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More metrics on patent litigation and costs

Patent-related legal services, including litigation, bulk large for many law departments, and data appears frequently about these services. The Wall St. J., June 9, 2007 at A7, offers a number of insights.

“It is cheaper to obtain a patent, which can cost $5,000-$25,000, than to invalidate one. Legal fees average $4.5 million in disputes where more than $25 million is at risk” (See my posts of May 13, 2007 on Microsoft’s spending; and June 11, 2007 on the costs of patent litigation in the US.). I do not know whether this average includes the legal costs of all parties to the lawsuit.

The number of patent lawsuits filed in U.S. courts has risen since the 1990s from about 800 per year steadily up to around 2,700 per year. For the past three years, that total has stayed fairly constant (See my post of Aug. 5, 2005 about the choice between a generalist litigator or a patent lawyer to handle a case.).

“A larger share of patent cases are settled out of court than other civil cases.” The article cites research that found that 63 percent of patent cases are settled whereas roughly half that percentage are settled of other civil cases. The implication seems to be that the costs, delay, and risks push patent litigants to resolve their disputes.

“Firms lose about 5% of their stock market value when sued for patent infringement, according to a study by professors at Boston University” (See my post of May 4, 2005 about event studies of share prices after a patent lawsuit is announced.). When a settlement is announced, what happens to share prices?