Patents Reformed, But Into What?

Patents Reformed, But Into What?

Corporate Counsel magazine recently released its 2012 Patent Litigation Survey, and the results are striking. The survey is noteworthy not just for the rapid acceleration in the number of patent lawsuits it shows, but also because it illustrates changes that have taken place across the patent litigation landscape with the September 2011 phase-in of the Leahy-Smith American Invents Act (AIA). Among the many provisions contained within the AIA is a restriction on naming unrelated defendants in a single suit, which greatly benefited Non-Practicing Entities, commonly known as patent trolls. Undaunted by this new requirement, patent trolls began to file multiple lawsuits targeting single defendants, which contributed to the 22% increase in patent litigation over the previous year.

Patent trolls, of course, do not account for every Intellectual Property lawsuit. The much-publicized Apple v Samsung lawsuit that resulted in a verdict of over a billion dollars against Samsung was just one of many suits in the ongoing battle between smart phone producers. Other technology-based business, as well as pharmaceutical companies, and many other goods-producing companies also contributed to the spike in patent litigation.

All of this legal wrangling provides plenty of business to IP lawyers, but in-house counsel and the companies they represent are less thrilled. A new PriceWaterhouseCoopers study, cited in Corporate Counsel, noted that “the median award in a patent case plummeted in 2010 to $1.9 million” but that it “skyrocketed in 2011, to $8.8 million.” These astronomical verdicts are making some companies and their counsel very nervous, but there are signs that the Federal Courts are clamping down by throwing out outsize verdicts, with the district courts soon to follow their lead.

If the goal of the AIA was to reduce patent litigation, it appears there is still a great deal of work left to do.

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