If we lived in a more sane world, patent lawsuits would not be a growth industry. But we don't, and they are. In fact, they're an extremely high growth industry, as illustrated in a new report from PricewaterhouseCooper.
As shown in the graph below, lawyers filed an all-time high 4,015 patent cases in 2011, up 22 percent from the year before (that's the maroon-colored line). Since 1991, they've grown at an average annual rate of 6.4 percent. At the moment, they're in overdrive. If you want a clear illustration of how broken our patent system is, this is it.*
This isn't just a matter of tech firms like Apple and Samsung trying to tear out each other's stuffing in front of a jury. As PwC notes, the suits are spread across many different parts of the economy. Consumer products makers are heading to court to defend their IP. So are big industrial companies. Pharmaceutical and medical device makers too! It's like patent law has become a big, litigious block party for corporate America, with taxpayers footing part of the bill (after all, we pay for the courts).
Much has been made of the role that so-called "patent trolls" have played in this trend. These are people and companies that buy up patents in order to file lawsuits without any intention of, you know, actually selling a product. In legal speak, they're politely referred to a "non-practicing entities," or NPEs. But while PWC says these bad actors are responsible for a growing portion of these suits, they're still just a part of the picture. PWC finds that there have only been about 361 court decisions involving NPEs since 1995, or about 21 percent of the total.* Convenient as it is to blame the trolls, this current burst of litigation is also the fault of actual companies trying to kneecap their competition.
How many of these cases actually have merit? It's not clear. In the last five year period, fewer than four in ten of the suits filed by non-trolls led to a successful result in court. But that doesn't tell us how often companies have simply paid settlements to make litigation disappear. Even that number would be of limited use, since companies often pay up front rather than spend money on a costly -- if possibly meritorious -- legal defense.