Litigation and IPRs: More Dangerous Than You Thought?

This is part 5 of a 6-part series on our 2016 Patent Market Report. To begin reading from the beginning please see 2016 Patent Market Report: An Overview.

Litigations and inter partes reviews are always a risk when dealing with patents. That’s why it’s so important to always have a strategy in place to combat such risks. Of all packages sold, 10.2% have at least one US patent litigated after the listing date. We have a much better data set this year and the rates are much higher than previously reported. We strongly recommend revising any models based on the old data.

We analyzed all of the packages in our database to look at the use of the assets after receipt of the package by the broker. Because we used a better source of US litigation and inter partes review data this year, it makes it impossible to compare our results to our previous year’s analysis. Focusing on package-level analysis for packages received in the market years from 2012 to 2016, and looking for packages with at least one litigation or inter partes review as of October 2016, we found that the sold packages are litigated and inter partes reviewed to a greater degree than packages generally (Table 9). For inter partes reviews, Table 9 focuses on packages listed in the market years 2014 to 2015, since we wanted to account for full implementation of the America Invents Act.

Table 9 suggests that purchased patents are used in either litigations or perhaps private assertions (not all inter partes reviews have corresponding litigations) with much greater frequency than previously found. When analyzed on a per-US patent basis, about 1.2% of US patents presented are litigated.

Our new data source allows us to better analyze the timing of the first litigation for the sold packages (Figure 18). Surprisingly, the filing of litigations is somewhat delayed after a purchase. Litigations start in earnest around four months from the sales date, with around half of all first litigations filed around one year. The tail is long, though – nearly 20% of litigated sold packages are not first litigated until more than two years from the sale (43 months is the longest delay from sale to first litigation in our data set).

Cumulative distribution of months from listing to date of litigation for each litigated package.

When developing a strategy for addressing the risk of litigation from packages listed on the brokered patent market, it is important to look at which packages get litigated. Figure 19 examines the proportion of litigations that came from sold and unsold packages. All of the packages in this dataset have at least one US-issued asset which was litigated after the listing date, while 56% of all litigations after a listing are from sold patents. This highlights the importance of a robust risk clearance function for the in-house team. A combination of cross-licenses, license on transfer agreements and membership of defensive aggregators can reduce these litigation risks. Similarly, the remaining 44% of litigations came from assets that never changed hands – the original owner could not sell the patents and sued. This suggests that monitoring the brokered patent marketplace and defensive purchasing can be valuable as well.

CLICK HERE to CONTINUE READING… In Part 6 of our 2016 Patent Market Report, we’ll look at the current market size and conclude with our key findings and action items for the year.

The Author

Kent Richardson

Kent Richardson counsels clients on a variety of patent and business matters including patent buying, selling, licensing, valuation, prosecution and operations. Kent has licensing and marketing patent portfolio experiences resulting in more than $600M of patent license bookings. Kent has served as an expert witness on patent monetization and licensing practices in cases in England and the United States. Prior to founding the ROL Group, Kent was the General Manager of ThinkFire Services USA, Ltd’s Silicon Valley office. Kent has worked in various senior management roles with such growth businesses as Sezmi, Constellation Capital, Rambus, Numerical Technologies. Kent is a member of the California Bar and a United States Patent and Trademark Office registered patent attorney, and holds five US patents.

Contact Kent via e-mail at kent@richardsonoliver.com, or the Internet at Richardson Oliver Law Group.

Kent Richardson

Erik Oliver counsels clients on patent, licensing and trademark matters. He brings more than ten years of patent prosecution, litigation, and licensing experience and a track record of millions of dollars in both patent and technology licensing deals. Prior to founding the ROL Group, Erik was a Vice President at ThinkFire Services USA, Ltd’s Silicon Valley office. Erik has held various senior positions with a range of responsibilities at Rambus Inc., Synopsys, Inc., and a number of Silicon Valley startups. Erik is a member of the California and District of Columbia Bar and a United States Patent and Trademark Office registered patent attorney.

You can reach Erik via e-mail at erik@richardsonoliver.com, or on the Internet at Richardson Oliver Law Group.

Kent Richardson

Michael Costa acts as the ROL Group's financial, engineering, and market analyst. His background in engineering and consulting allow him to bring a blend of business knowledge and technological understanding to our clients. Prior to joining the ROL Group, Michael worked as an independent financial and strategy consultant for Silicon Valley startups. He has helped companies analyze their business and technology opportunities in crowdfunding, mobile advertizing, home automation, green systems and power management, InGaAs semiconductors, and digital signal processing.

You can contact Michael via e-mail at mcosta@richardsonoliver.com, or via Internet at Richardson Oliver Law Group.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 1 Comment comments.

  1. Jeff Lindsay April 25, 2017 9:21 pm

    Thank you for this valuable information. I look forward to the further upcoming reports and to your ongoing analysis. Vital and important.

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