Patent litigation in the US has increased over 230% in the past two decades. Given that, what is the cause of increased US patent litigation? What does this mean for the researchers, lawyers, counsels and executives this affects? And, most importantly, is the explosion of litigation a cause for concern?
The Rise in Patent Litigation
In 2008, 2,896 patent infringement actions were filed – merely 179 fewer than the peak year 2004 – and has been increasing by 5.6 percent since 1991.
Some argue the number of patent suits is a result of our “innovation economy”: the spur of innovation in the late 20th century simply created more patented inventions and thus more patent litigation. Statistics released from the USPTO seem to mirror this sentiment; the number of patent filings and patent suits roughly correlate with each other.
Alternatively, it could merely be a reflection of growth in the patent portfolio size of many large firms. Companies have and will continue to use patents as a competitive advantage. In 2009, the top 10 patent-holding firms accounted for 298,466 (7.8%) of all patents granted in the United States since 1977.
Since the increase of patent filings correlates with the increase of patent litigation, a larger patent portfolio suggests an increase in the probability of litigation. Why would organizations want a larger patent portfolio if it increased the risk of being sued?
Many companies saw the advantages of aggressively obtaining patents and maintaining a broad patent portfolio: traditionally, companies had a large portfolio in order to threaten those who assert patents against them with a counter-suit. In other words, imagine that Corporation A asserted a patent against Corporation B. At that point, Corporation B would look in its patent portfolio and find that one of Corporation A’s products infringed on a patent owned by Corporation B. Corporation B would then countersue Corporation A.
However, Boston University professors James Bessen and Michael J. Meurer disagree, believing that “the effect of defensive patenting seems weak.” They acknowledge:
“Firms may choose to invest in technologies that expose them to a greater risk of infringement suits but they may also attempt to inoculate against this risk by acquiring more patents. These two choices may counteract each other, so that in equilibrium, prospective defendants with larger portfolios might not have lower probabilities of being sued.”
With this stalemate, corporations may now be motivated to find a different recourse outside patent litigation.
Given the two opposing view points, what do you believe the cause for increased patent litigation is? Are Bessen and Meurer correct? Or does the more traditional defensive portfolio still hold true?
For more information, see:
1. 2009 Patent Litigation Study, PriceWaterhouse Coopers, 2010. [link]
2. The Patent Litigation Explosion, James Bessen and Michael J. Meurer, 2005. [link]
3. Fulbright’s Litigation Trends Survey, Fulbright and Jaworski LLP, 2007. [link]
4. PTMT Special Report, US Patent and Trademark Office, 2009. [link]
For raw sources for the PWC Patent Litigation Study, see:
1. 2009 USPTO Performance and Accountability Report, USPTO, 2009. [Link]
2. 2008 Judicial Facts and Figures, UScourts.gov, 2008. [link]