeholders we identified through our review of academic literature on patent litigation 

and the patent system and were knowledgeable in the issues we were asked to study. 

Because stakeholders varied in their expertise with various topics, not every stakeholder 

provided an opinion on every topic.
Page 5 GAO-13-465 Patent Litigation

no more than plus or minus 5 percentage points over all these years and 

no more than plus or minus 10 percentage points for any particular year.12

Lex Machina used a variety of characteristics from court records, U.S. 

Securities and Exchange Commission (SEC) filings, and corporate 

websites to categorize litigants, including as an operating company or 

likely operating company, PME or likely PME, university, or an individual 

or trust.13 A limitation of this categorization is that litigants were not 

contacted to verify their identity, so there is some uncertainty about the 

accuracy of the category in which Lex Machina placed them. We also 

obtained patent infringement data from RPX, another firm that collects 

data on patent infringement lawsuits, in an effort to verify Lex Machina’s 

litigant categorizations.14

 12This sample allowed us to draw conclusions about the broader population of patent 

infringement lawsuits for each of these years and is therefore generalizable to all patent 

infringement lawsuits filed in federal district court from 2007 to 2011. However, as noted, 

estimates from the Lex Machina sample are subject to a 5 percent margin of error. This 

means that an estimate of 50 percent, for example, based on all years of data, would have 

a 95 percent confidence interval of between 45 percent and 55 percent. The margin of 

error is 10 percent when looking at individual years, which means that an estimate of 50 

percent, for example, looking at an individual year, would have a 95 percent confidence 

interval of between 40 percent and 60 percent. Because Lex Machina followed a 

probability procedure based on random selections, the sample is only one of a large 

number of samples that might have been drawn. Since each sample could have provided 

different estimates, we express our confidence in the precision of our particular sample’s 

results as a 95 percent confidence interval. This is the interval that would contain the 

actual population value for 95 percent of the samples that could have been drawn. Unless 

otherwise noted, the margin of error associated with the confidence intervals of our survey 

estimates is no more than plus or minus 10 percentage points at the 95 percent level of 

confidence. 

Also to describe what is known about the 

volume and characteristics of recent patent litigation activity, we reported 

data collected by the American Intellectual Property Law Association 

13Definitions of these categories are discussed below and detailed in appendix I. We 

found that it was difficult to reliably identify the type of NPEs through analysis of data from 

court records because, among other things, firms do not identify themselves as such in 

these records. Lex Machina did not include patent owners that primarily seek to develop 

and transfer technology, such as universities and research firms, as PMEs. See appendix 

I for more detail on Lex Machina’s categorizations and our review of them.

14RPX also purchases patents itself, to prevent them from being asserted against its 

members. RPX provided us with summary data on the number of patent infringement 

lawsuits filed in federal district court since January 2005. RPX’s data identified NPEs and 

other types of plaintiffs in these lawsuits by using a variety of factors, such as whether 

there was evidence that an entity sells or develops products. RPX representatives said 

that they used professional judgment to some extent in making these determinations. We 

were not able to fully assess the reliability of the judgments RPX used in making these 

classifications. 
Page 6 GAO-13-465 Patent Litigation

(AIPLA) on the costs of patent litigation.15

In addition to the steps we took to address all four objectives, in order to 

describe views of stakeholders on what is known about the key factors 

that contribute to recent patent litigation trends, we reviewed academic 

literature on the patent and judicial systems and the benefits and costs of 

patent assertion, including economic and legal studies. To describe 

developments in the judicial system that may affect patent litigation, we 

interviewed officials and judges from the U.S. District Courts for the 

District of Delaware and for the Eastern District of Texas. We selected 

these district courts because they had high levels of patent infringement 

lawsuits according to Lex Machina data. We also interviewed judges with 

the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) in 

Washington, D.C., which hears appeals of patent cases decided in 

federal district courts, as well as officials from the Administrative Office of 

the U.S. Courts (AOUSC) and the Federal Judicial Center––organizations 

that provide broad administrative, legal, and technological services and 

support to the judicial branch. We also reviewed documents and data 

from the courts, as well as economic and legal studies. To describe what 

actions, if any, PTO has recently taken that may affect patent litigation in 

the future, we conducted interviews with officials from PTO and reviewed 

documents and data from the agency, as well as economic and legal 

studies. Appendix I provides more details on our scope and methodology.

We also reviewed academic 

literature on patent litigation and the patent system in general and 

assessed the methodology of the studies we reported on for soundness. 

To assess the reliability of data from Lex Machina, we met with Lex 

Machina staff, examined documentation, and tested and reviewed the 

data provided for completeness and accuracy. To assess the reliability of 

data from PTO, AIPLA, and RPX, we conducted interviews and reviewed 

relevant methodology documentation. We found these data to be 

sufficiently reliable for purposes of this report. 

We conducted this performance audit from November 2011 to August 

2013 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

 15AIPLA is a national, voluntary bar association constituted primarily of patent lawyers in 

private and corporate practice, in government service, and in the academic community. 

See AIPLA, Report of the Economic Survey 2011 (Arlington, Va.: July 2011). AIPLA 

surveyed its members during 2011 and asked them to estimate legal costs for typical 

patent infringement cases. AIPLA’s findings are based on an 18 percent response rate.
Page 7 GAO-13-465 Patent Litigation

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

When PTO receives a patent application, it assigns it to a team of patent 

examiners with relevant technology expertise. PTO does not begin 

examining patent applications upon receiving them and PTO’s data 

shows that, as of June 2013, the average time between filing and an 

examiner’s initial decision on the application was about 18 months.16

The focus of patent examination is determining whether the patent 

application satisfies the statutory requirements for a patent, including: (1) 

novelty, (2) nonobviousness, (3) utility, and (4) patentable subject 

matter.

On 

average, it takes 30 months for PTO to issue a patent once an application 

is submitted. 

17 Generally, other patents, publications, and publicly disclosed but 

unpatented inventions that pre-date the patent application’s filing date are 

known as prior art. During patent examination, the examiner, among other 

things, compares an application’s claims to the prior art to determine 

whether the claimed invention is novel and nonobvious.18

U.S. patents include the specification and the claims:

The examiner 

then decides to reject or grant the claims in the application and deny the 

application or grant a patent.

 16PTO’s data show that the current inventory of new applications that have not yet 

received an initial decision was around 600,000 applications. PTO refers to these initial 

decisions as a “first action on the merits.”

17To be patentable subject matter, the invention must be a (1) process; (2) machine; (3) 

manufacture; (4) composition of matter; or (5) improvement of a process, machine, 

manufacture, or composition of matter. To be nonobvious, the claimed invention’s 

improvements to the prior art must be more than the predictable use of prior art elements 

according to their established functions. Specifically, at the time of the invention, the 

differences between the scope and content of claimed invention and the prior art cannot 

render the claimed invention as a whole obvious to a person having ordinary skill in the 

art. 

18During the patent examination, the applicant and the examiner communicate about the 

application, including aspects that might be deficient. For example, the examiner may 

inform the applicant that one of the claims is not novel because of prior art, and the 

applicant might revise the claim to distinguish it from the prior art the examiner found. 

Background
Page 8 GAO-13-465 Patent Litigation

• The specification is a written description of the invention that, among 

other things, sufficiently discloses the invention and the manner and 

process of making and using it. The specification must be written in 

full, clear, concise, and exact terms so as to enable any person skilled 

in the art to make and use the invention. As an example, an excerpt 

from the specification for a cardboard coffee cup and insulator 

invention describes “corrugated containers and container holders 

which can be made from existing cellulosic materials, such as paper.”

• The claims define the scope of the invention for which protection is 

granted and must be definite. There are often a dozen or more claims 

per patent, and they can often be difficult for a layperson to 

understand, according to legal commentators. For example, one claim 

for the cardboard coffee cup insulator begins by referring to “a 

recyclable, insulating beverage container holder, comprising a 

corrugated tubular member comprising cellulosic material and at least 

a first opening therein for receiving and retaining a beverage 

container.” A patent’s claims can be written broadly or be more 

narrowly defined, according to legal commentators, and applicants 

can change the wording of claims—which can affect their scope—

during examination based on examiner feedback. Patents are a 

property right and—like land—their claims define their boundaries. 

When a property right is not clearly defined, it can lead to boundary 

disputes, although to some extent uncertainty is inherent. 

Consequently, legal commentators define high-quality patents as 

those whose claims clearly define and provide clear notice of their 

boundaries.

Once issued by PTO, a patent is presumed to be valid. However, the 

patentability of its claims can be challenged in administrative proceedings

before PTO or its Patent Trial and Appeal Board and its validity can be 

challenged in federal court. For example, the AIA established three new 

administrative proceedings for entities to challenge the patentability of a 

patent’s claims:

• Inter partes review.19

 19Inter partes is Latin for “between the parties.”

This proceeding allows anyone who is not the 

patent owner to request review of an issued patent by presenting prior 

art to PTO—either patents or other publications—to challenge the 

claimed invention’s patentability as obvious or not novel. This review 

proceeding became available on September 16, 2012, 1 year after the 

enactment of the AIA, but entities cannot request this review until the 
Page 9 GAO-13-465 Patent Litigation

later of (1) 9 months after a patent is granted or (2) completion of 

post-grant review, if such a proceeding is held.

• Post-grant review. This proceeding allows anyone who is not the 

patent owner to request a review of an issued patent that challenges 

at least one of the claims’ patentability in more circumstances than 

inter partes review—such as the invention not being useful—and not 

solely based on prior art. This proceeding is available for patents 

issued from patent applications with a filing date of March 16, 2013, or 

later and requests must be filed within 9 months of the patent’s 

issuance.

• Transitional program for covered business method patents. 20

In addition, a patent’s validity can be challenged in the 94 federal district 

courts throughout the country by, for example, presenting additional prior 

art that PTO may have been unaware of when it granted the patent.

Challenges to a patent’s validity are often brought by an accused infringer 

who has been sued for infringing the patent.

This 

proceeding allows anyone who is sued or charged with infringing a 

covered business method patent to request a review of the patent to 

challenge a claim’s patentability in generally the same circumstances 

as post-grant review. This review proceeding became available on 

September 16, 2012, and requests must be filed within 9 months of 

the patent’s issuance.

21

 20A covered business method patent is a patent that claims a method or corresponding 

apparatus for performing data processing or other operations used in the practice, 

administration, or management of a financial product or service but does not include 

patents for technological inventions. This transitional program is subject to a sunset 

provision that will repeal the program on September 16, 2020.

Patent owners can bring 

infringement lawsuits against anyone who uses, makes, sells, offers to 

sell, or imports the patented invention without authorization because a 

patent is a right to exclude others from practicing the invention. Exactly 

what a patent covers and whether another product infringes the patent’s 

claims are rarely easy questions to resolve in litigation, according to legal 

commentators. As noted, appeals of district court decisions in 

infringement cases are heard in the U.S. Court of Appeals for the Federal 

Circuit in Washington D.C.

21 In patent infringement lawsuits, the accused infringer often challenges the patent’s 

validity as an “affirmative defense,” meaning that even if the infringement allegations are 

true, the would-be infringer is not liable because the patent is invalid. A party accused of 

infringement can also file a lawsuit to obtain a court decision on whether they are 

infringing or whether the patent is valid, which is known as a declaratory judgment action.
Page 10 GAO-13-465 Patent Litigation

If a patent infringement lawsuit is not dismissed in the initial stages, it 

proceeds to discovery (a process that exists in all federal civil litigation) 

and claim construction. Discovery requires the accused infringer to 

produce documents or other information that shows, among other things, 

how the allegedly infringing product is made and operates to help the 

patent owner establish infringement. Similarly, the patent owner must 

produce documents or other information that the accused infringer can 

use to challenge the patent’s validity, among other things. However, 

parties that do not offer products or services using the patents at issue 

often have far fewer documents to disclose—because they do not have 

any documents related to their products or services—than patent owners 

or accused infringers who do offer products or services.22

With this information the patent owner specifies which patent claims 

allegedly are infringed and the alleged infringer responds by explaining 

why the allegedly infringing product is not covered by the patent’s claims. 

This identifies the patent claims the court needs to interpret. Known as 

claim construction, this is a fundamental issue in patent cases, and each 

party tries to persuade the court to interpret the patent claims in its favor. 

The court has broad discretion in how it goes about this process, which 

can involve a hearing with testimony from witnesses, according to legal 

commentators.23

Once the judge interprets the claims, the claims are then applied to the 

allegedly infringing product, to determine infringement, and to the prior 

art, to determine the patent’s validity if it is challenged. If the patent is 

found to be both valid and infringed, the court can award the patent owner 

monetary damages, issue an injunction to prohibit further infringement, or 

both. The court is required to award damages adequate to compensate 

In addition, if the patent’s validity is being challenged, 

the alleged infringer specifies why the patent allegedly is not valid, 

including any prior art.

 22 As noted, asymmetrical discovery demands, burdens, and costs are not unique to NPE 

patent infringement litigation. For example, parties in class actions and antitrust litigation 

typically face the same asymmetry. See, e.g.,Thorogood v. Sears, Roebuck & Co., 624 

F.3d 842, 849-50 (7th Cir. 2010) (class action discovery); Bell Atlantic Corp. v. Twombly, 

550 U.S. 544, 558-559 (2007) (antitrust discovery).

23This hearing is often referred to as a Markman hearing after the Supreme Court’s 

decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).
Page 11 GAO-13-465 Patent Litigation

for the infringement that are at least what a reasonable royalty would be 

for the use made of the invention by the infringer.24

In addition to being enforced in the federal courts, patents can also be 

enforced at ITC, which handles investigations into allegations of certain 

unfair practices in import trade. Specifically, certain patent owners can file 

a complaint with ITC if imported goods infringe their patent or are made 

by a process covered by the patent’s claims.25 If ITC determines after an 

investigation that an imported good infringes a patent, the agency can 

issue an exclusion order barring the products at issue from entry into the 

United States, which the President can disapprove for policy reasons. ITC 

decisions can be appealed to the U.S. Court of Appeals for the Federal 

Circuit. Legal commentators have reported that a 2006 Supreme Court 

decision led to increased complaints alleging imported goods infringed 

U.S. patents being filed with ITC, and recent ITC data show that the 

number of investigations instituted by ITC increased from 32 in 2006 to 37 

in 2012.

26

According to PTO data, applications for all types of patents have 

increased in recent years, and patents granted for software-related 

technologies have seen dramatic increases over the past 2 decades (see 

 24The judge has the authority to increase damages up to three times the amount initially 

awarded, called treble damages, for cases of willful infringement. In “exceptional cases”

the court is authorized to award the prevailing party reasonable attorney fees.

25In order for ITC to have jurisdiction to hear the complaint, there must be an industry in 

the United States in existence or in the process of being established that relates to the 

articles protected by the patent concerned. An industry in the United States is considered 

to exist if there is in the country, with respect to the articles protected by the patent: (1) a 

significant investment in plant and equipment; (2) significant employment of labor or 

capital; or (3) substantial investment in its exploitation, including engineering, research 

and development, or licensing. This is known as the domestic industry requirement. 

26Prior to this 2006 Supreme Court case, the Federal Circuit’s general rule was for district 

court judges to issue injunctions in patent cases once validity and infringement had been 

determined except in unusual cases under exceptional circumstances and in rare 

instances to protect public interest. In the 2006 eBay decision, the Supreme Court ruled 

that district courts should not assume an injunction was automatically needed in patent 

infringement cases and instead should use the same test used in other cases to 

determine whether to award the plaintiff an injunction. eBay, Inc. v. MercExchange, L.L.C., 

547 U.S. 388 (2006). According to several legal commentators we spoke with, this 

decision has generally made it more difficult for NPEs to obtain injunctions in the courts 

and has led them to pursue exclusion orders at ITC—although there may have been other 

reasons for the increase in filings, including the relative speed of proceedings at ITC. 
Page 12 GAO-13-465 Patent Litigation

fig. 1).27

Figure 1: Number of Software-Related Patents Granted per Year by PTO, 1991 to 

2011

Software-related patents occur in a variety of technologies 

containing at least some element of software, and cover things like 

sending messages or conducting business over the Internet (e.g. ecommerce). Patents related to software can, but do not generally, detail 

computer software programming code in the specification, but often 

provide a more general description of the invention, which can be 

programmed in a variety of ways.

Note: Software-related patents include a number of patent classes that are most likely to include 

patents with software-related claims, and this includes business method patents.

According to legal commentators, the number of software-related patents 

grew as computers were integrated into a greater expanse of everyday 

 27Although PTO does not have a specific “software-related” patent class, we combined a 

number of entire patent classes that PTO economists have said are most likely to include 

patents with software-related claims, and this includes business method patents. For the 

list of these classes, see S. Graham, , and S. Vishnubhakat, Of Smart Phone Wars and 

Software Patents, Journal of Economic Perspectives, v. 27 no.1 (2013), pp. 67-86.
Page 13 GAO-13-465 Patent Litigation

products. By 2011 patents related to software made up more than half of 

all issued patents. Software was not always patentable, and Supreme 

Court decisions in the 1970s found mathematical formulas used by 

computers were not patentable subject matter.28 However, a 1981 

Supreme Court decision overturned PTO’s denial of a patent application 

for a mathematical formula and a programmed digital computer because, 

as a process, it was patentable subject matter.29 Subsequently, in 1998, 

the Federal Circuit ruled that a mathematical formula in the form of a 

computer program is patentable if it is applied in a useful way.30

According to PTO officials, the agency interpreted these cases as limiting 

their ability to reject patent applications for computer processes. Legal 

commentators also said that after these decisions, particularly the 1998 

Federal Circuit decision, software-related patenting grew as many 

technology companies made the conscious effort to generate more 

patents for offensive or defensive purposes—that is, to use them to sue 

or countersue competitors in infringement lawsuits, rather than use them 

to recoup R&D costs. As recently as 2010, the Supreme Court has noted 

that the patent statute acknowledges that business methods are 

patentable subject matter.31

 28Gottschalk v. Benson, 409 U.S. 63 (1972) (finding a mathematical formula that had no 

substantial practical application except in connection with a digital computer was not 

patentable because it is like a law of nature, which cannot be the subject of a patent); 

Parker v. Flook, 437 U.S. 584 (1978) (finding a method for updating alarm limits through 

computerized calculations was not patentable because the alarm limit is a number and the 

patent application was for a formula to compute it).

29Diamond v. Diehr, 450 U.S. 175 (1981) (finding a patent claim containing a 

mathematical formula that implements or applies that formula in a structure or process, 

which, when considered as a whole, is performing a function which the patent laws were 

designed to protect, to be patentable). 

30State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. 

Cir. 1998). 

31Bilski v. Kappos, __ U.S. __, 130 S. Ct. 3218 (2010). 
Page 14 GAO-13-465 Patent Litigation

From 2000 to 2010, the number of patent infringement lawsuits fluctuated 

slightly, and from 2010 to 2011, the number increased about 31 percent. 

Our more detailed analysis of a generalizable sample of 500 lawsuits 

estimates that the overall number of defendants in these cases increased 

from 2007 to 2011 by about 129 percent over the 5-year period. This 

analysis also shows that operating companies brought most of these 

lawsuits and that lawsuits involving software-related patents accounted 

for about 89 percent of the increase in defendants during this period. 

Some stakeholders we interviewed said that they experienced a 

substantial amount of patent assertion without firms ever filing lawsuits 

against them.

From 2000 to 2011, about 29,000 patent infringement lawsuits were filed 

in U.S. district courts. The number of these lawsuits fluctuated slightly 

until 2011, when there was a 31 percent increase (see fig. 2).

Figure 2: Patent Infringement Lawsuits, 2000 to 2011

Specifically, about 900 more lawsuits were filed in 2011 than the average 

number of lawsuits filed in each of the previous years. Some stakeholders 

Number of Patent 

Infringement Lawsuits 

Increased 

Significantly in 2011 

and the Number of 

Defendants Increased 

between 2007 and 

2011

Number of Patent 

Infringement Lawsuits 

Fluctuated Slightly before 

Increasing in 2011, but 

Number of Defendants 

Increased from 2007 to 

2011
Page 15 GAO-13-465 Patent Litigation

we interviewed generally attributed the increase in 2011 to patent owners’

anticipation of the passage of AIA, which restricts the number of accused 

infringers who can be joined in a single lawsuit.32 Prior to the enactment 

of AIA, plaintiffs could sue numerous defendants in a single lawsuit. AIA 

restricts this practice by prohibiting joining unrelated defendants into a 

single lawsuit based solely on allegations that they have infringed the 

same patent. According to the legislative history of AIA, this provision was 

designed to address problems created by plaintiffs joining defendants, 

sometimes numbering in the dozens.33

 32Pub. L. No. 112-29, § 19(d)(1) (2011). Specifically, accused infringers may be joined, or 

have their actions consolidated for trial, only if (1) questions of fact common to all will arise 

in the action; and (2) any right to relief is asserted against the parties jointly and severally 

or with respect to or arising out of the same transaction, occurrence, or series of 

transactions or occurrences relating to the same accused product or process. AIA Section 

19(d)(1), however, allows an accused infringer to waive these restrictions.

As a result, some stakeholders we 

interviewed generally agreed that the increase in 2011 was due to the fact 

that plaintiffs had to file more lawsuits at the end of 2011 after AIA’s 

enactment in order to sue the same number of defendants or anticipated 

this change and rushed to file lawsuits against multiple defendants before 

it was enacted. In addition, our analysis of a generalizable sample of data 

from 2007 through 2011 estimates that the number of overall defendants 

in patent infringement suits increased by about 129 percent over the 5-

year period (see fig. 3).

33H. Rep. No. 112-98, at 54 (2011). 
Page 16 GAO-13-465 Patent Litigation

Figure 3: Estimated Number of Defendants in Patent Infringement Lawsuits, 2007 to 

2011

Note: Defendant estimates are representative of all patent infringement lawsuits and error bars 

display 95 percent confidence intervals.

Representatives of several operating companies that we interviewed said 

they are being sued more often since the mid-2000s. For example, one 

former official at a large technology company told us that, in 2002, the 

company was a defendant in five patent infringement lawsuits, but in 

2011, it was a defendant in more than 50. However, a few legal 

commentators we interviewed said that such increases are common 

during periods of rapid technological change—new industries lead to 

more patents and the number of patent infringement lawsuits also 

increases because there are more patents to be enforced. Similarly, one 

researcher working on these issues told us that, historically, major 

technological developments—such as the development of automobiles, 

airplanes, and radio—have also led to temporary, dramatic increases in 

patent infringement lawsuits.
Page 17 GAO-13-465 Patent Litigation

Operating companies brought most of the patent infringement lawsuits 

from 2007 to 2011. According to our analysis of data for this period, 

operating companies and related entities brought an estimated 68 percent 

of all lawsuits.34 PMEs and likely PMEs brought 19 percent of the 

lawsuits.35 PMEs and likely PMEs brought 17 percent of all lawsuits in 

2007 and 24 percent in 2011, although this increase was not statistically 

significant. In contrast, operating companies and related entities filed 76 

percent of the lawsuits in 2007 and 59 percent in 2011, a statistically 

significant decrease.36

 34The evidence that Lex Machina used to classify an entity as an operating company and 

that we then used to review Lex Machina’s classifications is described in appendix I. 

Related entities included subsidiaries of operating companies—see appendix I for more 

information. We did not verify whether the companies practiced the patents at issue in the 

lawsuit. 

Individual inventors brought about 8 percent of the 

lawsuits, and research firms and universities brought less than 3 percent 

over the 5 year span. In about 3 percent of the lawsuits there was 

insufficient evidence to determine the type of plaintiff (see fig. 4).

35 The evidence that Lex Machina used to classify an entity as a PME or likely PME and 

that we then used to review Lex Machina’s classifications is described in appendix I. 

Another paper using data from Lex Machina presented different proportions of patent 

monetizing plaintiffs, and these differences may be due to differences in methodology. For 

example, this study included other plaintiff groups as patent monetizers, including 

individuals and trusts. See Robin Feldman, Tom Ewing, and Sara Jeruss, The AIA 500 

Expanded: The Effects of Patent Monetization Entities, UCLA Journal of Law & 

Technology (forthcoming).

36Our analysis of litigation data from RPX showed similar results. Specifically, RPX’s 

classification of all infringement suits from 2007 to 2011 shows that operating companies 

brought 69 percent of lawsuits, and firms that RPX classified as patent assertion entities 

(PAE) brought 25 percent. RPX’s PAE category excluded universities and individual 

inventors acting as NPEs, making it similar to Lex Machina’s PME category. Individual 

inventors brought about 6 percent of the lawsuits, and universities brought less than 1 

percent. Operating companies litigating patents that do not relate to the technology of their 

primary business sector—classified as noncompeting entities by RPX—brought less than 

1 percent of all lawsuits. Additionally, lawsuits filed by PAEs increased by about a third 

from 2007 to 2010 and, in 2011, doubled over the previous year, and lawsuits brought by 

operating companies decreased by about 6 percent from 2007 to 2010 and, in 2011, 

increased by about 3 percent over the previous year.

Characteristics of 

Plaintiffs in Recent Patent 

Litigation
Page 18 GAO-13-465 Patent Litigation

Figure 4: Estimated Patent Infringement Lawsuits by Type of Plaintiff, 2007 to 2011

Note: Lawsuit estimates are subject to a margin of error of up to plus or minus 10 percentage points.

Our analysis of the data from 2007 through 2011 shows that PMEs 

tended to sue more defendants per suit than operating companies. For 

this period, there were about 1.9 defendants on average for suits filed by 

operating companies, and about 4.1 defendants on average for suits filed 

by PMEs. In addition, a disproportionate share of PMEs sued a relatively 

large number of defendants. For example, about 12 percent of PMEs 

sued 10 defendants or more in a single lawsuit, compared to about 3 

percent of operating companies, a statistically significant difference. Thus, 

even with bringing about a fifth of all patent infringement lawsuits from 

2007 to 2011, PMEs sued close to one-third of the overall defendants, 

accounting for about half of the overall increase in defendants. 

Additionally, the estimated total number of defendants sued by PMEs 

more than tripled from 834 in 2007 to 3,401 in 2011, while the increase in 
Page 19 GAO-13-465 Patent Litigation

the total number of defendants sued by operating companies was not 

statistically significant.37

To further explore the characteristics of PMEs and other NPEs, we 

interviewed stakeholders knowledgeable about patent infringement 

lawsuits. According to some stakeholders we interviewed, NPEs have 

many different characteristics and there are a spectrum of NPE business 

models and behaviors, including operating companies that partner with 

NPEs to file infringement suits.38

• PMEs and likely PMEs. PMEs we spoke with did not develop 

technology or sell products but, instead, derived most of their revenue 

from asserting patents against operating companies. Some of these 

PMEs told us that they acquired patents from a variety of sellers, such 

as universities, individual inventors, failed companies, or operating 

companies. A few of these PMEs told us they were able to get patents 

on their own even with minimal R&D investments, especially for 

software-related processes. Some PMEs we spoke with said that they 

formerly produced patented products and now simply assert those 

patents, and others said that they sued on behalf of individual 

inventors who did not have the resources to enforce patents on their 

own.

These different types of NPEs include 

the following:

• Entities Related to Operating Companies. Our analysis of patent 

infringement lawsuit data shows that some entities were subsidiaries 

of or had other corporate relationships with operating companies, 

although they did not produce products themselves. In addition, some 

stakeholders we interviewed said that operating companies 

sometimes partner with PMEs to monetize patents. In some cases, 

these partnerships may allow an operating company to sue its 

competitors with less risk of countersuits. A few operating companies 

we spoke with acknowledged that they are aware of such 

partnerships, although none said they engaged in this practice. The 

two patent brokers we interviewed told us that they have structured 

 37Our analysis of RPX data showed similar results. Specifically, RPX’s data show that 

from 2007 to 2011 operating companies sued about 51 percent of all defendants and that 

firms RPX classified as PAEs sued about 42 percent of all defendants. Additionally, 

defendants sued by these firms almost tripled, while defendants sued by operating 

companies decreased by about 20 percent. RPX identified more than 200 NPEs that sued 

more than 20 defendants since 2005, suing 12 defendants per suit on average. 

38Often both the NPE and operating company appear as plaintiffs in the same suit.
Page 20 GAO-13-465 Patent Litigation

agreements where they transfer patents from an operating company 

to a PME, and one legal commentator who also structured such deals 

told us that operating companies often retain an interest in the gains 

from any lawsuits the PME files. This commentator also said that 

there are many PME lawsuits in which the identity of interested 

operating companies is intentionally hidden; our review of court 

records indicates that corporate relationships may not be easily 

deciphered. In some cases, business relationships were easily 

identifiable from court records and in other cases the links were more 

difficult to identify. 39 Further, some operating companies, like PMEs, 

also assert patents not related to products they produce, according to 

some stakeholders.40

• Research firms. Representatives from a few of the companies we 

interviewed said that they invested heavily in R&D and made efforts to 

share their technology with other companies and to help them develop 

new products. Specifically, these representatives told us that their 

companies did not focus on producing products but, rather, mainly 

developed new technologies and then licensed them to operating 

companies to pay for continued R&D.41

• Universities. Many universities license their patented technologies to 

companies who use them in their products, according to a 

representative from each of two large research universities we spoke 

with, although they said that the licensing revenue is generally small 

in relation to other sources of university revenue. They also noted that 

licensing at many universities is mostly driven by life sciences 

research and that, sometimes before research begins, universities 

develop partnerships with private sector firms, such as 

These representatives also 

said that they provided technical support to the firms they license 

patents to helping them to make the best use of their patented 

technologies, which distinguishes them from PMEs.

 39For example, some operating companies owned patent monetization subsidiaries that 

shared their name, and others were linked to outside monetization entities with different 

names.

40RPX collects data on these types of lawsuits and, according to RPX’s data, these 

lawsuits accounted for less than 1 percent of lawsuits in RPX’s database from 2007 to 

2011.

41These research firms told us that they file patent infringement lawsuits if their patented 

technologies are used without or in violation of licensing agreements. Economic literature 

suggests that this division of labor is valuable because companies that specialize in R&D 

can often innovate more nimbly and create new, innovative technologies that other 

companies can then incorporate into products they manufacture.
Page 21 GAO-13-465 Patent Litigation

pharmaceutical companies, who have the first right to bring patented 

ideas into the marketplace.

Our analysis of patent infringement lawsuit data from 2007 to 2011 shows 

that on average about 46 percent of the lawsuits involved softwarerelated patents. Between 2007 to 2011, 64 percent of defendants were 

sued over software-related patents, and these patents were at issue in 

the lawsuits that accounted for about 89 percent of the increase in 

defendants over this period (see fig. 5). About 49 percent of the patents in 

our sample were asserted within 5 years of being granted, and there was 

no statistically significant difference between software-related patents and 

other patents in this regard.

Figure 5: Estimated Number of Patent Infringement Lawsuits and Defendants Associated with Software-Related Patents, 2007 

to 2011

Notes: Lawsuit and defendant estimates are representative of all patent infringement lawsuits and 

error bars display 95 percent confidence intervals. Software-related patents include a number of 

patent classes that are most likely to include patents with software-related claims, and this includes 

business method patents.

Our analysis of patent infringement lawsuit data from 2007 to 2011 shows 

that operating companies and PMEs both asserted software-related 

patents, although PME lawsuits involved these patents to a much greater 

Types of Patents Involved in 

Recent Patent Infringement 

Litigation
Page 22 GAO-13-465 Patent Litigation

extent. Specifically, about 84 percent of PME lawsuits from 2007 to 2011 

involved software-related patents, while about 35 percent of operating 

company lawsuits did. However, operating companies brought a greater 

number of lawsuits involving software-related patents, given that they filed 

more lawsuits overall.42

Figure 6: Estimated Percentage of PME and Operating Company Lawsuits and Defendants Associated with Software-Related 

Patents, 2007 to 2011

By defendant, software-related patents were used 

to sue 93 percent of the defendants in PME suits and 46 percent of the 

defendants in operating company suits (see fig. 6).

Note: Percentage of lawsuit and defendant estimates are subject to a margin of error of up to plus or 

minus 10 percentage points. Software-related patents include a number of patent classes that are 

most likely to include patents with software-related claims, and this includes business method 

patents. PMEs focus solely on asserting typically purchased patents.

Technology-related operating companies were not the only companies 

sued for infringing software-related patents; other sectors were also sued 

 42We estimate that, from 2007 to 2011, operating companies and related entities brought 

3,037 lawsuits involving software-related patents, while PMEs and likely PMEs brought 

2,093 such lawsuits.
Page 23 GAO-13-465 Patent Litigation

for infringing such patents, including retail companies and local 

governments. We estimate that 39 percent of suits involving softwarerelated patents were against firms in nontechnology sectors, according to 

our analysis of 2007 to 2011 data. One representative from a retail 

company noted that historically, all of the patent infringement lawsuits 

brought against the company used to be related to products they sold. 

However, as of mid-2012, the representative said that half of the lawsuits 

against the company were related to e-commerce software that the 

company uses for its shopping website—such as software that allows 

customers to locate their stores on the website—and were brought by 

PMEs. Representatives of retail and pharmaceutical companies told us 

they also defend lawsuits brought by PMEs related to features on their 

websites––typically software that outside vendors provide to them, rather 

than something they developed. Additionally, city public transit agencies 

have been sued for allegedly infringing patents by using software for realtime public transit arrival notifications, according to a few stakeholders we 

interviewed.

For 2007 to 2011, an estimated 32 percent of patent infringement lawsuits 

were filed in 3 of the 94 federal district courts: the Eastern District of 

Texas, the District of Delaware, and the Central District of California. 

These districts also had the most lawsuits filed for the period of 2000 to 

2011 (see fig. 7).

Common Venues of Recent 

Patent Litigation
Page 24 GAO-13-465 Patent Litigation

Figure 7: Distribution of Total Patent Infringement Lawsuits across U.S. District Courts from 2000 to 2011

In addition, our review of 2007 to 2011 litigation data shows that PMEs 

filed more lawsuits in the Eastern District of Texas than other types of 

plaintiffs. Specifically, from 2007 to 2011, 39 percent of PME and likely 

PME lawsuits were filed in the Eastern District of Texas, compared to 

about 8 percent of lawsuits filed by all other plaintiffs. Some stakeholders 
Page 25 GAO-13-465 Patent Litigation

we interviewed said that in their view this occurs because juries in this 

district favor patent owners over alleged infringers.43 In addition, one 

study we reviewed that looked at all decisions for all patent lawsuits from 

1995 to 2011, showed that the Eastern District of Texas, the Eastern 

District of Virginia, and the District of Delaware were among the top 

districts for quicker trials, higher success rates, and higher damage 

awards for patent owners.44

An estimated 21 percent of patent infringement cases from 2007 to 2011 

were still ongoing. Of the remaining cases, our analysis shows that about 

86 percent either ended or likely ended in a settlement. This occurred 

because both parties agreed to a judgment that the judge sanctioned, 

both parties agreed to end the lawsuit, or the plaintiff, who had brought 

the lawsuit, asked for it to be dismissed.45 Lawsuits brought by both 

operating companies and PMEs settled or likely settled at similar rates.46

We were not able to determine litigation cost information from our sample 

data, and we found very little information on the costs of patent 

Less than 3 percent of the cases that were not ongoing ended in a trial 

and judgment, or were on appeal, which was consistent with what some 

representatives of operating companies told us—very few of their lawsuits 

go to trial because they settle quickly to avoid high litigation costs.

 43Defendants can request that the district court transfer the case to another court in 

certain circumstances. If the district court denies the defendant’s request, the defendant 

can ask the Federal Circuit to order the district court to transfer the lawsuit. For example, 

in 2008, the Federal Circuit ordered the Eastern District of Texas to transfer a case 

because none of the parties had an office and no witnesses or evidence were located in 

the district. In re: TS Tech, 551 F.3d 1315 (Fed. Cir. 2008). According to one legal 

commentator, the precedent in this case and other Federal Circuit transfers likely resulted 

in fewer lawsuits being filed in the Eastern District of Texas. 

44PricewaterhouseCoopers, 2012 Patent Litigation Study: Litigation continues to rise amid 

growing awareness of patent value. www.pwc.com/us/en/forensicservices/publications/2012-patent-litigation-study.jhtml. Pricewaterhouse looked at

decisions identified through the WestLaw database.

45We estimate that 46 percent of all patent infringement lawsuits filed between 2007 and 

2011 ended or likely ended in a settlement within 1 year of being filed. 

46Of the lawsuits that were not ongoing, 86 percent of PME suits and 87 percent of 

operating company suits settled, which was not a statistically significant difference. 

However, our analysis showed a statistically significant difference between suits involving 

software-related patents, of which 82 percent settled compared with 89 percent of suits 

that did not involve software-related patents.

Outcomes and Costs of Recent 

Patent Litigation
Page 26 GAO-13-465 Patent Litigation

infringement lawsuits in court records. Further, as one stakeholder we 

interviewed noted, all litigation is expensive, not just patent infringement 

litigation. According to a 2011 nongeneralizable survey of patent lawyers 

by AIPLA, the cost of defending one patent infringement lawsuit, which 

excludes any damages awarded, was from $650,000 to $5 million in 

2011, depending on how much was at risk.47 As for damages awarded, a 

2012 study that looked at all district court patent decisions that proceeded 

through trial from 1995 to 2011 found that the median damage award was 

over $5 million dollars and that damage awards in NPE cases were 

higher than in other types of suits.48 The authors of a 2012 paper who 

collected data from a nonrandom, nongeneralizable set of 82 operating 

companies noted that total litigation costs for NPE suits, including 

damages awarded and legal fees, were around $300,000 for small and 

medium companies and $600,000 for large companies.49 The author of 

another 2012 paper sought to examine the impacts of NPE litigation on 

small companies and collected data from a nonrandom, nongeneralizable 

set of 223 small technology companies.50 Of the 79 companies that 

indicated that they had received a patent demand, 31 reported that the 

demand affected the company in various ways, including reduced hiring 

or a reduced value of their company—which the author collectively 

described as “significant operational impacts.”

In addition to lawsuits, patent assertion occurs without firms ever filing 

lawsuits, but the extent of this practice is unclear because we were not 

able to find reliable data on patent assertion outside of the court system. 

According to representatives of some operating companies we spoke 

with, they often get letters from patent owners offering licenses for the 

 47For the 18 percent of those lawyers that responded, AIPLA reports that the median legal 

cost for one patent infringement lawsuit was $650,000 when less than $1 million was at 

risk for damages; $2.5 million when between $1 million and $25 million was at risk for 

damages; and $5 million when more than $25 million was at risk for damages. These 

costs include legal fees and exclude damage awards.

48PricewaterhouseCoopers, 2012 Patent Litigation Study: Litigation continues to rise amid 

growing awareness of patent value. Pricewaterhouse looked at decisions identified 

through the WestLaw database.

49James E. Bessen and Michael J. Meurer, The Direct Costs from NPE Disputes, Law and 

Economics Research Paper No. 12-34 (Boston University School of Law: June 28, 2012). 

50Colleen Chien, Startups and Patent Trolls, Santa Clara Univ. Legal Studies Research 

Paper No. 09-12 (Sept. 28, 2012).

Stakeholders Reported 

That Patent Assertion 

Occurs Without Firms 

Ever Filing Lawsuits
Page 27 GAO-13-465 Patent Litigation

use of their patents. They said that these letters, which they refer to as 

“demand letters,” sometimes threaten lawsuits if the parties do not reach 

a licensing agreement. These company representatives told us that for 

every patent infringement lawsuit filed against them, they might receive 

many times more letters notifying them of potential infringement and 

offering licenses.51

However, a few PME representatives told us that operating companies 

generally ignore their letters, thus leading the PMEs to sue the companies 

first to get their attention. A few of these PMEs also told us that they are 

more likely to sue without sending a demand letter after a 2007 Supreme 

Court decision expanded accused infringers’ ability to file preemptive 

declaratory judgment lawsuits seeking determinations that the patent is 

invalid, unenforceable, or not being infringed.

Representatives from a few operating companies we 

spoke with said that these letters can sometimes help to resolve issues 

without litigation, but that at times the letters can be so vague that they do 

not reference the patents at issue or what products the operating 

company sells that may be infringing these patents.

52

Because licenses or payments resulting from out-of-court patent 

assertions are almost always confidential, it is difficult to know the cost of 

these settlements. The authors of the 2012 study noted above of a 

nonrandom, nongeneralizable set of 82 operating companies attempted 

to identify this cost. The 46 companies that provided data on costs 

reported that they spent an average of about $30 million on NPE suits, 

including both legal fees and settlements, which were settled without 

litigation from 2005 to 2011.

The threat of a declaratory 

judgment lawsuit can derail patent owners’ attempts to reach a licensing 

agreement, according to a few PMEs we spoke with.

 51The author of a 2012 study of a nonrandom, nongeneralizable set of 223 small 

technology companies noted above found that about two-thirds of the 79 companies that 

reported that they had received a demand from an NPE were not sued.

52MedImmune Inc. v. Genentech, 549 U.S. 118 (2007).
Page 28 GAO-13-465 Patent Litigation

Stakeholders we spoke with identified three key factors that likely 

contributed to many recent patent infringement lawsuits: (1) unclear and 

overly broad patents, (2) the potential for disproportionately large damage 

awards, and (3) the increasing recognition that patents are a valuable 

asset.

Several of the stakeholders we spoke with, including representatives from 

PMEs, operating companies, and legal commentators, said that many 

recent patent infringement lawsuits are related to the prevalence of lowquality patents; that is, patents with unclear property rights, overly broad 

claims, or both. Although there is some inherent uncertainty associated 

with all patent claims, several of the stakeholders with this opinion noted 

that claims in software-related patents are often overly broad, unclear or 

both. Unclear and overly broad patents do not provide notice about their 

boundaries and the uncertainty of a patent’s scope then usually needs to 

be resolved in court, according to some stakeholders we spoke with.

Stakeholders we interviewed identified several reasons why patents may 

be overly broad, unclear, or vague:

• Some stakeholders representing different interests, including 

operating companies, PMEs, and legal commentators, said the use of 

unclear terminology in patents can lead to a lack of understanding of 

patent claims and, therefore, what constitutes infringement, which 

needs to be resolved in court. For example, two of these stakeholders 

said the computer software industry does not have clear terminology 

or common vocabularies for describing concepts, innovations, and 

ideas. Language describing emerging technologies, such as software, 

may be inherently imprecise because these technologies are 

constantly evolving. In contrast, pharmaceutical drug patents are 

relatively clear because they use standardized scientific terminology, 

according to a few stakeholders.

• Some stakeholders, including operating companies and legal 

commentators, emphasized that claims in software patents 

sometimes define the scope of the invention by encompassing an 

Stakeholders 

Identified Three Key 

Factors Contributing 

to Many Recent 

Patent Infringement 

Lawsuits

Stakeholders Said That 

Some Patents Have 

Unclear Property Rights 

and Make Overly Broad 

Claims
Page 29 GAO-13-465 Patent Litigation

entire function––like sending an e-mail––rather than the specific 

means of performing that function.53 According to a few stakeholders 

we spoke with, functional claims and other overly broad claims may 

allow patent owners who sue for infringement to argue in court that 

their patent covers (1) an entire technology when it may only cover a 

small improvement, or (2) future technologies that their patent did not 

originally intend to cover. For example, representatives from one PME 

we spoke with said they had successfully sued companies for 

infringement even though the companies were implementing their 

idea in a completely different manner than described in their patent––

noting that they had patented their invention before the technology to 

best implement it was actually available. In addition, a few 

stakeholders noted that in certain circumstances patent owners can 

file a reissue application with PTO, which can sometimes broaden the 

scope of patents after they are issued.54 In addition, a few 

stakeholders noted that patent owners can also file continuation 

applications during patent examination, which, depending on the type 

filed, allow new subject matter to be added to the patent application.55

• According to some stakeholders—including PMEs and 

representatives of operating companies that were sued for patent 

infringement—broad patents on concepts they would not expect to be 

patented make it easy to infringe a patent without intending to do so, 

although this is not a defense since patent infringement is a strict 

 53In addition, FTC recently reported that reliance on describing what an invention does 

rather than how it is created contributes to overly broad patents and a 2012 study also 

supports that view. U.S. Federal Trade Commission, The Evolving IP Marketplace: 

Aligning Patent Notice and Remedies with Competition (Washington, D.C.: March 2011). 

Mark A. Lemley, Software Patents and the Return of Functional Claiming (Stanford 

University, 2012).

54Applications for reissuance of defective patents—those which, through error, are 

deemed wholly or partly inoperative or invalid by reason of a defective specification or 

drawing or by reason of the patentee claiming more or less than he or she had a right to 

claim in the patent—cannot introduce new matter and must be filed within 2 years of the 

patent issuance if the reissued patent enlarges the scope of the original patent’s claims. 

55PTO recognizes three types of continuations and only one type allows the patent owner 

to claim subject matter not previously disclosed in the application. One patent owner told 

us he filed a continuation so that his patent would closely match software that was already 

being used but that his original application did not anticipate; he later won large 

settlements from the allegedly infringing companies.
Page 30 GAO-13-465 Patent Litigation

liability offense.56

Unclear boundaries make it hard to determine whether a patent is actually 

related to a particular technology. Several diverse stakeholders, including 

PMEs, operating companies, legal commentators, and judges we 

interviewed said that many overly broad or vague patent claims do not 

sufficiently identify the scope of the patent’s coverage. This lack of notice 

makes it difficult for entities to identify relevant existing patents and prior 

art before developing new products, according to some legal 

commentators and operating companies. This difficulty reduces the 

effectiveness of searching for existing patents to ensure the product being 

developed does not infringe on valid patents and, according to several 

stakeholders, including PMEs, legal commentators, and venture capital 

and start-up firms, entities do not always conduct patent searches. For 

example, representatives from a software start-up company we spoke 

with told us that searching for relevant patents before developing new

products is unrealistic and diverts already scarce resources, particularly 

because their product development process can be as short as 2 months. 

In contrast, pharmaceutical company representatives we spoke with said 

that development of new drugs is so expensive that patent searches are a 

necessity and that they can conduct thorough searches because their 

patents are described clearly and are easy to find in industry databases.

For example, the software start-up and venture 

capital firms we spoke with said that many software-related patents 

they encountered were for obvious concepts and did not represent 

any real contribution to new technology. Other stakeholders, including 

operating companies, judges, and legal commentators, also said 

some patents, particularly software-related patents, should never 

have been issued because they were obvious, not novel, or lacked 

definiteness.

In addition, a few stakeholders we spoke with told us that the sheer 

volume of patents makes searching for relevant patents before 

developing new products particularly difficult, especially for products that 

combine many patented technologies. For example, these stakeholders 

 56One study we reviewed looked at a sample of 193 complaints from two federal courts 

districts, the District of Delaware and the Eastern District of Texas, and found that 

allegations of copying occurred in 21 of the 193 complaints. The authors suggested this 

means that most accused infringers came up with the idea independently; however, as 

noted, patent infringement liability does not require proof of copying so patent owners do 

not need to allege it. Christopher A. Cotropia and Mark A. Lemley, Copying in Patent Law,

87 N.C.L. Rev. 1421 (2009).
Page 31 GAO-13-465 Patent Litigation

we spoke with estimated that a typical smartphone uses from 50,000 to 

250,000 patented technologies because such devices incorporate 

technologies from digital cameras, global positioning systems, and 

wireless communication. In contrast, pharmaceutical company 

representatives we spoke with said they are able to conduct thorough 

patent searches, in part, because there are fewer patents per drug.

Determining the licenses a new product needs can be costly when many 

patents are involved; according to data from the AIPLA survey, the 

median cost for a legal validity and infringement opinion is $15,000 per 

patent.57

Even if an entity conducts a patent search, identifies a relevant patent, 

and wants to avoid infringing it by obtaining a license to use it, according 

to several diverse stakeholders we spoke with, including PMEs, legal 

commentators, and operating companies, identifying the owner could be 

difficult because patent owners are not required to notify PTO of changes 

in assignment or ownership. According to some stakeholders we spoke 

with, finding patent owners is further complicated by the fact that some of 

these patent owners create subsidiary companies solely to hold their 

patent rights. In fact, several stakeholders we interviewed, including legal 

commentators, operating companies, and a PME, said that some entities 

intentionally hide the existence of their patents until a sector or company 

are using the patented invention without authorization and can be sued 

for infringement. Further, some economic literature we reviewed suggests 

that the numerous technologies in many products are sometimes 

patented by many different patent owners and can have overlapping 

rights, making it difficult and costly to determine which patents the 

operating company needs to license. We discuss PTO’s current efforts to 

address these notice problems later in the report.

Additionally, a technology start-up company told us that they 

may avoid patent searches because damage awards can be tripled for 

willful infringement, and by not searching for existing patents, they can 

claim ignorance.

Most of the representatives from operating companies we interviewed 

said that PMEs specifically have played a role in the rise in patent 

infringement litigation. Some of the representatives from operating 

 57AIPLA, Report of the Economic Survey 2011 (Arlington, Va.: July 2011). Entities can 

seek patent validity and infringement opinions on patents found during a patent search. A 

patent validity opinion is a legal opinion as to whether a patent is valid and a patent 

infringement opinion is a legal opinion as to whether a product infringes a patent.
Page 32 GAO-13-465 Patent Litigation

companies also said that PMEs are often more willing to bring lawsuits 

based on a broad interpretation of their patents’ claims because they 

cannot be countersued for patent infringement since they do not produce 

a product. Some economic literature we reviewed suggests that accused 

infringers have an incentive to settle quickly to avoid the uncertainty of 

claim construction and high litigation costs, particularly if they face very 

high costs of changing their products to avoid infringement.58 Although a 

few stakeholders said that operating companies have also brought 

lawsuits alleging infringement of poor quality patents that they do not 

practice, and several stakeholders, including PMEs, operating 

companies, and legal commentators, said they believe the prevalence of 

low quality patents was driving recent increases in litigation more than 

PME suits.59

Disproportionately large damages awarded by the courts can motivate 

patent owners to file lawsuits, according to several stakeholders, we 

spoke with, including operating companies, PMEs, and legal 

commentators. According to some stakeholders, the potential for large 

damage awards may encourage some patent owners to file lawsuits in 

the hope that the accused infringer settles to avoid going to court. A few 

representatives of operating companies told us that companies prefer to 

settle lawsuits before trial for smaller amounts of money rather than risk 

having to pay large damage awards and legal fees, even if they know the 

case against them is weak. They said that some patent owners file 

infringement lawsuits knowing that defendants will settle the case before 

the court determines whether infringement occurred or the patents are 

valid. In addition, some operating company representatives said that 

patent owners often sue operating companies that have purchased 

licenses to use software in order to get settlements from numerous 

infringers rather than suing the vendor. One PME we spoke with said that 

although it tries to sue technology vendors whenever possible, it sues end 

 58This practice imposes social costs to businesses that are sued in this manner, according 

to economists. We were not able to identify suits associated with overly broad patents in 

our analysis of Lex Machina data, or the extent to which overly broad patents were 

associated with PME lawsuits, and were not able to estimate the overall economic social 

costs of this type of patent infringement litigation. 

59As noted earlier, our analysis of litigation data showed that PME suits accounted for 

about half of the increase in defendants between 2007 and 2011, while suits involving 

software-related patents accounted for around 89 percent of the increase in defendants. 

Stakeholders Believe the 

Potential for 

Disproportionately Large 

Damage Awards from the 

Courts Can Incentivize 

Litigation
Page 33 GAO-13-465 Patent Litigation

users most of the time because these are usually profitable companies, 

and there is greater potential for larger settlements.

Until 2011, damage awards could be calculated using the 25 percent 

rule—whereby the alleged infringer would pay a royalty rate equivalent to 

25 percent of the expected profits for the product that incorporates the 

patent at issue. As a result, according to some stakeholders, damage 

awards were outsized and did not reflect the value of the patent or the 

patent’s contribution to the product at issue, making it possible for the 

owner of only a few patents to capture most of the profit from a product, 

even though thousands of other patents also contributed to the 

development of the product. In a 2011 report, FTC noted that some legal 

rules for calculating damages were not grounded in economic analysis 

and therefore may under- or overcompensate patent owners for 

infringement in comparison to the market.60

In its 2011 report, FTC made a number of recommendations to courts, 

including that damage awards—since they are based on reasonable 

royalties—should not be higher than the incremental value of the 

patented invention over the next best alternative and should not be 

punitive. Some stakeholders noted that changes to damage awards 

occurred after a 2011 Federal Circuit decision eliminated the use of the 

25 percent rule because it was fundamentally flawed and established a 

rule of apportionment whereby damages are apportioned according to the 

patent at issue’s contribution to the product.

FTC reported that 

overcompensation can overincentivize patenting and patent litigation. 

Moreover, the FTC report included concerns from some industry 

participants that the value added by one patented technology may be 

very small relative to the price of the entire product for complex products.

61

 60U.S. Federal Trade Commission, The Evolving IP Marketplace: Aligning Patent Notice 

and Remedies with Competition (Washington, D.C.: March 2011).

These stakeholders noted 

this 2011 decision and other decisions have had the effect of lowering 

damage awards to reflect a patent’s value or eliminated the potential for 

61Uniloc USA, Inc., v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011). 
Page 34 GAO-13-465 Patent Litigation

enhanced damages.62 Despite some of this progress, a few stakeholders 

noted that there is still a need for improvement in the way damages are 

calculated.

Several stakeholders, including PMEs and legal commentators, we 

interviewed said that the recognition that patents are a more valuable 

asset than once assumed may have contributed to recent patent issuance 

trends and patent infringement lawsuits. Within the last 10 years, 

technology companies in particular have increasingly realized that patents 

are valuable and can be important to their corporate strategy, according 

to some of these stakeholders. This trend may have started, according to 

literature we reviewed, when Texas Instruments Inc. was looking for 

additional sources of revenue in the 1980s and started to more 

aggressively assert its patents to increase revenue.63

Despite the new value placed on patents, some industries may have 

slightly different approaches to patenting. For example, a few 

representatives of venture capital and software start-up firms told us that 

they do not always apply for patents until their companies are well 

established because patent attorneys are expensive, and the process is 

Prior to this, entities 

used patents to protect inventions rather than to generate revenue, 

according to some stakeholders, including legal commentators and a 

PME, we spoke with.

 62 Enhanced damages can be awarded for willful infringement but some stakeholders said 

that recent Federal Circuit decisions made it harder to prove willful infringement and 

obtain enhanced damages. Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana, 

383 F.3d 1337 (Fed. Cir. 2004) (alleged patent infringers who invoke attorney-client 

privilege or work product protection over advice of counsel regarding whether its activities 

would be an infringement of a valid patent does not give rise to an adverse interference 

and failure to obtain legal advice does not give rise to an adverse inference with respect to 

willful infringement); In re: Seagate Technology, 497 F.3d 1360 (Fed. Cir. 2007) (proof of 

willful infringement permitting enhanced damages requires the patent owner (1) to show 

by clear and convincing evidence that the infringer acted despite an objectively high 

likelihood that its actions constituted infringement of a valid patent and (2) demonstrate 

that this objectively-defined risk was either known to the accused infringer or so obvious 

that it should have been known but there is no affirmative obligation to obtain opinion of 

counsel). 

63See Colleen V. Chien, From Arms Race to Marketplace: The Complex Patent 

Ecosystem and Its Implications for the Patent System, 62 Hastings L.J. 297 (2010); Kevin 

Rivette and David Kline, Rembrandts in the Attic: Unlocking the Hidden Value of Patents, 

(Boston, Ma.: Harvard Business School Press, 2000).

Stakeholders Noted the 

Recognition of Patents as a 

Valuable Asset May Have 

Contributed to Recent 

Patent Issuance and 

Litigation
Page 35 GAO-13-465 Patent Litigation

time consuming. They told us that the cost of R&D is low relative to the 

cost of applying for a patent, so there is minimal incentive in the software 

industry to patent in order to recoup R&D costs. For example, 

representatives from one small software company we spoke with said that 

they could develop a product in a little as 2 months with only a few 

programmers. They also noted that it is relatively easy to get patents on 

their software even with their minimal R&D efforts—it is just a matter of 

paying the patent attorney’s fees. On the other hand, several 

representatives from the pharmaceutical industry told us that patents are 

actually critical to their ability to recoup the costs of developing a new 

drug, which can cost as much as $1 billion and take from 10 to 15 years.

Further, several stakeholders, including operating companies, PMEs, and 

legal commentators, we interviewed said that investors have played a role 

in the increasing number of patent infringement lawsuits. Specifically, 

according to some of these stakeholders, some PMEs have financial 

backers who fund the purchase and enforcement of patents and expect to 

see a return on their investment, sometimes turning to contingency fee 

law firms to carry out the lawsuits, where the law firm pays all of the 

litigation costs but shares in any award or settlement.64

Furthermore, economic literature suggests that inventors who do not have 

the resources or skills to enforce patents on their own benefit from 

partnering with PMEs that specialize in patent monetization, and this was 

confirmed by some of the stakeholders we spoke with. For example, one 

inventor we spoke with said that he was able to sell his patents to a PME 

that specialized in patent litigation when his start-up company failed, 

which allowed him to fund a new company. Representatives from a 

university we spoke with also said universities look to outside entities, 

such as PMEs, to finance patent infringement litigation because 

universities cannot cover the up-front costs of filing a lawsuit. 

Representatives from one PME we spoke with said that they helped a 

small inventor get the attention of large technology companies that were 

infringing his patent and ignoring his licensing requests. In addition, one 

 64For example, one PME we spoke with said its business model was to value patents 

based on legal, financial, and technical factors and then either (1) offer an inventor no upfront payment but a large cut of a settlement with accused infringers, (2) offer the inventor 

a small payment up front and a medium-sized portion of the settlement, or (3) pay the 

inventor up front and retain all of the settlement. One legal commentator, however, noted 

that contingency fee lawsuits are not unique to patent infringement litigation.
Page 36 GAO-13-465 Patent Litigation

patent broker we spoke with said that well-known operating companies 

often do not want to file patent infringement suits because of potential 

public backlash, so they sell or transfer their patents but retain an interest 

in any settlement or award.

The federal court system is implementing some new initiatives to improve 

the handling of patent cases. A pilot program was established for certain 

U.S. district courts to encourage the enhancement of expertise in patent 

cases among district court judges and a model order was issued in 

response to high discovery costs for e-mails and other electronic 

documents in patent cases—known as e-discovery. In addition, some 

recent decisions in the Federal Circuit and the Supreme Court may also 

affect future patent infringement litigation.

In January 2011, Congress established a pilot program in certain U.S. 

district courts to encourage the enhancement of expertise in patent cases 

among district court judges.65 This pilot program would create a cadre of 

judges who have advanced knowledge of patents due to more intensified 

experience in handling the cases, according to a statement made during 

the congressional debate for the law. Specifically, the law required 

AOUSC to designate at least 6 district courts that met certain eligibility 

requirements to participate in a 10-year pilot program.66 As of December 

2012, AOUSC had designated all 14 federal district courts that applied as 

participants. Currently, 7 of the 14 district courts participating in the pilot 

program have adopted case management rules to govern patent cases, 

such as how cases are allocated to judges in the program, although some 

districts’ rules predated the program.67

 65Pub. L. No. 111-349 (2011).

66To be eligible for designation, district courts had to: (1) be among the 15 district courts in 

which the largest number of patent cases were filed in 2010; or (2) have adopted, or 

intend to adopt, local rules for patent cases.

67The law requires patent cases to be randomly assigned to judges in districts 

participating in the pilot program regardless of whether they are designated by the court’s 

chief judge to hear patent cases. Nondesignated judges may decline to accept the case, 

which would then be randomly assigned to one of the designated judges. 

New Initiatives in the 

Courts May Affect 

Patent Litigation

Efforts to Improve Courts’

Handling of Patent Cases
Page 37 GAO-13-465 Patent Litigation

Some legal commentators and other stakeholders we interviewed said 

they were hopeful that the pilot program would lead to some meaningful 

improvements in patent case management in the courts. However, a few 

judges we interviewed said that more resources are needed to improve 

the handling of patent cases and that the needed resources were not 

appropriated to implement the pilot program.68 For example, they told us 

that hiring additional law clerks would help with the increased workload 

and processing of patent cases resulting from participation in the pilot 

program. Because participation in the pilot program does not come with 

additional resources, some districts decided not to participate, according 

to the judges we spoke with. For example, a district court judge told us 

that his district court did not volunteer for the pilot program because funds 

were not appropriated to implement it. In general, several stakeholders 

we spoke with agreed that it is too early to tell what impact the patent pilot 

project will ultimately have on patent litigation.

In response to high discovery costs, in September 2011, the Advisory 

Council for the U.S. Court of Appeals for the Federal Circuit issued a 

model order regarding discovery for e-mail and other electronic 

documents (known as e-discovery) targeted to patent cases.69 According 

to some legal commentators and judges we interviewed, the technical 

complexity of patent cases leads to expansive discovery requests that are 

time consuming and expensive and, as is typically the case with most 

documents produced in discovery, do not necessarily produce documents 

used at trial. For example, a study conducted by AIPLA found that 

discovery costs can range from $350,000 to $3 million, depending on the 

size of the potential settlement.70

 68The law also requires AOUSC to keep certain congressional committees informed on a 

periodic basis while the pilot project is in effect and to submit a report to those committees 

in 2016 and 2021. 

One judge we spoke to said that only a 

few of the documents in discovery are actually used at trial—often less 

69The Advisory Council was established to review, study, and make recommendations on 

the rules of practice and internal operating procedures of the court. The Chief Judge of the 

court unveiled the model order at a meeting of the Federal Circuit Bar Association and the 

Eastern District of Texas Bar Association. The model order is a template, or model, for 

judges to adopt and issue in patent infringement lawsuits.

70AIPLA, Report of the Economic Survey 2011 (Arlington, Va.: July 2011). The estimated 

cost of litigation through discovery was $350,000 when the damage stakes are less than 

$1 million, $1.5 million when the stakes are between $1 million and $25 million, and $3 

million when the stakes are over $25 million.

Efforts to Reduce 

Discovery Costs
Page 38 GAO-13-465 Patent Litigation

than one document in 10,000—and representatives from one operating 

company told us that about 2,000 of the 10 million documents they were 

asked to produce were actually used in a recent trial.

After the issuance of the e-discovery model order, a few federal district 

courts have adopted similar rules to streamline e-discovery in patent 

cases, according to legal commentators we spoke with. Courts with ediscovery rules are more efficient and reduce litigation costs for everyone 

involved, according to a few judges we spoke with. For example, under 

the model order, discovery begins with an exchange of core 

documentation concerning the patent, allegedly infringing product, prior 

art, and finances before an exchange of e-mails.71

In general, several stakeholders we spoke with agreed that it is too early 

to tell what impact e-discovery rules will ultimately have on patent 

litigation.

However, at least one 

federal district court that handles a large volume of patent infringement 

cases declined to adopt specific discovery rules, noting that it would be a 

mistake for the courts to bind themselves to specific rules given 

differences among cases.

Several federal judges and other stakeholders we interviewed said that 

the judiciary had the ability to address some of the aforementioned 

factors contributing to patent infringement litigation in court decisions and 

that certain recent court decisions have helped to address some of these 

problems. In the future, they said the courts would continue working to 

address them. Specifically, these stakeholders said that recent court 

decisions about what constitutes patentable subject matter and what 

satisfies the obviousness and definiteness requirements would help 

combat overly broad and ill-defined patent claims once the decisions 

were incorporated into PTO’s patent examination guidelines and 

implemented by examiners. For example, two stakeholders said that a 

2012 Supreme Court decision restricted what constitutes a patentable 

process and a 2007 Supreme Court decision made it easier to combine 

separate pieces of prior art to prove a patented invention was obvious 

 71The model order presumptively limits the number of each party’s e-mail requests, but 

the parties may jointly agree to modify the limits or request court modification for good 

cause. 

Evolving Case Law
Page 39 GAO-13-465 Patent Litigation

and, thus, not eligible for a patent.72 In addition, as we discussed earlier, 

some stakeholders also identified several decisions that have changed 

damages law. Despite these cases, some stakeholders said that the 

judicial system has contributed to recent problems in patent infringement 

litigation and is either unable or unwilling to rectify them. For example, 

they noted that judges should be more willing to award attorney fees in 

exceptional cases to the winning party in order to address the growing 

number of patent infringement lawsuits.

PTO has taken several recent actions that are likely to affect patent 

quality and patent litigation in the future, including agency initiatives and 

changes required by AIA. For example, PTO is implementing initiatives to 

continue to improve the quality of software-related patents and to improve 

patent examination searches. The agency is also implementing the new 

administrative trial proceedings created by AIA.

We identified four initiatives that PTO is currently undertaking to address 

patent quality and patent search:

• In February 2011, PTO issued supplemental guidelines to assist in the 

examination of claims in applications for compliance with the 

definiteness requirement and began training patent examiners in how 

to implement them. PTO often updates its patent examination manual 

or issues guidance to patent examiners in response to changes in 

case law and these recently issued supplemental guidelines try to 

ensure that all technologies receive consistent examination practices, 

according to PTO officials. These guidelines specifically address 

examination of claims with functional language—which recites a 

feature by what it does rather than by what it is—in computerimplemented claims. For example, the guidelines state that examiners 

 72 Mayo Collaborative Servs. v. Prometheus Labs, _ U.S. _, 132 S. Ct. 1289 (2012); KSR 

International Co. v. Teleflex, Inc., 550 U.S. 398 (2007). 

PTO Has Taken 

Actions to Improve 

Patent Quality and 

Implement New AIA 

Proceedings That May 

Affect Patent 

Litigation in the 

Future

PTO Is Implementing 

Initiatives to Address 

Problems with Unclear 

Patents and Patent Search
Page 40 GAO-13-465 Patent Litigation

should determine whether the application discloses the computer and 

algorithm that perform the claimed function in sufficient detail that 

someone of ordinary skill in the art would know how to program the 

computer to perform the claimed function, and that the inventor was in 

possession of the claimed invention. The guidelines further noted that 

the algorithm may be expressed in any understandable terms and 

generally do not call for the application to contain actual computer 

code. The supplemental guidelines attempt to make examination of 

applications consistent and resulting patents clearer across all 

technologies, according to PTO officials. In May 2012, an internal 

PTO review showed that PTO examiners were making 4 to 6 percent 

more rejections in patent applications across all technology areas 

based on claims not being clear and definite than before the 

supplemental guidelines were issued. PTO officials said patent 

requirements are established by statute and case law, which 

constrains the agency’s ability to alter requirements for patent 

applications. PTO officials told us that only court decisions or statutory 

changes could change the law to require more detail for algorithms in 

software-related patents, for example.

• In November 2011, in response to the recommendations from FTC’s 

2011 report, PTO acknowledged that more uniform terminology would 

help to improve the quality of software-related patents and began 

working to establish a partnership with the software industry to 

address this issue.73 In January 2013, PTO announced the Software 

Partnership—a cooperative effort with the software industry to explore 

ways to enhance the quality of software-related patents, including 

through the use of more uniform terminology. Subsequently, 

roundtable meetings with the software industry were held in New York 

City, New York and Stanford, California in February 2013.74

• Additionally, PTO is working to implement a new patent classification 

system, called the Cooperative Patent Classification (CPC), which 

launched in January 2013. Since October 2010, PTO and the 

European Patent Office (EPO) have been collaborating to develop the 

CPC, which is a joint patent classification system that is intended to 

allow companies and patent applicants to conduct more effective 

 73U.S. Federal Trade Commission, The Evolving IP Marketplace: Aligning Patent Notice 

and Remedies with Competition (Washington, D.C.: March 2011), (FTC Report 

Recommends Improvements in Patent System to Promote Innovation and Benefit 

Consumers).

74PTO announced these public meetings by public notice. 78 Fed. Reg. 292 (Jan. 3, 

2013).
Page 41 GAO-13-465 Patent Litigation

searches for patents that might be related to technologies they are 

developing or planning to use, which may reduce some of the 

infringement that contributes to current patent litigation, according to 

documents we reviewed. CPC is also designed to allow for more 

frequent updating of patent classes, so that similar technologies can 

be grouped together, which should improve PTO’s ability to adapt to 

emerging technologies quickly, according to agency documents we 

reviewed.

• PTO is also working to provide greater transparency on patent 

ownership by and issued a notice in November 2012 to obtain public 

input on regulations it was considering to require patent ownership 

information to be verified and updated at certain times during patent 

examination and after patent issuance. Specifically, PTO is currently 

considering issuing regulations that would require ownership 

information to be verified and updated periodically. In addition, PTO 

held a round table discussion in January 2013 to obtain public input 

on how the agency could collect and provide such information to the 

public. Since holding the round table, PTO officials have been 

considering the input and written comments and have been 

discussing what the appropriate next steps should be. PTO officials 

noted, however, that the agency does not have substantive 

rulemaking authority so its ability to issue regulations requiring 

updates to the ownership information is limited without additional 

statutory authority.

In addition to these initiatives, in 2009 PTO began a patent quality 

initiative to measure and improve overall patent quality. After public 

comment and round table discussions, PTO released a set of new metrics 

in 2010 for fiscal year 2011 to assess patent quality throughout 

examination, rather than solely at the end of examination, which had been 

its practice. These metrics include, among other things, looking at the 

timeliness of patent examiners’ decisions and whether examiners reject 

claims for the right reasons.75

 75According to PTO, the new metrics expand the previous procedures for measuring 

examination quality and will reveal quality issues arising during the examination and 

identify their sources so that problems may be remediated by training. See the following 

for more information on PTO’s patent quality metrics: 

http://www.uspto.gov/dashboards/patents/main.dashxml. 

However, the agency generally does not 

review patent examination quality after patents are issued. PTO officials 

said that they did not examine the nature of patent infringement litigation 

and issues in dispute or review trends in such litigation. In 2003, the 
Page 42 GAO-13-465 Patent Litigation

National Academies reported that litigation rates could be a useful 

measure of post-grant patent quality, presuming that litigated patents 

define less clear boundaries.76 One study in the National Academies’

report examined the link between examiner inputs, including the number 

of hours used to examine a patent, and the likelihood that the patent 

would end up in a lawsuit. The study found a statistically significant result, 

implying that patents that examiners spend more time examining are less 

likely to be involved in litigation, suggesting the patents are of higher 

quality.77

In February 2013, PTO officials said that they generally try to adapt to 

developments in patent law and industry to improve patent quality, as 

they are doing with their new examination guidelines and their softwarerelated patent partnership. However, the agency does not currently use 

information on patent litigation in initiating actions like these. However, 

some staff in PTO’s Office of the Chief Economist have suggested that 

analyzing relationships between the types of patents involved in 

infringement litigation and internal patent examination data, including the 

timeline between the filing and grant of a patent and changes in the 

wording of claims could potentially benefit patent quality and examination 

by identifying meaningful patterns in the examination of patents that end 

up in court.78

 76National Academy of Sciences, Committee on Intellectual Property Rights in the 

Knowledge-Based Economy, National Research Council, Patents in the KnowledgeBased Economy, Wesley M. Cohen and Stephen A. Merrill, eds. (Washington, D.C., 

National Academies Press, 2003).

As noted, our analysis of litigation data showed that about 

two-thirds of patent infringement defendants were sued for infringing 

software-related patents. Given the extent of litigation associated with 

these patents, examining trends in patent infringement litigation, including 

the types of patents and issues in dispute, and linking this information to 

internal data on patent examination, could provide PTO with information 

to improve patent quality and the examination process. However, PTO 

77The results suggested that an additional hour of patent examination per application 

would be associated with a decrease in litigation by as many as 24 to 26 infringement 

complaints annually. The study, using data from 1996 and 1997, estimated that the 

savings associated with this reduction in suits would have been greater than the cost of 

the additional examiner hours. 

78PTO’s Office of the Chief Economist was created in 2010. See also J. Lanjouw. and M. 

Schankerman, Characteristics of Patent Litigation: A Window on Competition, The RAND 

Journal of Economics, vol. 32, no. 1 (Spring 2001), pp. 129-151.
Page 43 GAO-13-465 Patent Litigation

staff economists said that looking at litigation trends was not without 

challenges. For example, they said that less than 2 percent of patents 

end up in court. In addition, patents usually end up in court long after they 

are issued, and examination procedures may have long since changed. 

PTO officials and a few stakeholders also noted that there are other 

factors that affect litigation trends, including economic conditions and 

inherent differences among industries.

PTO is in the process of implementing the three new post-grant review 

proceedings created by AIA and described previously—inter partes 

review, post-grant review, and a transitional program for covered 

business method patents. These proceedings replace or supplement 

certain reexamination proceedings conducted by patent examiners with 

proceedings conducted by judges at PTO’s Patent Trial and Appeal 

Board—making them more closely resemble a patent trial, according to 

PTO officials we spoke with.79 According to some stakeholders, these 

proceedings are most likely to be used by companies that have been 

sued for patent infringement. PTO issued rules to govern the proceedings 

in August 2012 and hired additional judges soon after AIA was passed. 

Specifically, PTO’s Patent Trial and Appeal Board plans to move from 

100 to more than 200 judges on staff by the end of 2013, according to 

PTO documents we reviewed. In addition, judges at the Board have been 

coordinating with stakeholders in the patent community to create a 

streamlined discovery process for these proceedings. The judges told us 

they want to avoid the massive discovery requests that add time and 

expense to patent trials in federal district courts, but said that details of 

how they handle discovery will continue to evolve over time.80

 79Prior to AIA’s provisions taking effect on September 16, 2012, patent reexamination 

proceedings consisted of:(1) inter partes reexamination conducted by patent examiners, 

which AIA replaced with inter partes review, a proceeding conducted by the Patent Trial 

and Appeal Board and (2) ex-parte reexamination.

The 

director of PTO is required to study and report to Congress on how these 

and other provisions of AIA are being implemented no later than 

September 16, 2015. According to agency officials, PTO plans to meet 

this 2015 deadline, and the agency has started collecting and publishing 

information on the number of times the new AIA proceedings are being 

80In addition, judges at the Board told us they are working with stakeholders in the patent 

community to balance some stakeholders’ need for additional pages in their written 

submissions with the Board’s need to complete the post-grant reviews in a timely way.

PTO Is Implementing AIA 

Post-Grant Review 

Proceedings
Page 44 GAO-13-465 Patent Litigation

used and the timing of implementation. As of July 31st, 2013, there had 

been 395 requests for inter partes reviews and 39 requests for review 

under the transitional program for covered business method patents, 

according to data from PTO.

Given that challenging a patent’s validity is a common defense for those 

who have been accused of patent infringement, PTO officials we spoke

with mentioned that the new post-grant proceedings may have the 

potential to reduce future patent litigation because they offer a less costly 

and faster alternative to settling patent disputes in federal district courts. 

For example, a representative of a number of technology companies we 

spoke with estimated that the legal and filing fees for using one of these 

proceedings would be between $166,000 and $390,000, depending on 

the proceeding, for an average patent, while legal fees could be upwards 

of $5 million for an infringement case filed in district court. According to 

the Board judges we spoke with, these proceedings will be faster than 

most litigation in district court—which takes 2-1⁄2 years for the patent 

infringement trial to begin on average, according to a recent study—

because the regulations stipulate that they normally are to conclude 

within 1 year of being initiated.81 However, representatives from some 

operating companies said that they will not use these post-grant review 

proceedings if federal judges do not consistently delay the costly trials 

until the Board completes its review.82

 81PricewaterhouseCoopers, 2012 Patent Litigation Study: Litigation continues to rise amid 

growing awareness of patent value.

In the past, federal judges have not 

always been willing to suspend a lawsuit while waiting for PTO to conduct 

reexaminations, but may be more likely to do this given the regulatory 1 

year timeline, according to these representatives. Judges at the Board 

told us they are working to ensure that the post-grant review proceedings 

are completed within 1 year. In addition, some operating company 

representatives we spoke with said that post-grant review in particular 

would be of limited utility since they only have 9 months after a patent is 

82 Under AIA, if an entity submits a request for inter partes or post-grant review and then 

subsequently files a lawsuit, but not a counterclaim, challenging the validity of a patent 

claim in federal district court, the lawsuit is automatically suspended until certain events 

occur. In addition, AIA specifies factors judges are to consider in deciding whether to 

suspend a lawsuit alleging patent infringement at the request of a party because of a 

transitional covered business method patent proceeding. Requests for inter partes review 

and post-grant review cannot be granted if the requester (or real party in interest) 

previously filed a lawsuit challenging the validity of the patent’s claims—but not a 

counterclaim—before the date on which the request is filed.
Page 45 GAO-13-465 Patent Litigation

issued to file a request for review, but usually only learn about a patent’s 

existence after being sued or receiving a demand letter, which is often 

many years after the patent has been issued.

Finally, representatives from some operating companies said they are not 

planning to use post-grant review to challenge a patent’s validity because 

an adverse final decision by the Board generally prohibits them from 

challenging the patent’s validity again in court.83 These representatives 

said that they consider this to be a major flaw in post-grant review. 

However, a few other stakeholders said that patent owners need certainty 

in their patent’s validity and that the same party should not be able to 

challenge the patent’s validity through post-grant review and in the federal 

courts. Judges at the Board said they were aware of this issue and would 

continue to monitor it.

Public discussion surrounding patent infringement litigation often focuses 

on the increasing role of NPEs. However, our analysis indicates that 

regardless of the type of litigant, lawsuits involving software-related 

patents accounted for about 89 percent of the increase in defendants 

between 2007 and 2011, and most of the suits brought by PMEs involved 

software-related patents. This suggests that the focus on the identity of 

the litigant—rather than the type of patent—may be misplaced. PTO’s 

recent efforts to work with the software industry to more uniformly define 

software terminology and make it easier to identify relevant patents and 

patent owners may strengthen the U.S. patent system. Further, PTO has 

available internal data on the patent examination process that could be 

linked to litigation data, and a 2003 National Academies study reported 

that using these types of data together could provide useful insights into 

patent quality. Examining the types of patents and issues in dispute 

represents a potentially valuable opportunity to improve the quality of 

issued patents and the patent examination process and to further 

strengthen the U.S. patent system.

 83Specifically, parties who request post-grant or inter partes reviews that result in a final 

written decision may not assert in federal court or before ITC that a claim is invalid on any 

ground the party raised or reasonably could have raised during the review. Similarly, 

parties who receive a final written decision in a transitional program for covered business 

method patent proceedings are prohibited from subsequently asserting in federal court or 

before ITC that the claim is invalid on any ground that was raised during the proceeding.

Conclusions
Page 46 GAO-13-465 Patent Litigation

We are recommending that the Secretary of Commerce direct the

Director of PTO to consider examining trends in patent infringement 

litigation, including the types of patents and issues in dispute, and to 

consider linking this information to internal data on patent examination to 

improve the quality of issued patents and the patent examination process.

We provided a copy of our draft report to PTO for review and comment.

PTO concurred with key findings and our recommendation in its written 

comments, which are reproduced in appendix II. PTO also provided 

additional clarifying comments, which we incorporated as appropriate.

We are sending copies of this report to the Secretary of Commerce, the 

Federal Trade Commission, the International Trade Commission, the 

Administrative Office of the U.S. Courts, the appropriate congressional 

committees, and other interested parties. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix III.

Frank Rusco

Director, Natural Resources and Environment

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation
Page 47 GAO-13-465 Patent Litigation

List of Addressees

The Honorable Patrick J. Leahy

Chairman

The Honorable Charles E. Grassley

Ranking Member

Committee on the Judiciary

United States Senate

The Honorable Bob Goodlatte

Chairman

The Honorable John Conyers, Jr.

Ranking Member

Committee on the Judiciary

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 48 GAO-13-465 Patent Litigation

Section 34 of the Leahy-Smith America Invents Act (AIA)1 mandated that 

GAO conduct a study on the consequences of patent litigation by 

nonpracticing entities (NPE).2

To address all four of these objectives, we reviewed relevant laws, 

including AIA, and interviewed officials from PTO, the Federal Trade 

Commission (FTC), and the International Trade Commission (ITC). We 

also interviewed the following 44 stakeholders knowledgeable about 

patent litigation:

Our objectives were to determine: (1) what 

is known about the volume and characteristics of recent patent litigation 

activity; (2) what is known about the key factors that contribute to recent 

patent litigation trends; (3) what developments in the judicial system may 

affect patent litigation; and (4) what actions, if any, has the Patent and 

Trademark Office (PTO) recently taken that may affect patent litigation in 

the future.

• Ten representatives from operating companies and industry groups 

from an array of industries, including software, computer hardware, 

retailers, and pharmaceuticals, who had been regularly sued in recent 

years for patent infringement. We identified these operating 

companies and industry groups by using patent infringement litigation 

data from 2005 through 2011, which we discuss below.

• Eight representatives of patent monetization entities (PME) and 

research firms that had regularly sued others in the past 10 years. We 

identified these PMEs by using patent infringement litigation data from 

2005 through 2011, and they represent a range of business models.

• Fourteen legal commentators, economists, and consultants that had 

conducted research closely related to our objectives. We identified 

them through our review of academic literature on patent litigation and 

 1

Pub. L. No.112-29 § 34 (2011).

2

As noted in a September 7, 2011, letter from the Comptroller General to the chairs and 

ranking members of the congressional committees with jurisdiction over patents, the bill 

being considered at that time would have required a GAO study involving several 

questions for which reliable data were not available or which could not be obtained. The 

bill was enacted without change, but the Chair of the Senate Judiciary Committee, 

responding to these concerns, stated that GAO should note data and methodology 

limitations in its report prepared in response to the mandate. 157 CONG. REC. S 5402, 

S5441 (daily ed. Sept. 8, 2011) (statement of Sen. Leahy). Consequently, we developed 

report objectives consistent with these limitations, and we have noted specific data 

limitations throughout this report, as appropriate.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 49 GAO-13-465 Patent Litigation

the patent system and they each had done work related to the issues 

we were asked to study.

• We also interviewed one representative each from two large research 

universities that license patents, two patent brokers who help others 

buy and sell patents, four venture capitalists, and four individual 

inventors at software start-up companies and at a small inventor 

advocacy group. We identified these universities, brokers, venture 

capitalists, and start-up companies based on our review of academic 

literature on patent litigation and the patent system and they were 

knowledgeable of the issues we were asked to study.

Because stakeholders varied in their expertise with various topics, not 

every stakeholder provided an opinion on every topic.

We were not able to find reliable data on patent assertion outside of the 

court system—which often consist of patent owners sending letters 

demanding licensing fees to potential infringers before filing suit and, as a 

result, our data analysis focuses on patent infringement litigation rather 

than patent assertion more broadly.

In addition to steps we took to address all four objectives, to describe 

what is known about the volume and characteristics of recent patent 

infringement litigation activity, we reported data from the American 

Intellectual Property Law Association’s (AIPLA) 2011 survey on the costs 

of patent litigation.3

We also analyzed patent infringement litigation data that we purchased 

from Lex Machina, a firm that collects and analyzes data on patent 

litigation.

We also reviewed academic literature on patent 

litigation and the patent system in general and assessed the methodology 

of the studies we reported on for soundness. To assess the reliability of 

data from PTO, AIPLA, and RPX, we conducted interviews and reviewed 

relevant methodology documentation. We found that these data were 

sufficiently reliable for purposes of this report.

4

 3

AIPLA is a national, voluntary bar association constituted primarily of lawyers in private 

and corporate practice, in government service, and in the academic community. See 

AIPLA, Report of the Economic Survey 2011 (Arlington, Va.: July 2011). AIPLA surveyed 

patent lawyers during 2011 and asked them to estimate legal costs for typical patent 

infringement cases. Their findings are based on an 18 percent response rate.

Lex Machina maintains a database created from public 

4

We selected Lex Machina through a competitive contracting process to provide us patent 

infringement litigation data, select a sample of cases, and classify the plaintiffs in those 

cases.
Appendix I: Objectives, Scope, and 

Methodology

Page 50 GAO-13-465 Patent Litigation

electronic court filings for all patent infringement lawsuits filed in U.S. 

federal district courts, beginning in the year 2000. From this database, 

Lex Machina selected a random, generalizable sample of 100 lawsuits 

per year from 2007 through 2011, identifying for each lawsuit the 

patent(s) being litigated, the court hearing the lawsuit, and the lawsuit’s 

outcome. The sample size allowed us to draw conclusions about patent 

infringement lawsuits filed in each of these years, with a margin of error of 

no more than plus or minus 5 percentage points over all these years and 

no more than plus or minus 10 percentage points for any particular year.5

Each sample element was subsequently weighted in the analysis to 

account statistically for all the members of the population, including those 

that were not selected. To assess the reliability of data from Lex Machina, 

we met with Lex Machina staff, examined documentation, and tested and 

reviewed the sample data for completeness and accuracy. We found the 

data to be sufficiently reliable for our purposes. We also obtained patent 

infringement data from RPX, another firm that collects data on patent 

infringement lawsuits, in an effort to verify Lex Machina’s litigant 

categorizations.6

 5

This sample allowed us to draw conclusions about the broader population of patent 

infringement lawsuits for each of these years and is therefore generalizable to all patent 

infringement lawsuits filed in federal district court from 2007 to 2011. However, as noted, 

estimates from the Lex Machina sample are subject to a 5 percent margin of error. This 

means that an estimate of 50 percent, for example, based on all years of data, would have 

a 95 percent confidence interval of between 45 percent and 55 percent. The margin of 

error is 10 percent when looking at individual years, which means that an estimate of 50 

percent, for example, looking at an individual year, would have a 95 percent confidence 

interval of between 40 percent and 60 percent. Because Lex Machina followed a 

probability procedure based on random selections, the sample is only one of a large 

number of samples that might have been drawn. Since each sample could have provided 

different estimates, we express our confidence in the precision of our particular sample’s 

results as a 95 percent confidence interval. This is the interval that would contain the 

actual population value for 95 percent of the samples that could have been drawn. Unless 

otherwise noted, the margin of error associated with the confidence intervals of our survey 

estimates is no more than plus or minus 10 percentage points at the 95 percent level of 

confidence.

6

RPX also purchases patents itself, to prevent them from being asserted against its 

members. RPX provided us with summary data on the number of patent infringement 

lawsuits filed in federal district court since January 2005. RPX’s data identified NPEs and 

other types of plaintiffs in these lawsuits by using a variety of factors, such as whether 

there was evidence that an entity sells or develops products. RPX representatives said 

that they used professional judgment to some extent in making these determinations. We 

were not able to fully assess the reliability of the judgments RPX used in making these 

classifications. 
Appendix I: Objectives, Scope, and 

Methodology

Page 51 GAO-13-465 Patent Litigation

For the plaintiffs named in each lawsuit, Lex Machina also provided an 

entity description, classifying the plaintiffs as follows:

• an operating company, or a likely operating company;

• an entity related to an operating company;

• a PME or a likely PME;

• a university;

• an individual or trust; or

• a research firm.7

To classify a plaintiff, Lex Machina placed more weight on statements 

made by the plaintiff in official documents, such as its own court and 

Securities and Exchange Commission (SEC) filings, and statements 

appearing on a website maintained by the plaintiff. From these sources 

Lex Machina obtained information that would help it to determine the 

entity type, such as statements indicating that the plaintiff made or sold a 

product or offered services, or evidence that the plaintiff shared corporate 

ownership with such an entity. Some statements, such as a statement 

describing a plaintiff’s business as focused on patent licensing, indicated 

that the plaintiff was in the business of patent monetization.

In some cases, the plaintiffs’ own statements did not lead to a definitive 

classification, and Lex Machina consulted other sources to obtain relevant 

information about the plaintiff’s business activities. To the extent possible, 

Lex Machina relied on additional sources they characterized as “verified 

and objective,” such as corporate databases and articles of incorporation. 

To the extent that Lex Machina lacked official information, it used 

professional judgment to classify plaintiffs based on information from 

other sources, such as news articles, blogs, court filings by opposing 

parties, and Lex Machina’s own database. Examples of information from 

these other sources that were used to classify plaintiffs include: (1) the 

number of patent infringement lawsuits filed by the plaintiff; (2) whether 

the plaintiff had been sued for patent infringement in other lawsuits or 

counterclaims; (3) whether the plaintiff had been subject to a declaratory 

judgment lawsuit for noninfringement or invalidity; (4) the number of 

defendants sued in each lawsuit and in total; (5) statements about the 

 7

Lex Machina originally labeled these “other entity,” but we determined that research firm 

was a better descriptive term for these companies, although in a few cases the entity was 

government sponsored.
Appendix I: Objectives, Scope, and 

Methodology

Page 52 GAO-13-465 Patent Litigation

plaintiff in news articles, blogs, or in court filings by an opposing party, 

such as a statement characterizing the plaintiff as a patent monetization 

entity; (6) whether the plaintiff was represented by an attorney known to 

represent patent monetization entities; and (7) evidence of linkages 

between the plaintiff and a patent monetization entity, such as a common 

principal or a street address shared in common. In some cases, the 

difficulty of finding information about the plaintiffs, their business activities, 

and their corporate relationships led Lex Machina to choose no entity 

classification at all. Such plaintiffs were classified as “Insufficient 

Evidence.”

We reviewed Lex Machina’s classifications of first named plaintiffs to 

ensure their reliability and consistency. We found 29 cases where we 

differed with Lex Machina’s original classification. They adjusted their 

classifications in all but five of the cases. We agreed on different labels in 

these cases mainly based on our preference for the “entity related to 

operating company” label. Table 1 presents the evidence or information 

we used to review Lex Machina’s classifications of first named plaintiffs.

Table 1: Evidence or Information Used to Review Lex Machina’s Plaintiff Classifications

Plaintiff classification Evidence or information used to review plaintiff classification 

Operating company The plaintiff’s website, court filings, or SEC filings indicated that the plaintiff made a product, 

sold a product, or offered a service at the time the lawsuit was filed.

Likely operating company In the absence of information from the plaintiff’s website, court filings, or SEC filings, other 

sources indicated that the plaintiff made a product, sold a product, or offered a service at 

the time the lawsuit was filed.

Entity related to an operating company • There was no available evidence that the plaintiff made a product, sold a product, or 

offered a service but there was evidence that its parent corporation, subsidiary, or other 

related entity made a product, sold a product, or offered a service; or

• The plaintiff was a holding company that did not itself make a product, sell a product, or 

offer a service but owned the stock of a company that did; or

• The plaintiff was a parent company to at least one subsidiary that made a product, sold 

a product, or offered a service; or

• The plaintiff’s business consisted of patent monetization but its parent, subsidiary, or 

other company with shared corporate ownership made a product, sold a product, or 

offered a service.

• This category did not include plaintiffs if the only known association between it and the 

operating company was a licensing agreement.
Appendix I: Objectives, Scope, and 

Methodology

Page 53 GAO-13-465 Patent Litigation

Plaintiff classification Evidence or information used to review plaintiff classification 

Patent monetization entity • The plaintiff indicated that it, or a corporate parent, was in the patent monetization 

business, by stating that its or its parent’s purpose was to license patents or generate 

revenue from licensing patents; or

• There was no available evidence of the plaintiff making, selling, or offering a product or 

service, and the plaintiff had never been sued for patent infringement, and the plaintiff 

had filed 8 or more patent infringement lawsuits;a or

• There was no available evidence of the plaintiff making, selling, or offering a product or 

service, and the plaintiff had never been sued for patent infringement, and the plaintiff 

had sued a large number of defendants (around 20 or more, which put them in the top 

5 percent of cases); or

• There was no available evidence of the plaintiff making, selling, or offering a product or 

service, the plaintiff had never been sued for patent infringement, and there were at 

least 4 pieces of different types of other evidence supporting classification as a patent 

monetization entity. 

Likely patent monetization entity • There was no available evidence of the plaintiff making, selling, or offering a product or 

service, the plaintiff had not been sued for patent infringement, and there were 2 or 3 

pieces of different types of other evidence supporting the plaintiff’s classification as a 

patent monetization entity.

University The plaintiff is an institution of higher education. 

Individual/trust The plaintiff identified itself in court documents as an individual or a trust.

Research firm The plaintiff’s business focus or purpose was on research and development, even if it also 

produced or marketed a product or service.

Insufficient evidence • There was conflicting information about whether, at the time the lawsuit was filed, the 

plaintiff made or sold a product, offered a service, or was in the business of patent 

monetization; or

• There was no more than 1 piece of other evidence supporting the plaintiff’s 

classification as a patent monetization entity.

Source: GAO.

a

The 106 most-asserted patents from January 2000 through February 2009 were litigated eight times 

or more. See John R. Allison et al., Patent Quality and Settlement Among Repeat Patent Litigants, 99 

Geo. L. J. (2011).

In addition to steps we took to address all four objectives, to describe 

what is known about the key factors that contribute to recent patent 

litigation trends, we reviewed academic literature on the patent and 

judicial system and the benefits and costs of patent assertion, including 

economic and legal studies.

In addition to steps we took to address all four objectives, to describe 

developments in the judicial system that may affect patent litigation, we 

interviewed officials and judges from the U.S. District Courts for the 

District of Delaware and for the Eastern District of Texas. We selected 

these district courts because they had high levels of patent infringement 

lawsuits according to Lex Machina data. We also interviewed judges with 

the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., 
Appendix I: Objectives, Scope, and 

Methodology

Page 54 GAO-13-465 Patent Litigation

which hears appeals of patent cases decided in federal district courts. We 

also interviewed officials from the Administrative Office of the U.S. Courts 

(AOUSC), and the Federal Judicial Center––organizations that provide 

broad administrative, legal, and technological services and support to the 

judicial branch. We also reviewed documents and data from the courts, 

as well as economic and legal studies.

In addition to steps we took to address all four objectives, to describe 

what actions, if any, PTO has recently taken that may affect patent 

litigation in the future, we conducted interviews with officials from PTO 

and reviewed documents and data from this agency, as well as economic 

and legal studies.
Appendix II: Comments from the Patent and 

Trademark Office

Page 55 GAO-13-465 Patent Litigation

Appendix II: Comments from the Patent and 

Trademark Office
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 56 GAO-13-465 Patent Litigation

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

In addition to the individual named above, Tim Minelli (Assistant Director), 

Justin Fisher, Cindy Gilbert, Karen Keegan, Rob Marek, Susan Offutt, 

Alison O’Neill, Nalylee Padilla, Dan Royer, Susan Sawtelle, Jeanette 

Soares, Ardith Spence, Kiki Theodoropoulos, and Jacqueline Wade made 

key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(361366)
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