Lex Machina: Patent Lawsuits Rising in U.S. Via StreamIndustry

Patent litigation is booming in America despite the federal sequestration and court budget cuts. According to a new study by legal analytics pioneer Lex Machina, patent cases increased as expected since the America Invents Act (AIA) went into effect in 2012. In 2013, Plaintiffs filed 6,092 new patent cases – 12.4% more than 2012. Litigation has more than doubled in federal district courts since 2008. In 2014, the U.S. Supreme Court will hear the highest proportion of IP cases ever. Nevertheless, the report confirms that the vast majority of cases settle before trial. The following is a summary of key findings:

WHO

Parties – The top ten plaintiffs filing patent suits in 2013 were patent monetization entities (“PME”s a.k.a. “patent trolls”). Three PMEs filed more than 100 new patent infringement cases: ArrivalStar/Melvino Technologies (137), Wyncomm (131) and Thermolife International (117). Only three of the top plaintiffs by number of distinct patents in litigation, however, are PMEs: Intellectual Ventures I (100 patents) and II (81), and Ronald Katz Licensing (65). The rest are all operating companies, including Ericsson (176), Finisar (59), Motorola Mobility (52), Apple (52), Philips (41) and Pfizer (30). Unsurprisingly, large tech companies were the most common defendants sued in patent cases: Apple (59), Amazon (50), AT&T (45), Google (39 cases), Dell (38 cases), HTC (38 cases), Samsung (38 cases), Microsoft (35 cases), LG (34 cases), and HP (34 cases).

Law Firms – Boutique patent law firms in regional markets edged out national firms for most cases. Delaware-based Morris, Nichols, Arsht & Tunnell handled more patent cases since 2009 than any other firm (604 open cases / 1,369 total). The District of Delaware also includes other exceptional boutique firms Bayard (390 open cases / 794 total), Stamoulis & Weinblatt (277 open cases / 828 total). Ward & Smith led the Eastern District of Texas docket (245 open cases / 629 total). The top national firms were Fish & Richardson (308 open cases, 1027 total), Farney Daniels (216 open cases, 590 total), DLA Piper (188 open cases / 599 total), and Winston & Strawn (165 open cases / 477 total).

Judges – Hon. James Gilstrap of the Eastern District of Texas is by far the most active in terms of new cases filed. He was assigned 941 new patent cases in 2013. No other judge handled more than 400 cases. All of the top ten judges by most cases filed were from one of four districts: District of Delaware, Eastern District of Texas, Southern District of California, and Southern District of Florida. Moreover, decisions on the merits by judges or juries comprise only a small percentage of total cases. The Hon. James Gilstrap, Hon. Richard Andrews, and Hon. Sue Robinson issued 15 decisions each. A handful of other judges issued more than 10 decisions. Seven judges each issued four or five summary judgment decisions.

WHAT

4,917 patents were at issue in all cases filed in 2013; 61% of which had not been litigated in the past 10 years. PMEs ArrivalStar and Melvino jointly asserted six of ten most frequently litigated patents, all involving systems for monitoring or tracking vehicle status, travel, or proximity. Other subject matter included medical devices, biotech, pharmaceuticals, telecommunications, processors, and camera imaging. The report found that the number of merits decisions by district courts invalidating patents under 35 U.S.C. § 101, for lack of patentable subject matter, notably continued to increase from 2 in 2010 to 14 in 2013.

WHERE

The Eastern District of Texas (E.D. Tex.) had 1,495 new cases filed in 2013 (up 20% from 2012) while District of Delaware (D. Del.) increased the fastest with 1,336 cases filed (up 33%). Plaintiffs likely see these two districts as the most favorable given these strong numbers, and the District of Delaware appears poised to become the top jurisdiction this year. The Central and Northern Districts of California (C.D. Cal., N.D. Cal.) saw a relative decline in new filings even though they remain the third and fourth most popular venues, respectively. In the case of C.D. Cal., the decline was quite pronounced: 399 new cases in 2013, down from 499 in 2012. S.D. Cal. overtook N.D. Ill. as the fifth most popular district to file new cases in 2013. The U.S. International Trade Commission (ITC) also remains an important venue for resolving patent disputes. Total new ITC investigations in 2013 stabilized at 41, almost identical to 2012’s 42 new investigations, after falling from 70 in 2011.

WHEN

Most cases settled before trial. Despite the thousands of cases filed in recent years, trials were held in only 128 cases in 2013 in a total of only 9 states (CA, DE, FL, IN, IL, MA, NJ, NY, TX), including 52 bench trials and 63 jury trials. 13 cases involved both bench and jury trials. Over half of all trials were held in the District of Delaware (25), the Eastern District of Texas (25) or the Southern District of New York (17). No other district courts had more than ten (10) patent trials in 2013. Cases went to trial fastest in the Eastern District of Pennsylvania; its 212-day median time to trial was approximately 2 times faster than the next fastest district – the Southern District of Florida (2 trials; 401 days median) – and 12 times faster than the slowest district – Western District of New York (1 trial; 2,423 days). However, given that so few cases actually went to trial in each of these districts, few conclusions can be reasonably drawn about the efficiency of a district due to the differences in cases.

HOW MUCH

While settlement data is confidential and outside the purview of the report, median damages awarded in patent trials generally increased 22% to $1,256,920 in 2013. Top headlining cases caused the average damages to increase by 28% up to $34,694,527. Such outlier cases included awards of up to $1 billion, due from DuPont to Monsanto for infringement of a patent on genetically modified (GMO) seeds, to the nearly $600 million in damages awarded to Apple against Samsung for mobile device software infringement, to just over $15 million, due from Nintendo to Tomita for infringement of a video camera image system.

Lex Machina’s first annual 2013 Patent Litigation Year in Review Report “focuses on the most important trends and developments in patent litigation during 2013, carefully researched and compiled using the same Legal Analytics platform that’s allowing lawyers to predict the behaviors and outcomes that different legal strategies will produce.” This predictive big-data technology is expected to play a growing role in settlement negotiations and help resolve more of the increasing burden on the federal courts.

Read the full Lex Machina Report Here

Source and Image Credit: Stream Industry