Costs of patent litigation, and some questions about data

According to an article in Patent World (Sept. 2004), a 2003 survey of the American Intellectual Property Lawyers Association found that “the average cost of bringing a patent litigation is almost US$2 million.” [Article available on www.ipworldonline.com].  As a connoisseur of metrics, this claims raises several, shall we say, patent questions.

Wouldn’t it have been useful to suggest the ratio between litigation costs and the damages reasonably at stake?  If the average ante for a suit were $2 million, but the average recovery facing the litigants were $50 million, that doesn’t sound like an exorbitant transaction cost or a paltry return on investment. Does “bringing” a lawsuit mean carrying it through trial or through an appeal; could it mean only the preparation for and filing of a lawsuit?   We need deeper understanding about the typical duration and resolution of the cases that made up the average. For that matter, it is important to know how many cases made up the survey population.  If ten, I worry about the legitimacy of a number that could be thrown off by one lawsuit.  Then too, are the members of the AIPLA representative of most patent litigants in the United States – and are these figures only for litigation in US courts?  Even more fundamentally, how do we know whether one or two gargantuan cases skewed the average too high?  If there had been a median figure to go along with the average, the findings would be more meaningful.

I could go on.  My point is not that $2 million is nothing to sneeze at, nor that full bore patent litigation is a game for parties with deep pockets.  I also realize that the survey might address all my challenges.  But going beyond both truths – patent litigation is costly and the survey could have tied down its methodology – I still believe that the quote as presented leaves many, many questions unanswered.

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