The novelty of IP litigation being "hot" wore off long ago, but never did the practice dominate headlines quite as much as in 2012. Apple Inc.'s patent and trademark battle with smartphone rival Samsung Electronics Co. was probably the most-watched business lawsuit of the year. The three largest jury verdicts of the year were awarded in patent cases. Those headlines, meanwhile, placed unprecedented public scrutiny on the once-obscure patent system itself. To help keep track of it all, here's a rundown of some of the biggest IP developments of 2012.
Tech companies have been complaining for years about the explosion in costly patent litigation. The mainstream press caught on in 2012. "One consequence of all this litigation, policy makers and academics say, is that patent disputes are suffocating the culture of startups that has long fueled job growth and technological innovation," The New York Times reported in a heavily trafficked feature from October. "It seems as if every time a high-tech company comes up with something new, another company files a patent lawsuit, saying they had it first," parroted CBS News in December.
Famed jurist Richard Posner of the U.S. Court of Appeals for the Seventh Circuit lent credibility to the patent skeptics, telling Reuters that "it's not clear that we really need patents in most industries." To make his point, he volunteered to hear one of Apple's key smartphone patent cases at the district court and then dismissed it before trial on the grounds that Apple couldn't show damages.
The U.S. Court of Appeals for the Federal Circuit, which helped to create the supposedly chaotic patent system, obviously isn't happy with the negative attention. Federal Circuit chief judge Randall Rader and his predecessor Paul Michel teamed up to defend their work at a conference in November. "For every dispute that's considered so controversial...thousands of agreements and market efficiencies are achieved by the patent system that far outweigh the inefficiencies of litigation," Rader said. Rader and Michel accused a handful of tech companies of distorting the national conversation about the patent system. They also assailed Posner's reasoning.
In 2012 "patent trolls"--companies that acquire patents purely for leverage or litigation, rather than innovation--came under more scrutiny than ever before. One study concluded that trolls cost the U.S. economy $29 billion a year. Another blamed trolls--also known as non-performing entities--for 40 percent of all patent litigation.
Regulators started paying more attention. In December the Federal Trade Commission held a one-day workshop to discuss the impact of "patent assertion entities" on the marketplace, with the Justice Department's outgoing antitrust chief warning of "a possibility of competitive harm."
All the furor over patent system didn't stop juries from returning huge verdicts against infringers.
Apple won $1.05 billion from Samsung in August, earning Apple's lawyers at Morrison & Foerster and Wilmer Cutler Pickering Hale and Dorr Litigator of the Week honors. Samsung's lawyers at Quinn Emanuel Urquhart & Sullivan were able to soften the blow by fending off Apple's bid for an injunction blocking Samsung from selling its infringing products. As we noted when we named Quinn Emanuel's John Quinn Litigator of the Week in October, Samsung's win could make it nearly impossible for gadget-makers to enjoin sales of a rival's devices.
The Monsanto Company won $1 billion from E.I. du Pont de Nemours & Co. in August in a dispute relating to genetically engineered seeds. (George Lombardi of Winston & Strawn was our Litigator of the Week for that win.) It later came to light that a judge sanctioned DuPont for "perpetuating a fraud against the court" by "intentionally ma[king] statements to the Court that are directly contradicted by facts."
The biggest verdict of the year came on Dec. 26, when Carnegie Mellon University won $1.17 billion from the semiconductor manufacturer Marvell Technology Group Ltd. Marvell's lawyers at Quinn Emanuel have already moved for a mistrial based on CMU's supposedly improper closing argument. We named Douglas Greenswag and Patrick McElhinny of K&L Gates Litigators of the Week for the stunning verdict, which we also covered here.