A patent owner has the right to prevent others from making, using or selling a product or process covered by an issued and valid United States patent. Likewise, a patent owner can prevent the importation of products covered by an issued and valid United States patent. In order to enforce these patent rights it is necessary for the patent owner to bring an action in either a United States Federal District Court, or an action in the International Trade Commission (ITC). The ITC, however, only has limited jurisdiction; the ITC may issue either a exclusion order to prevent importation or a cease and desist order. Federal District Courts have the ability to issue orders prohibiting further infringement and issue monetary awards to compensate for damages suffered by the patent owner as the result of patent infringement. Increasingly patent owners will simultaneous file a lawsuit in Federal District Court and file an action at the ITC, forcing an alleged infringer to fight the same battle in multiple forums.
It is unfortunate that there is such redundancy in the litigation process, with the Federal District Court and the ITC having overlapping jurisdiction in many cases. If you add reexamination to the mix the Federal District Courts, the ITC and the United States Patent and Trademark Office are doing nearly the same thing reviewing the validity of claims. But is patent litigation out of control? A look at the numbers relating to patent litigations in the Federal District Courts over the past 30 years may surprise you. Patent litigation in the Federal District Court is really where the action is at since that is where patentees must turn to seek money damages for infringement, and the statistics don’t suggest there is the “curse” of litigation that many might want you to believe.
So there is definitely an increase in the number of patent cases filed in the Federal District Courts between 1980 to 2010, but is this “out of control”? If you take a look at the number of utility patents issued between 1980 and 2010 you would expect an increase in the number of patent litigations simply because of the increased number of patents granted (see below).
And if you focus on the number of utility patents filed (see below), which demonstrates an enormous increase in the interest in obtaining a patent the fact that more patents are litigated is a completely logical conclusion and does not demonstrate a patent litigation process out of control.
In trying to determine whether patent litigation is out of control it is worth looking at the numbers of patent cases terminated and how they are terminated. What becomes clear is that there is no statistically relevant increase in the number of trails over the last 30 years even with a significant increase in the number of cases commenced. The following charts show that while actual trials remains largely constant over the last 30 years there has been growth in the number of patent litigations terminated without any court action, as well as increase in cases terminated with court action and before pre-trial and the number of cases terminated between pre-trial and trial.
What does this show? It suggests that there has been an increase in the number of patent cases commenced for strategic purposes, which corresponds to cases being terminated prior to court action. In the patent world if the defendant reasonably fears being sued the defendant can initiate litigation in a forum of their choosing, which is not typically where the patentee would prefer to litigate. For that reason increasingly lawsuits are filed without anyone ever knowing they were in the cross-hairs. The first time you are likely to learn that someone thinks you are infringing is when you are served.
These charts also show that the real growth in patent litigation is after the court gets involved but prior to the pre-trial conference. So there has been discovery and almost certainly a Markman ruling relating to the meaning of the claims.
What these charts also show is that the overwhelming majority of patent litigation ends with settlement, not a verdict. This becomes even more clear when you focus in on the total number of patent trials each year, which has averaged 99.9 trials per year since 1980. With such constant numbers of trials in the face of significant filing growth it is impossible to justify the claims that patent trials are out of control.
More to come picking up on these patent litigation statistics. Stay tuned!