Median Patent Damages Awarded Hits 16-year Low

The following is excerpted from a PwC press release published on October 18, 2011 by U.S. Politics Today:

Reflecting upon developments currently underway in patent reform legislation, PwC US today released a new report "2011 Patent Litigation Study: Patent litigation trends as the ‘America Invents Act' becomes law" summarizing trends in the patent infringement litigation landscape.  PwC reports that the annual number of patent actions filed has increased at an overall compound annual growth rate (CAGR) of 4.9% since 1991, while annual median damages awarded ranged from $1.8 million to $15.6 million between 1995 and 2010.

PwC maintains a database of patent damages awards, collecting with specificity information about patent holder success rates, time-to-trial statistics, and practicing versus non-practicing entity (NPE) statistics (all from 1995 through 2010).  This year's study adds industry classification and expanded NPE segmentation analyses.

Notable findings include:

• Damages awards for NPEs averaged more than double those for practicing entities over the last five years
• Almost half of the largest damages awards have gone to NPEs; however, these large awards are frequently reversed on appeal, with final results dramatically reduced or eliminated
• The disparity between jury and bench awards continues to widen and is likely the primary contributing factor in the significant increase in use of juries since 1995
• Reasonable royalties remain the predominant measure of patent damages awards
• NPEs have been successful 23% of the time overall versus 33% for practicing entities, with similar success at trial but a relative lack of success for NPEs at summary judgment
• Technology associated with the consumer products industry represents the largest percentage of identified decisions from 1995 through 2010
• While the median time-to-trial has remained fairly constant in recent years (averaging 2.28 years), there are significant variations among jurisdictions
• Certain federal district courts (particularly Virginia Eastern, Delaware, and Texas Eastern) continue to be more favorable to patent holders, with shorter time-to-trial, higher success rates, and higher median damages awards
• Ten federal district courts (of 94 total, i.e. 11%) accounted for 55% of all identified decisions involving an NPE as the patent holder
• Not all NPEs are created equal: While University/Non-profit NPEs have the highest success rate among NPE litigants, their median damages award is considerably lower than the median award of Company NPEs

Read the full press release and access a link to the full PwC report here.

Comments

[patent litigation]

I'm more or less agnostic on the patent troll issue. Although I recognize the inefficiency problem that their business model creates within the economy, nevertheless the NPE model is profitable, effective, and a legal exercise of IP rights. The problem is a systemic one; when NPEs win, on average, three times the damage awards that practicing entities reap from patent litigation, you can't blame them for suing as much as possible. It seems to me that one of the best ways to combat the NPE problem is to disincentivize them by reducing their potential winnings from enforcement actions. So far, however, only a few courts seem to have taken the reasonable-royalty approach.
http://www.youtube.com/watch?v=LkQELhZeDYQ

[adammarley]

. The problem is a systemic one; when NPEs win, on average, three times the damage awards that practicing entities reap from patent litigation, you can't blame them for suing as much as possible.

[Web design sydney]

I recognize the inefficiency problem that their business model creates within the economy, nevertheless the NPE model is profitable, effective, and a legal exercise of IP rights.