With patent litigation, average costs might rise even while total industry costs decline

Nathan Myhrvold wrote a fascinating article about what he calls invention capital. The former chief technology officer at Microsoft and now the CEO of Intellectual Vendors, a company based on patents and invention, lays out a remarkable agenda for change in the way he predicts patententable ideas and patents will be funded, commercialized, and enforced.

One small point in the Harvard Bus. Rev., March 2010 at 46, article is that “The number of court battles over patent infringement in the U.S. peaked in 2004 and has since declined.” He predicts further declines in that number.

Assume Myhrvold is correct. The remaining fewer lawsuits over patents may well cost more because other means of avoiding or resolving the dispute have failed. As hard cases make bad law, bad disputes make big bills. Average costs of those patent litigations that proceed might climb even while the total costs of patent litigation to law departments as a whole drop.

Such a secular trend in costs that are material to any law department caught in the tar baby of litigation could manifest itself in gradually declining systemic costs. Fewer budget-busting lawsuits over patents let general counsel breathe easier.

Most grandly, what may be going on is that business, more so than legal management, gradually addresses inefficient litigation. Forces far more powerful than general counsel and their firms pass as glaciers over the land and wear down the bumps of costly lawsuits.

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