The growth in NPE activity explains the high placing of plaintiff firm Niro, Haller & Niro in our survey. It was number four overall in the number of cases it handled in 2011 and number one in the number of cases in which it represented the plaintiff. Chicago-based Niro, a firm known for its representation of nonpracticing entities, helped inspire the term patent troll. In 2011 Niro handled a total of 105 cases and represented plaintiffs in 100 of them.
A dozen of those cases were filed on behalf of just one client: Delaware-based Innovatio IP Ventures LLP, which sued businesses that offer wireless Internet to customers, including major national and international hotel chains, restaurant chains, and coffee shops. In 2011 Niro also filed nine separate suits on behalf of the NPE Cascades Computer Innovation LLC, a company run by Anthony Brown. Niro and Brown, who used to head up the NPE TechSearch, are both considered the original patent trolls.
NPEs weren't the only patent asserters in 2011, however. Industry competitors also filed patent suits to protect their intellectual property and presumably their market share. Another firm that benefited from these battles was Kilpatrick Townsend & Stockton, which was formed in 2011 through the merger of Kilpatrick Stockton and the intellectual property firm Townsend and Townsend and Crew. Kilpatrick not only made it into the top tier of our list for the first time but also ranked second in the number of clients it defended in 2011 patent suits. Many of its clients are big players in the technology sector.
Who sued? Technology-based lawsuits related to semiconductors, smartphone wars, and the Internet kept most of our top-ranking firms busy in 2011. Pharmaceutical and life sciences litigation was also active, says Anthony Insogna of Jones Day, who in 2011 represented Celgene Corp. in several Hatch-Waxman patent infringement cases. Fish's Chaplin, whose firm represented Allergan Inc. in two big cases in 2011, agrees. "We've seen our pharma practice increase quite a bit," she says.
IP lawyers are benefiting from all the patent litigation activity, but in-house counsel are reeling at the size of awards. While the median award in a patent case plummeted in 2010 to $1.9 million, it once again skyrocketed in 2011, to $8.8 million, according to the PricewaterhouseCoopers study. The last time it was higher was in 2005, when it hit the equivalent of $10.2 million, adjusted for inflation.
NPEs are responsible for much of that increase. The PricewaterhouseCoopers study notes that awards to NPEs in the last decade have been almost double the size of damages awards to practicing entities. The major changes contained in the patent reform law ultimately did not address the calculation of damages in patent infringement cases, although the topic had been discussed in earlier drafts of the legislation. So damage awards may continue to remain high.
There is some good news for companies defending themselves against charges of patent infringement, however. Lawyers believe that the days of runaway damages are starting to become a thing of the past. They say the Federal Circuit is starting to clamp down, throwing out outsize verdicts. "District courts will eventually get the message," says Jones Day partner and IP attorney Brian Poissant.
Even so, it doesn't appear as if patent litigation will decline in the near future. "The number of patent trolls are increasing," Poissant says. "The old standbys are still there, but a lot more have gotten into the business."
So, with NPEs remaining active and the nonjoinder rule firmly in place, it's likely that patent suit filings will continue to rise. If history is any guide, the sluggish economy may also keep patent lawyers busy. "Companies tend to look harder for value in their patent portfolios when the economy is down," Chaplin says, noting that they often assert their patents against competitors to generate income and protect their market share.
In addition, the smartphone wars and other high-stakes battles will continue, lawyers say. The $1.05 billion jury award that Apple won in California in its patent suit against Samsung in August may even encourage more litigation, they say.