Monday, 20 October 2008

Patent litigation "not an issue" for most businesses

Writing in the IAM Blog, Intellectual Asset Management magazine's Joff Wild discusses US law firm Fulbright & Jaworski's fifth annual survey of litigation trends in the US and the UK. He writes:

"As far as patents are concerned, the first thing that struck me is that the majority of companies surveyed in both countries have not been on the receiving end of any infringement claim for the past three years (67% in the US and 73% in the UK). Those reporting between one and five claims come in at 26% in the US and 23% in the UK. Broadly speaking, therefore, over 90% of both British and American companies – if the respondents to the survey are in anyway representative – have no or relatively few problems with patent litigation. In fact, even those companies that report claims being made against them do not always end up in full-blown disputes; 44% of claims do not lead to litigation in the US, while the figure stands at 32% in the UK. It’s not a surprise when you think of how many suits are filed in each country during the course of a year, but it does offer further confirmation that those who claim that the patent system is running out of control could fairly be accused of over-egging their position somewhat.

I am not saying that being a defendant in patent litigation is any fun. In some cases it can be hugely damaging, especially for smaller companies. It is almost always very expensive - especially in the US and the UK. But the simple fact is that, if this survey is to be believed, only a relatively small number of businesses are affected. In fact, even in technology-driven industries, patent litigation is not a given – in the US, for example, although 52% of companies report at least one claim being made against them during the last three years, that leaves 48% of companies that reported none. Just 12% of businesses valued at under $100 million received a claim. Of course, this must have been a great worry to them, but how do such figures sit with the idea that patents are forcing smaller businesses to abandon innovation for fear of being sued? If this is happening, maybe it is the perception rather than the reality that is causing the decline. And if that is the case, naysayers and doom-mongers need to ask themselves some pretty tough questions.

So, where does this leave us? Well, clearly for some, patent litigation is a hugely expensive, time-intensive, pain in the behind. But the Fulbright study is yet another indication that such companies are actually very much in the minority. For the vast majority, patent litigation is not an issue or is a relatively minor one. And when you understand this, it does make the case for a major overhaul of the patent litigation system in either the US or the UK rather less compelling".

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