2016] THE LAYERED PATENT SYSTEM 1537
acronyms—or worse—used to describe different types of plaintiffs.4 While
these divisions are real, each alone does not capture the layered connections
between inventors, enforcers, and technologies. Instead, head-to-head
comparisons present themselves in the aggregate, mere snapshots of the
bigger picture. Like the proverbial elephant identified by three blind
observers, one commentator feels a leg and identifies a technology problem,
another feels a tail and finds a litigant problem, and a third feels the trunk
and discovers a patentee problem.
This Article uses a novel dataset of 25 years of litigation to examine how
these layers form the whole elephant. It begins with enforcement, moves to
patentees, and finishes with technology. Finally, it uses statistical modeling to
further explore the connections between different layers.
The results reveal a far more complex puzzle than any one dichotomy
allows. One must look deeper than patent trolls versus product companies, or
information technology versus pharmaceuticals, for explanation. Instead, the
story begins with how invention is achieved, who has the resources to
complete what types of inventions, and how this affects who eventually
enforces patent rights.
For example, the data shows that, litigation tactics aside, the identity of
the initial patentee is better correlated with patent invalidation than the
identity of the party bringing the suit. It is well known that individual plaintiffs
win less often than other plaintiffs. The data presented here suggests that the
problem may not be individual plaintiffs, but patents obtained by individuals.
The problem seems to dissipate if the inventor is savvy enough to form a
company.5 Patents issued to inventor companies do not fare as poorly, while
patents issued directly to the inventor fare worse, regardless of technology.
This is a surprising outcome that affects how we should think about individual
inventors and their companies, patent plaintiffs, and patent quality.
4. PRICEWATERHOUSECOOPERS LLP, 2014 PATENT LITIGATION STUDY: AS CASE VOLUME
LEAPS, DAMAGES CONTINUE GENERAL DECLINE 1 (2014), http://www.pwc.com/en_US/us/
forensic-services/publications/assets/2014-patent-litigation-st udy.pdf (studying litigation outcomes
by plaintiff type); Colleen V. Chien, Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in
the Litigation of High-Tech Patents, 87 N.C. L. REV. 1571 (2009) (describing different patent litigant
plaintiff and defendant narratives and pairs and exploring their prevalence); Jay P. Kesan &
Gwendolyn G. Ball, How Are Patent Cases Resolved? An Empirical Examination of the Adjudication and
Settlement of Patent Disputes, 84 WASH. U. L. REV. 237, 258 (2006); Michael J. Mazzeo et al., Do NPEs
Matter? Non-Practicing Entities and Patent Litigation Outcomes, 9 J. COMPETITION L. & ECON. 879
(2013) (studying litigation outcomes by plaintiff type); Gwendolyn G. Ball & Jay P. Kesan,
Transaction Costs and Trolls: Strategic Behavior by Individual Inventors, Small Firms and Entrepr eneurs
in Patent Litigation 14 (U. Ill. Coll. of Law, Research Paper Nos. 08-21 & LE09-005, 2009), http://
ssrn.com/abstract=1337166 (examining case outcomes by litigant size).
5. This is consistent with Ashish Arora et al., The Acquisition and Commercialization of
Invention in American Manufacturing: Incidence and Impact 13–14 (Nat’l Burea u of Econ. Research,
Working Paper No. 20264, 2014), http://www.nber.org/papers/w20264.pdf (finding that
independent inventor inventions are commercially valuable and most often assigned to small firms).