Even odds for defendants in US patent and trademark litigation, and frequent reductions of awards

Out of a research set of 1,124 US federal district court IP cases – 670 patent, 436 trademark, and 18 both – decided between 1980 and June 2005, “on average since 1983, plaintiffs … are awarded damages approximately 53% of the time” according to the 2006 Patent and Trademark Damages Study by PwC at 5. So much is written about the costs of patent lawsuits, especially, but law departments and their counsel fare quite well; plaintiffs can’t be too encouraged if they win barely more than one half of the time.

As to the vaunted litigation surge, the number of patent cases brought has climbed steadily from 1,171 in 1991 to 3,075 in 2004; for trademarks, the same timeframe saw an increase from 2,220 to 3,508 filings (id at 7). During those 14 years, corporate revenue in the US might well have doubled, or more, so IP cases filed per billion dollars of revenue appear to have roughly kept pace.

Finally, what amazed me (at 23) is that in “patent decisions, only about 30% of the damages decisions issued by US federal district courts during this entire period were affirmed (i.e., left unchanged by the appellate court.” We always read about huge awards, but less frequently do we read about those decisions being overturned, adjusted, or remanded. Therefore, in proportion to revenue growth, and adjusted for inflation (See my post of Dec. 31, 2006 on this calculation.), the numbers and damages of patent litigation appear less frightening than their usual description, and victory is had as often as not by those who are sued.

Michael E. Woods says:

December 31, 2006 at 10:38 pm

Thank you for pointing out this PWC Study – I enjoyed the overview and agree with several points.
However, I have reviewed the study and find some points where I disagree with your characterizations. First, while 53% of the cases result in damage awards according to the study, since the study does not count injunctions, summary judgements, and motions to dismiss. The “success” of a plaintiff in achieving an injunction can sometimes be far more valuable than damages. In this case, the 53% damages figure from the survey does not directly support the assertion that plaintiffs “win barely more than one half of the time.”
Second, while the survey does assert that 30% of the damage decisions issued by US federal district courts were affirmed, the ‘other’ 70% were overturned, adjusted, or remanded. The survey does not indicate what happens in these 70% of the cases, from my experience the damage awards can be increased.
There are, of course, other costs of litigation not directly quantified in this survey, particularly the mind share and distractions of the executives and technologists in participating in the litigation. I am not sure that many people who have been sued feel victorious, no matter the outcome.