There's a pithy saying in the technology world: If you can't innovate, litigate.
Reversing that logic, those at the receiving end of patent litigation might then be seen as the most innovative. Plaintiffs, of course, would disagree. Their argument is that defendants aren't innovating, but simply stealing ideas.
Since U.S. courts have become the de-facto clearing house for the debate on innovation vs theft, a look at data there is a good place to start. That's what Bloomberg Government did in a recent study of court filing data from Bloomberg Law. More than 3,500 patent litigation cases from 2015 were analyzed and, where possible, subsidiary companies were linked back to their parent entities.
The results are telling. Thirteen of the top 15 patent litigation plaintiffs are what kind observers might call patent licensees, or non-practicing entities. The less-kind describe them as patent trolls. Leading the pack is eDekka LLC, which was the plaintiff in seven times more patent litigation cases than the median of all cases uncovered by the Bloomberg analysis. In fact, the top five are all NPEs.
Generally speaking, NPEs don't make anything, except money. Instead, they're driven by a business model that involves owning patents and hoping to extract value from licensing, or litigation.
On the receiving end, 11 of the top 15 targets in U.S. patent litigation cases last year were in technology (the others were in pharma, led by Allergan), and more than half were Asian smartphone makers. Samsung, including its affiliates, led the list, being named defendant 11 times more often than the median of all cases. To be clear, being named a defendant doesn't suggest guilt.
It makes sense that Samsung should top the list. Newly emerging, highly competitive or recently disrupted industries are ripe for patent litigation. That's because litigants often smell blood in the turbid waters of a fast-flowing new revenue stream.
As a new, fast-growing and highly disruptive business, smartphones are fertile hunting ground for those seeking legal fame or fortune. Samsung sits right in the middle. Beyond its huge size, it not only makes smartphones but is the global leader in their core technologies, including displays and memory chips.
Although an expensive annoyance, attracting so much attention from litigants is flattering. If Oscar Wilde were a lawyer, he'd have told Samsung that there is only one thing in the world more insulting than being sued, and that is not being sued.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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