A few of the patent blogs over the last week or so have been reporting a decline in patent litigation in the US, sourced from analysis done by LegalMetrics. But is it so? I’m not so sure…

According to LegalMetrics,

‘The number of new patent infringement cases in the U.S. dropped in 2005 by over 10 percent. According to a study by LegalMetric, a litigation analysis firm, this is an extremely rare event. Each year from 1994 to 2004 showed an increase in the number of patent cases over the previous year, according to LegalMetric’

On the other hand, another commentator, Peter Detkin, Managing Director of Intellectual Ventures also analyzed litigation trends and published a presentation entitled Patent Reform: Winners, Losers and Prospects…And Myths. He found that patent lawsuits per issued patent have been on the decline since 1997.

All of this sounded a little weird to me, because I’ve been reading some work by Bessen and Meurer lately, and according to their paper on SSRN, there has been a patent litigation explosion in the US (or at least was, in the US). According to them,

‘[There was a] rapid increase in patent litigation hazards over the 90s [which] cannot be explained by firm patenting rates, R&D spending, firm value or industry composition. Looking at a variety of explanations, we conclude that legal changes may be the dominant factor driving this increase. This implies that the increase in patent litigation represents a growing disincentive to R&D that is not likely offset by growth in the number or value of innovations.

Furthermore, we find evidence that … the more R&D a firm performs, the more likely it is to be sued. In most industries, this pattern of litigation is inconsistent with the view that most defendants in patent lawsuits are simple pirates or imitators. Instead, patent defendants are, to a large degree, innovators themselves, spending as much on R&D as the plaintiffs. Moreover, about a quarter of patent lawsuits occur between firms that are in different industries and are also “technologically distant,” suggesting that innovating firms may be unable to completely “clear” their technology for possible infringement in advance. …although the rate of litigation per patent among public firms as plaintiffs did not increase much from 1987 to 1999, the rate of litigation per R&D dollar among public firms as defendants increased 70%.’

Now, Bessen & Meurer studied the 1990s (up to 2000), so the LegalMetric analysis isn’t necessarily inconsistent. But it begs the question of how an increase is measured. In raw numbers? Against the number of patents granted? patents in force? R&D spending? All of these would be valid things to measure an increase against. None are clearly identified as being part of LegalMetric’s mix. All this means is that:

  1. Taking discussions or conclusions regarding litigation rates at face value is naive. Lots of other things impact on patent litigation rates, including (a) the number of patents in force, (b) developments in the market etc.
  2. Far more interesting is whether there are any implications for patent policy from any shifts in litigation. Something that Bessen and Meurer consider in another paper…

Oh, and if you are wondering about trends in Australian patent litigation, I talked about this at two presentations last year; the slides from those presentations are available at IPRIA’s website. There’s also a detailed academic paper in the Federal Law Review, August 2005.

6:50 pm - posted by . Categories: Law , Patent , USA
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