By Donald Zuhn --

PricewaterhouseCoopers recently announced the release of its annual report on patent damages. The report, entitled "A closer look: 2008 Patent Litigation Study: Damages, awards, success rates and time-to-trial," begins by asserting that the current threat of an economic recession has led to an increase in patent litigation, and that while the risks of patent litigation continue to rise, so too do patent damages awards. As evidence of the rising risks, the report points to recent court decisions in eBay v. MercExchange, MedImmune v. Genentech, Microsoft v. AT&T, and KSR v. Teleflex. With respect to ever increasing patent damages, the report points to the $1.5 billion damages award in Microsoft v. Alcatel-Lucent, which if it stands, would constitute the largest damages award in U.S. patent litigation history. However, to those who attack the value of patents and who continue to push for a weakening of the U.S. patent system, the report counters that "[current] trends suggest that corporations continue to realize value from patenting by the protection provided to their product commercialization initiatives, as well as through enforcement and other monetization efforts."

The report notes that 2,896 infringement actions were filed in 2007, down from the 3,075 filed in 2004. The report also noted that 183,831 patents were issued last year, up from 182,687 in 2006.

The bulk of the PWC study, however, focuses on 666 summary judgment, 616 trial, and 481 unique Federal Circuit patent decisions issued between 1995 and 2007. An analysis of these decisions indicated that (with dollar figures adjusted for inflation):

• Between 1995 and 2007, nearly three-quarters of all Federal Circuit reversals (or reversals in part) were based on claim construction (49%) or patent validity (25%).

• Patent holders enjoyed the highest success rates in the Middle District of Florida (66.7%), the Eastern District of Texas (54.6%), the Central District of California (51.0%), the Eastern District of Virginia (50.0%), and the Western District of Wisconsin (50.0%).

• Patent holders enjoyed the lowest success rates in the District of Connecticut (15.8%), the Eastern District of Michigan (18.5%), the Southern District of Florida (25.0%), the Southern District of New York (30.6%), and the Northern District of California (33.0%).

• The District Courts having the highest appeal rates included Massachusetts (46%), the Northern District of California (42%), the Northern District of Illinois (41%), Delaware (35%), and the Southern District of New York (34%). The reversal (and reversal in part) rates for these five Districts were 64%, 62%, 71%, 46%, and 64%, respectively.

• Time-to-trial varied by industry, with the automotive and software industries enjoying the shortest time-to-trial (1.65 years) and the medical device industry having the longest (2.90 years). The time-to-trial for the biotechnology and pharmaceuticals industries were 2.00 and 2.20 years, respectively.

• With respect to individual District Courts, the Eastern District of Virginia (0.88 years) and the Western District of Wisconsin (0.91 years) had by far the shortest times-to-trial.

• Patent damages awards varied by industry, with the smallest median damages awarded in the automotive industry ($34,108) and the largest median damages awarded in the telecommunications industry ($34,362,353). The median damages awarded for the biotechnology and pharmaceuticals industries were $4,876,728 and $1,374,833, respectively.

• This decade, jury trials have resulted in significantly larger median damages awards ($8.6 million) than bench trials ($900,000). In the 1990s the difference between jury and bench awards was far less pronounced ($2.6 million vs. $2.1 million). As a result of the current disparity in jury and bench awards, it is not surprising that jury trials increased from 16% in 1995 to 42% in 2007.

• Between 2005 and 2007, nine cases yielded damages awards in excess of $100 million, ranging from the $1.5 billion damages award in Microsoft v. Alcatel-Lucent to the $115.9 million award in DirecTV v. Finisar Corp. No biotech or pharma case resulted in a damages award in excess of $100 million.