Patent Trolling In US Sees Big Uptick, Most Of It Involving Software

trollzThe US government’s accountability office is reporting a big uptick in patent troll activity, and suggests one in five lawsuits are now brought on by “non-practicing entities” that are pretty much in the business of buying patents and suing other companies.

The Government Accountability Office issued a report last week that suggests software-related patents accounted for about 89 percent of the increase in defendants from 2007 to 2011. The report says the number of defendants jumped from 834 in 2007 to 3,401 in 2011.

The GAO says there are several things at play here:

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 National Retail Federation has issued a statement on the situation:

“This report affirms NRF’s position that patent trolls are increasingly threatening the U.S. economy. Patent trolls are growing in size and strength and exploiting legal loopholes to extort hefty payments from American companies, ranging from retail to technology. Trolls stymie technological innovation and ingenuity, and ultimately cost companies and consumers millions of dollars a year by driving up prices.”

The NRF hopes the study will spur further regulatory and congressional action to bring patent trolls under control.

Earlier his year, I learned several retailers – including Harley Davidson, Build-A-Bear and Wawa – were being sued for their use of digital signage systems.

The retailers are quite naturally turning back to the software and display companies that sold them the solution and saying WTF?