Who is going to sue you for patent infringement?

RPX is one of the leaders in IP-related insurance, and they publish well-researched articles on IP-related litigation. Their graph on patent infringement is shown below:

What does this graph show?

NPE (non-practicing entities) are patent owners who are enforcing their patents against an operating company. (Operating companies are the only ones who infringe patents, so there is always an operating company as a defendant.) Is it worse to get sued by a troll – or sued by a competitor?

The line “Operating Company Plaintiffs” are operating companies who are suing their competitors for patent infringement.

The number of NPE lawsuits is higher than the Operating Company Plaintiffs mostly because a couple NPEs will typically sue many plaintiffs. However, there are cases where operating companies sue many different smaller companies.

Patent insurance will protect you from being sued – and give you the ability to assert your patents. Expect to pay about 1-3% of your policy limits each year.

Takeaways

You are every bit as likely to be sued for patent infringement by a patent troll as by a competitor. Non-practicing entities have a perverse incentive to sue smaller companies first: they can collect nuisance fees from smaller companies to fund the big lawsuit against bigger companies later.

In general, non-practicing entities are trying to collect money. However, competitors might be suing to have you cease and desist. Your competitor might want you out of their marketplace regardless of cost, and this can complicate the settlement that you might be trying to reach.