New study shows first decline in patent litigation in five years

By Jessica M. Karmasek | May 26, 2015

BOSTON (Legal Newsline) - The number of patent lawsuits filed in 2014 decreased by almost 13 percent, according to a new study.

Last week, PricewaterhouseCoopers LLP released its “2015 Patent Litigation Study: A Change in Patentee Fortunes.” The study provides an analysis of patent infringement lawsuits filed in the U.S. from 1995 through 2014.


According to the study, which is in its 10th year, the decline is the first year-over-year drop since 2009.


The study’s authors point to the U.S. Supreme Court’s decision last year in Alice Corp. v. CLS Bank.

In its June 19 ruling, the Supreme Court said the claims in Alice were drawn to an abstract idea. Implementing those claims on a computer was not enough to transform the idea to a patentable invention, the justices ruled.


“The Supreme Court decision in Alice was likely responsible for this sharp reversal -- and other patent cases now before the Supreme Court may well further affect litigation trends,” Chris Barry, a PwC Advisory partner focused on forensic services, wrote in a recent blog post.


Barry, who is a certified public accountant with credentials in financial forensics and has more than 30 years of experience, has worked extensively in the intellectual property field. In fact, he has testified as an expert witness at trials more than 60 times.


He noted that, in contrast, the number of patents granted by the U.S. Patent and Trademark Office has continued to grow steadily, increasing by 14 percent in the last year.


“Despite the divergence in 2014, there continues to be a very high correlation (approximately 95 percent) between the numbers of patent litigations filed and patents granted,” Barry wrote.


The study also found that:


- Median damages award fell by 45 percent to $2.9 million in the most recent five-year period (2010-14);


- Two-thirds of all cases were decided by juries in 2014, with the median jury award over the last five years 31 times greater than the median bench award;


- Consumer products leads in the number of cases, with biotech and pharma scoring the highest median damages award;


- Damages awards for non-practicing entities -- defined by PwC as an entity that does not have the capability to design, manufacture or distribute products with features protected by the patent -- are 4.5 times greater than those for practicing entities over the last five years;


- The median time-to-trial -- calculated by PwC from the complaint date to the first day of either the bench or jury trial -- is about 2.4 years;


- The top five districts in terms of patent-holder favorability remain the same (Eastern District of Virginia, Delaware, Eastern District of Texas, Western District of Wisconsin and Middle District of Florida); and


- Fifty-two percent of appealed cases are modified in some regard.


“IP shows no sign of diminishing in strategic interest for companies -- and patent litigation will continue to be a high-stakes arena and a shifting target,” Barry noted.


Adam Mossoff, a law professor at George Mason University and senior scholar at the university’s Center for Protection of Intellectual Property, admitted he hasn’t examined the study in detail, but said its results are somewhat of an affirmation.


“The new study confirms again what many have already said: patent litigation rates dropped dramatically last year, which is likely a result of the preexisting changes wrought by the America Invents Act, the PTO and the courts,” he said. “Thus, it's looking more and more like the few, identified bad actors have been addressed by the courts and PTO, and this confirms that the calls for an immediate response to an alleged patent litigation crisis was really a false alarm.”


Mossoff said what is being seen is “completely consistent” with historical patterns of what he describes as “incredible” innovation -- sewing machines, light bulbs, airplanes, etc. -- and resulting patent wars and litigations.


“Incredible innovation has continued apace and Congress should not throw a monkey wrench in the U.S. innovation economy with overbroad and unbalanced legislation that threatens all innovators and all owners of patented innovation,” he said.


In this Congress alone, four different pieces of patent reform legislation have been introduced -- the Innovation Act; STRONG, or Support Technology and Research for Our Nation’s Growth, Patents Act; TROL, or Targeting Rogue and Opaque Letters, Act; and PATENT, or Protecting American Talent and Entrepreneurship, Act.


To view PwC’s complete 2015 study, click here.


From Legal Newsline: Reach Jessica Karmasek by email at

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