Patent Infringement Litigation Up or Down?
Alison Frankel
The American Lawyer
May 14, 2009
Zusha Elinson had an interesting piece in The Recorder this week about defendants' newfound resolve to fight patent infringement suits. The piece notes that Apple recently went to trial in a patent case for the first time in eight years (as we reported, Apple lost), and Yahoo is set to go to trial next week for the first time in four years in a patent case. "Tech companies are frustrated by what they view as abusive patent litigation, and one of their responses is [to] take them to trial," Edward Reines, an IP litigator with Weil, Gotshal & Manges, told Elinson.
But last week we ran an item citing a new survey by BTI Consulting that concluded patent litigation spending is down and likely to continue falling. In fact, BTI's president, Michael Rynowecer, told The Am Law Daily's Nate Raymond that big companies seem to be reluctant to be aggressive in both monetizing their patents and defending against patent trolls.
So what gives? Is patent litigation waxing or waning?
We're sorry to say that that's an almost impossible question to answer. The Am Law Litigation Daily has been doing some reporting for an American Lawyer feature story on the state of patent litigation, and -- as the dueling conclusions of The Recorder story and the BTI study suggest -- what we're finding is a lot of turmoil and little consensus about what's happening now and how the business will look in two or three years.
Filings by so-called patent trolls appear to be holding steady, which means they're actually rising as a percentage of all infringement cases as filings by non-trolls dip. Yet lawyers for two firms that have historically handled lots of plaintiffs contingency-fee work for patent holding companies (otherwise known as "trolls") told us that as rocket dockets have slowed and appellate rulings have swung in favor of defendants, they're increasingly reluctant to take on contingency-fee patent work. One of the lawyers told us his floor is now $12 million in predicted damages. Otherwise, his costs in hours and expert witness expenses outweigh his potential returns.
Meanwhile, prospective patent reform legislation, with its threatened caps on damages and possible big changes to the patent system, hangs over the litigation landscape like a big gray cloud. And then there's the secretive patent holding company Intellectual Ventures, which has bought up (or developed) something like 25,000 patents over the last few years. IV hasn't been an active enforcer of its IP rights -- it hasn't initiated lawsuits, in other words -- but there's increasing uneasiness that it will begin to do so.
What's it all mean for patent litigators? If you have several hours to devote to that question, we recommend taking a look at the transcripts from a fascinating set of hearings the Federal Trade Commission has held on what it calls "The Evolving IP Marketplace." The FTC brought in IP stars from both the private sector and academia, who engaged with each other on tough, real-life issues. Even if you can only dip into the hearing transcripts, they'll give you, at the very least, a sense of how uncertain the future of patent litigation is right now.
