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Five trends in US patent litigation

James Nurton

PwC’s annual Patent Litigation Study provides some useful data for legislators to review as they consider reforms in Congress

PricewaterhouseCoopers recently published its 2013 Patent Litigation Study, with copious statistics on everything from the number of cases filed to the most generous judges. The firm, which has been publishing this annual report for the past eight years, described 2012 as “a banner year”.

When I asked him to expand on this term, Chris Barry – a partner at the firm who led the research and writing of the report – pointed to the 30% rise in lawsuits filed in 2012 (there were more than 5,000 filed across the US) and the spike in damages awards, with three each topping $1 billion (Monsanto v DuPont, Apple v Samsung and Carnegie Mellon University v Marvell).

But, as he explained, there is a lot more to the report than these headline figures. Here are five observations; the references are to the charts in the report, which you can download here.

Impact of AIA

The 30% increase in the number of lawsuits filed is not quite what it seems. The study covers the period immediately after the AIA joinder provisions came into effect (September 16 2011). As the report’s authors point out, another study showed that the average number of defendants per case dropped from 3.9 in 2011 to 2.3 in 2012. “You could previously file a suit in the Eastern District of Texas and name 20 to 30 defendants. The AIA put a stop to that,” says Barry. The Act also cut off the large number of qui tam false marking actions filed in 2010 and 2011.

The bigger they are, the harder they fall

The three damages awards of more than $1 billion are among the top 10 awards ever made during initial adjudication in US trials (chart 2c: number one remains the $1.848 billion awarded to Centocor against Abbott in 2009). But, as the report notes, most of these awards “have since been vacated, remanded, or reduced”. In fact, of the 2012 trio, two of the awards have already been significantly reduced or settled, and one is still on appeal.

Put your faith in juries

While the overall trend in damages is upwards, there is a marked difference between bench and jury trials (chart 3e). Median bench awards have significantly decreased from $5.4 million in 1995-2000 to $0.3 million in 2007-12 while jury awards have increased from $6.9 million in 1995-2000 to $12.2 million in 2007-12. Not surprisingly, the proportion of all cases with damages decided by the bench fell from 55% to 27% between the two periods. Jury trials are most common in telecoms and computer hardware/electronics and least common in biotech/pharma cases (chart 6g).

There’s money in biotech and telecoms

While consumer products remain responsible for the largest number of cases, biotech/pharma cases now rank second, with 127 cases in 2007-12 compared to just 39 in 1995-2000. Other areas where the number of cases has significantly increased are computer hardware/electronics (up from 24 to 101), software (from 14 to 70 and internet/online services (0 to 25). Median damages awards were highest in telecoms, medical devices and biotech/pharma (chart 6c) while success rates were highest in medical devices and biotech/pharma. Part of the increase in biotech/pharma cases is attributable to the growth in ANDA litigation from 17 cases in 1995-2000 to 77 cases in 2007-12.

The future will not be the same as the past

Patent litigation, which broadly tracks the growth in patents granted (chart 1) “shows no sign of cooling off” says the report. But there are some reasons to think it may not continue to expand at quite the same rate as last year. First, it’s likely that the growth in patents granted will level off this year, as USPTO cuts bite. Second, the one-off impact of the anti-joinder provisions will not be repeated. Third, the ITC and the new procedures in the USPTO may, as Barry says, “drain off some of the cases”.

Readers will draw their own conclusions from these trends. Here are three observations: first, patent litigation in the US is complex and diverse; second, it’s an increasingly lucrative business for lawyers; and, third, we’ve written a whole post on the topic without once mentioning the terms trolls/NPEs/PMEs/PAEs.


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