In a June decision called CLS Bank v. Alice, the Supreme Court called into question the validity of many software patents. Since then, there have been over a dozen lower-court decisions invalidating software patents.
New data from the legal analytics firm Lex Machina suggests that the newfound judicial hostility toward software patents is making plaintiffs gunshy:
Patent lawsuits in September were down 40% from last year
This chart shows the number of patent lawsuits filed each month in the United States. The blue line is 2013, and the orange line is 2014.
In 2013, as in previous years, there was a lull in new lawsuits in the summer months, followed by a dramatic uptick in patent litigation in the fall. But this year has been different. There were 416 patent lawsuits filed in July, the month after the Supreme Court decided Alice. Then the number dropped to 399 in August and 329 in September.
Until this year, the number of lawsuits had been rising every year. There were 385 patent lawsuits in September 2011, 460 in September 2012, and 548 in September 2013. The September 2014 figure of 329 represents a 40 percent decline from last year.
Of course, we shouldn't read too much into one — or even three — months of data. But one obvious explanation for the apparent trend is that the Alice decision (and the related rulings from lower courts that followed) spooked software patent plaintiffs.
That's the view of Stanford legal scholar (and Lex Machina co-founder) Mark Lemley. "In the last two months, we’ve seen over a dozen decisions invalidating software and business method patents on the basis of Alice," Lemley says. "That’s a pretty strong deterrent to software plaintiffs whose patent isn’t directed to specific new computer technology."
The Supreme Court has handed defendants a powerful new weapon that could allow them to not only win lawsuits, but also destroy the patents used to sue them. That will inevitably make plaintiffs more reluctant to go to court, giving defendants more bargaining power.
Trolls — plaintiffs who don't make products themselves but make a living threatening accidental infringers — may be hardest hit by the judiciary's turn against software patents. Trolls are heavy users of software patents, and they often use exactly the kind of questionable software patent the Supreme Court rejected in its June decision.
Congress has failed to pass patent reform legislation this year. But it looks like the Supreme Court may be doing Congress's job for it.