Cloud Computing Patent Litigation on the Rise

A recent study reveals that US patent litigation on cloud technologies has been increasing by 700% over the past 4 years (figure 1). This drastic surge of litigation was mainly driven by so called PAEs “patent assertion entities”. PAEs purchase patents, e.g. from a bankrupt firm, and then sue other companies by claiming that one of their products or technologies infringes on the purchased patent (figure 2).

US Patent Litigation Over Time

Figure1: Number of cloud computing patent litigation cases in the US over time

Cloud computing is a space where complex technologies often overlap. Therefore, it becomes challenging for cloud-based companies to make sure that their solutions are not unconsciously infringing patented inventions. Just recently a techcrunch article revealed that Snap Inc. acquired a cloud-based geo filter patent from Mobli for a record amount of 7.7 million US dollars. Mobil was a Snap competitor that closed business years ago. However, Snap acquired the patent to ensure that the patent will not fall into the hands of an aggressive PAE (patent assertion entity) or competitors. When looking at the recent litigation numbers the fear of being sued for infringing cloud patents seems eligible.

US PAE Patent Litigation Over Time

Figure 2: Number of cloud patent litigation cases in the US as to main business model of the plaintiff

Cloud technologies are often believed to fundamentally rely on shared environments following public standards. The presented numbers however show that cloud technologies are increasingly subject to patent litigation. This may in fact block the open use and the commercialization of future cloud-based solutions. Cloud computing technologies are complex systems with millions of applications that are incorporated in various products or services. Broadly written patent claims may thus touch an unforeseeable range of cloud-based solutions creating unpredictable legal risks for every business that is based on cloud technologies.

The presented results are an extract of an ongoing study around patent activities in the space of cloud computing. The analysis conducted by IPlytics intends to shed light on the potential legal risks for cloud technology users.

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About Tim Pohlmann

Dr. Tim Pohlmann is founder and CEO of IPlytics. IPlytics Platform is a market intelligence tool which empowers its users to analyze technology trends, market developments and a company’s competitive position for any industry. IPlytics Platform integrates multiple data sources to provide a mapping of e.g. patents to technology standards, products or M&A deals. IPlytics Platform helps companies making the right R&D investment decisions by providing actionable and trustworthy insights on relevant IP assets. Dr. Tim Pohlmann worked as a research associate at the "Law and Economics of Patents Group"​ CERNA, MINES ParisTech and as an associate at Berlin Institute of Technology. He furthermore cooperates with the Fraunhofer ISI and Northwestern University of Chicago. Dr. Pohlmann's expertise covers the empirical analysis technology trends and market competition such as e.g. patent strategies, the interplay of patents and standards, the pooling of patents, technology licensing, patent trolls and standard setting for ICT.

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