Going Up

Leigh Jones

Corporate Counsel

11-01-2012

The number of patent infringement filings shot up by 22 percent in 2011 compared to the year before, reaching the highest level ever recorded, according to a study by PricewaterhouseCoopers released in September. Patent infringement actions totaled 4,015 last year, marking an overall annual growth rate of 6.4 percent since 1991.

The spike in filings was due in large part to the America Invents Act, which took effect in September 2011, according to Michael Rosen, a patent litigation partner at Fish & Richardson. The act changed the joinder rule for patent cases and now restricts plaintiffs from naming numerous defendants in a single lawsuit. Previously, defendants that weren't factually connected could be named in a single suit. After the act was passed but before its enactment, plaintiffs rushed to the courthouse to file using a "scattershot approach," Rosen says. Additionally, after the law was enacted, the number of cases increased because defendants that would have been named in one suit became defendants in separate suits, he notes.

The median damages award, adjusted for inflation, ranged from $1.9 million to $16.1 million between 1995 and 2011. From 2006 to 2011, the median damages award was$4 million.

Median damages awards for nonpracticing entities—that is, parties that do not use patents to develop products but instead buy and sell them—have nearly doubled compared with the awards to practicing entities since 1995, the study found. ­Nonpracticing entities include so-called patent trolls—parties that aggressively file lawsuits alleging infringement. Overall, ­practicing entities had higher success rates in litigation than did nonpracticing entities.

Median damages awarded in the telecommunications sector were significantly higher than in other industries, according to the study. The disparity between jury and bench awards continued to widen as the median jury award amounted to more than 20 times the median bench award between 2006 and 2011, the study found. At the same time, the number of patents granted by the Patent and Trademark Office climbed by 5 percent in 2011, to 244,430, showing moderation compared with a 23 percent growth rate between 2009 and 2010.