Friday, June 12, 2009

"Trolls on top?" or how not to cite relevant work?

In footnote 22 of the SSRN article titled Extreme Value or Trolls on Top? Evidence from the Most Litigated Patents by Allison, Lemley, and Walker, one has a reference to

Mark A. Lemley & Nathan Myhrvold, The Complex Ecology of Patent Plaintiffs (working paper 2009).

What one won't find in the SSRN paper (posted 21 May 09) is a reference to work by Gwendolyn Ball and Jay Kesan on troll litigations which appeared earlier than that of Lemley et al. [Refer to the March 2009 IPBiz post
Patent law academics make troll studies a growth industry

Other footnotes one will find in Allison/Lemley/Walker:

See Mark A. Lemley, Rational Ignorance at the Patent Office, 95 Nw. U. L. Rev. 1495 (2001).

See, e.g., Kimberly A. Moore, Worthless Patents, 20 Berkeley Tech. L.J. 1521 (2005) (documenting
the failure of most patentees to pay maintenance fees costing only a few thousand dollars); Jonathan A.
Barney, A Study of Patent Mortality Rates: Using Statistical Survival Analysis to Rate and Value Patent
Assets, 30 AIPLA Q.J. 317, 329 (2002) (“A relatively large number of patents appear to be worth little or
nothing while a relatively small number appear to be worth a great deal.”); Thomas Ewing, Book Review,
43 Santa Clara L. Rev. 631 (2003) (“Some of the authors simply recount patent procurement and
litigation statistics ad nauseum and do not seem to understand that some patents really do have no
value whatsoever since no one would ever practice the disclosed technology, as claimed.”); Jean O.
Lanjouw et al., How to Count Patents and Value Intellectual Property, 46 J. INDUS. ECON. 405 (1998).

John R. Allison et al., Valuable Patents, 92 Geo. L.J. 435 (2004); see also John R. Allison & Thomas W.
Sager, Valuable Patents Redux: On the Enduring Merit of Using Patent Characteristics to Identify
Valuable Patents, 85 Tex. L. Rev. 1769 (2007) (defending the statistical power of the results in the earlier

We do not address the outcomes of those lawsuits in this paper; that is the subject of a companion
piece. See John R. Allison, Mark A. Lemley & Joshua Walker, Repeat Play, Outcomes, and Settlements in
Patent Litigation (vaporware 2009).

A number of studies have used forward citations as evidence of patent value. See, e.g., Bronwyn H.
Hall, Adam Jaffe, & Manuel Trajtenberg, Market Value and Patent Citations: A First Look, NBER working
paper No. W7741, at 14 (2001); Dietmar Harhoff et al., Citation Frequency and the Value of Patented
Inventions, 81 REV. ECON. & STAT. 511 (1999); Manuel Trajtenberg, A Penny for Your Quotes: Patent
Citations and the Value of Innovations, 21 RAND J. ECON. 172 (1990). Cf. Lanjouw & Schankerman,
Characteristics, supra note __, at 130 (finding that citations received predicted litigation when those
citations were made by competitors);


Because of the unusual skew in forward citations, the means for untransformed forward
citations look nearly identical even though the differences in the distributions are both dramatic and
highly significant. As a result, we also report in Table 2 the log-transformed value for adjusted forward
citations, which makes the differences quite clear.

Allison et al., supra note __, at __ (finding a statistically significant relationship between backward
citations and litigation); Allison & Tiller, Business Method Patent Myth, supra note 30, at __ (arguing
that there is a correlation between the number of prior art references and patent value); Harhoff et al,
Citations, Family Size, supra note __ (finding a relationship between prior art references cited and other
measures of patent value). But see Lanjouw & Schankerman, Characteristics of Patent Litigation, supra
note 43, at 138 (failing to find a statistically significant relationship between citations to US patent prior
art references and patent litigation). The theory behind the relationship of backward citations and value
is that the more citations that are considered during prosecution by the examiner, the less likely it is
that some prior art exists that will invalidate the patent. The more prior art considered, in other words,
the more likely a patent is to survive subsequent litigation. See, e.g., Moore, Xenophobia supra note
__Error! Bookmark not defined., at __ (arguing that “patents that include more citations or more
diverse citations are more likely to be valid”); John R. Allison & Mark A. Lemley, Empirical Evidence on
the Validity of Litigated Patents, 26 AIPLA Q.J. 185, __ (1998) (showing that courts rarely invalidate
patents on the basis of prior art that was cited to the PTO). Because lawyers know this, the value
relationship may reflect not only the strength of patents that cite a lot of prior art, but also efforts by
applicants to “bulletproof” patents they expect to litigate by citing a great deal of art.

[IPBiz notes the present SSRN paper made no attempt to bullet-proof itself against Ball/Kesan, because
in legal academic writing, unlike in patents, there is no consequence to ignoring relevant prior art.

Allison et al., supra note __, at __. Because many of the patents in this sample issued before Jan. 1,
2001, when the PTO began identifying examiner-added prior art on the face of the patent, we were
unable to determine whether it was the applicant or the examiner that provided most of this art.

However, other work has shown that virtually all non-patent prior art (over 90%) is provided by
applicants, not examiners. Mark A. Lemley & Bhaven Sampat, Examiner Characteristics and the Patent
Grant Rate (working paper 2009) (under submission, Rev. Econ. & Stat.). Thus, it is quite likely given the
disparity in non-patent prior art citations that the difference is a result of applicant submissions, not
examiner diligence. [IPBiz: !]

See Mark A. Lemley, Are Universities Patent Trolls?, 18 Fordham Intell. Prop., Media & Ent. L.J. 611
(2008) (no).

Contra Mark A. Lemley & Kimberly A. Moore, Ending Abuse of Patent Continuations, 84 B.U. L. Rev.
63 (2004) (arguing that continuations are mostly unnecessary and do more harm than good).

See, e.g. ,Dan L. Burk & Mark A. Lemley, Fence Posts or Sign Posts? Rethinking Patent Claim
Construction, __ U. Pa. L. Rev. __ (forthcoming 2009). Burk and Lemley argue that modern claim
construction can systematically disadvantage patentees, since even one error in claim drafting or losing
one claim construction fight may mean either invalidity or noninfringement. Drafting more claims
hedges against this risk by giving the patentee multiple shots at an error-free claim. Continuations also
hedge against this risk by allowing patentees to rewrite their claims after the fact.

See John R. Allison & Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26
AIPLA Q.J. 185, __ (1998) (finding that it is much harder to invalidate patents based on art cited before
the patent office, leading to the possibility of “bulletproofing” a patent application by including as much
prior art as possible). Relatedly, a sea of citations may actually diminish the PTO's ability to analyze
invalidity with respect to the most salient prior art included therein, since examiners operate under
severe time constraints and are not given more time to examine applications just because they include
more prior art.

Doug Lichtman & Mark A. Lemley, Rethinking Patent Law’s Presumption of Validity, 60 Stan. L. Rev.
45 (2007); Mark A. Lemley, Doug Lichtman & Bhaven Sampat, What To Do About Bad Patents,
Regulation, Winter 2005-06, at 10. While one might view applicant bullet-proofing as a form of “gold
plating,” the latter term refers to a proposal that the PTO devote additional resources to examine
certain applications and award a patent that has correspondingly higher deference.

Dan L. Burk & Mark A. Lemley, The Patent Crisis and How Courts Can Solve It (forthcoming 2009).

Nathan Myhrvold and Mark Lemley assess the role of non-practicing entities in a separate paper.
Myhrvold & Lemley, supra note __, at __. That paper is more limited than this one because it focuses on
the telecommunications, computer, and electronics industries, but is also broader because unlike this
one it covers all suits in those industries.

John E. Dubiansky, An Analysis for the
Valuation of Venture Capital-Funded Startup Firm Patents, 12 B.U. J. Sci. & Tech. L. 170, 177 (2006) (“In
the licensing context, however, the patent owner is not engaged in an enterprise which utilizes the
Consequentially, the owner has no profits to have lost, and is only eligible to receive a
reasonable royalty.”).

***Separately, see

More on Lemley and Intellectual Ventures


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