Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-tech Patents

While each patent dispute is unique, most fit the profile of one of a limited number of patent litigation stories. A dispute between an independent inventor and a large company, for instance, is often cast in " David v. Goliath " terms. When two large companies fight over patents, in contrast, they are said to be playing the " sport of kings. " Some corporations engage in " defensive patenting " in order to deter others from suing them. Patent licensing and enforcement entities who sue have been labeled " trolls. " Finally, observers of the patent system call the use of patent litigation to impose or exploit financial distress " patent predation. " These stories, routinely invoked by the press, advocates, and academics, shape public understanding of the patent system. In this Article, I describe, then match, these stories to data on patent litigations to determine which types of suits are most prevalent. I focus exclusively on the litigation of high-tech patents, covering hardware, software, and financial inventions, using data from the Stanford Intellectual Property Clearinghouse for cases initiated in U.S. The data shows that the reality is more complicated than the rhetoric regarding patent litigation. For instance, many blame non-practicing entities (" NPEs ") for a majority of the problems with the patent system. But they bring only a minority of patent suits: 17% of high-tech patent suits in the last eight years. However, NPEs 102 NORTH CAROLINA LAW REVIEW [Vol. 87 often name multiple defendants and sometimes, rather than sue, are sued, for declaratory judgment (DJ). Counting suits based on the number of defendants and including DJ cases, the NPE share rises to 28% of all high-tech patent suits. This average reflects an increase in NPE suits as a proportion of all suits over an eight-year period, from 22% counting defendants, or from 10% to 20%, counting cases. I also report the variation by industry based on the absolute number of suits—the share of financial patent NPE suits (26%) was nearly triple that of hardware patent NPE suits (9%). These numbers provide a richer context for understanding the NPE phenomenon. Another widespread perception of the patent system is that large companies are reluctant litigants, carefully constructing portfolios of patents to avoid going to court. The practice of " defensive patenting " has been well-documented and theorized. Yet, I found that public and large private companies initiated 42% …