2012 was a groundbreaking year in patent litigation, as it saw explosive growth in both the number of suits filed and in the amount of damages awards returned. Before 2012, damages awards in the billions were unheard of. Yet, in 2012, three different cases, involving unrelated parties, returned awards of $1 billion or more. Many different and interrelated factors contributed to this explosion of growth. Non-practicing entities (NPEs), one of the most controversial and visible players in patent litigation, dominated the filings. Some studies report that NPEs now account for the majority of domestically filed patent infringement suits. This is significantly more than the 25% they accounted for in 2007.

Another factor contributing to the growth in patent litigation filed in 2012 is the ‘anti-joinder’ provision of the 2011 America Invents Act. The anti-joinder rule, which became effective on September 16, 2012, limits the number of defendants that can be named in a lawsuit. It basically states that accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit. Under the new law, joinder is possible only if the right to relief arises out of the same transaction and is based on the same question of fact. As a direct result, the number of lawsuits has generally increased, especially those filed by NPEs.

Overall, the annual number of patent infringement lawsuits filed has increased each year in the last two decades. According to the study, 2012 had the highest number of patent actions ever filed, at 5,189.

2012 also saw some interesting trends in terms of damages. Between 1995 and 2012, the overall damages award was approximately $5.5 million dollars. However, in 2012, the median awards jumped to $9.5 million dollars. The study also found that while reasonable royalties are the kind of damages most frequently awarded in patent cases, the concept of lost profits has also re-emerged.

The study has also found that the overall success rate for practicing entities is approximately 10% higher than that of NPEs over the last eighteen years. Similarly, the study also found that NPEs are much less successful at the summary judgment stage, NPEs are much less successful at the summary judgment stage, with only 2% being successful, as opposed to the 10% of practicing entities that are successful.

Overall, between 2007 and 2012, the practicing entities success rate has outpaced that of NPEs’ by 12%. Unsurprisingly, patent suits that deal with technology associated with the fields of telecommunications, biotechnology, pharmacology, medical devices, computer, electronics industry, experienced significantly higher median damages awards than other industries.

Similarly, unsurprisingly, the study also found that certain jurisdictions are still more favorable to patent holders. The study names Eastern Virginia, Delaware and Eastern Texas as jurisdictions favorable to patent holders due to their shorter time-to-trial, higher success rates, and greater median damages awards.

Source: http://www.pwc.com/us/en/forensic-services/publications/2013-patent-litigation-study.jhtml

For more information, please visit our patent service page.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the IP law firm and its IP law attorneys may be found at www.klemchuk.com.

Klemchuk LLP hosts Culture Counts, a blog devoted to the discussion of law firm culture and corporate core values with frequent topics about positive work environment, conscious capitalism, entrepreneurial management, positive workplace culture, workplace productivity, and corporate core values.