Report on New Patent Litigation Trends and the Increasing Impact of Nonpracticing Entities Released by PricewaterhouseCoopers

Intellectual Property will continue to play an important role in the economy and represent a competitive advantage for companies

Jan 25, 2010, 10:12 ET from PricewaterhouseCoopers

NEW YORK, Jan. 25 /PRNewswire/ -- According to a new report released today by PricewaterhouseCoopers LLP (PwC), the debate over patent reform has become more strident in the past few years as many of the world's largest companies face increasing threats of litigation from competitors and from organizations known as nonpracticing entities (NPEs) that do not design, manufacture, or distribute products.

The report, "A Closer Look: Patent Litigation Trends and the Increasing Impact of Nonpracticing Entities," studies the recent trends of patent decisions. PwC has compiled and maintained a thorough database of patent damages awards (from 1980 through 2008), collecting information about patent holder success rates, appellate reversals and modifications, time-to-trial statistics (from 1995 through 2008), and practicing versus nonpracticing entity statistics (from 1995 through 2008).

"Companies are continuing to realize value from patents -- whether protecting their product commercialization initiatives, or through their enforcement and other monetization efforts of patents -- they see the upside of using patents for competitive advantage," said Chris Barry, PricewaterhouseCoopers Advisory partner in the Forensic Services practice. "With U.S. patent trial success rates at their highest level in history, patent holders are winning considerable awards for damages."

Key findings from PricewaterhouseCoopers include:

  • Annual median damages awards ranged from $2.2 to $10.6 million.
  • Damages awards for NPEs have averaged more than double those for practicing entities.
  • NPEs have been successful 29 percent of the time overall versus 41 percent for practicing entities, due to the relative lack of success for NPEs at summary judgment; however, both have roughly a 2/3 win rate at trial.
  • The disparity between jury and bench awards has widened and is likely a contributing factor to the significant increase in use of juries since 1995.
  • Reasonable royalties continue to be the predominant measure of damages awards.
  • Alleged infringers increase their trial success rates slightly as plaintiffs seeking declaratory judgment.
  • While the median time-to-trial has remained fairly constant since 1995, significant variations exist between jurisdictions.
  • Certain federal district courts (particularly Virginia Eastern and Texas Eastern) continue to be more favorable to patent holders, with shorter time-to-trial, higher success rates, and higher median damages awards.
  • Five federal district courts accounted for 33 percent of all identified decisions involving an NPE as the patent holder.

Part of the patent litigation debate focuses on The Patent Reform Act, which is currently stalled in Congress. Hearings in the House indicate that its members don't feel bound to the Senate's version of the Bill. Nevertheless, if passed, this legislation will be the most significant patent reform in over 50 years. A central issue that has emerged from this debate involves how damages are calculated. Recently, the U.S. Supreme Court issued a number of rulings that have curbed some of the leverage NPEs can wield when attempting to monetize their patents.  Further, rulings by the Federal Circuit have made clear that patentees' damages claims will be scrutinized for apportionment issues.

"Patent litigation is very expensive and intellectual property damage awards can be costly," added Barry. "The smartest organizations are those that are able to properly assess their patent enforcement strategies as well as the impact of NPEs."

For more information and to receive a full copy of the study, please visit www.pwc.com/us/forensics.

About PricewaterhouseCoopers' Advisory Practice

PricewaterhouseCoopers' Advisory professionals help organizations improve business performance, respond quickly and effectively to crisis, and extract value from transactions. We help clients implement their business strategies and priorities to build effective organizations, innovate and grow profitably, reduce costs, manage risk and regulation, and leverage talent. As business integrators, we look across the entire organization -- focusing on strategy, structure, people, process and technology -- to help our clients drive sustainable change that yields measurable results.

About PricewaterhouseCoopers

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders.  More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.

SOURCE PricewaterhouseCoopers



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