Friday, 26 October 2012

Patent litigation in the UK: some real research results

During 2011-2012, Christian Helmers and Luke McDonagh (both of the London School of Economics & Political Science) have been working on interdisciplinary empirical research for the UK's Intellectual Property Office concerning patent litigation in the UK. This project is linked with SEEK, an ongoing wider European project.  As Luke explains:
"We have undertaken an empirical survey of cases filed at the Patents Court 2000-2008. The two papers that have come out of this project are being pre-published as LSE Working papers on SSRN.  The first of these is Patent Litigation in the UK, the second being Trolls at the High Court?".
The abstract for Patent Litigation in the UK reads:
"We construct a dataset that contains the complete set of patent cases filed at the courts in England and Wales during the period 2000-2008. The data cover all types of patent-related cases brought before the Patents County Court, the Patents Court at the High Court, the Court of Appeal, as well as the House of Lords/Supreme Court. We combine the detailed information on court cases with information on the patents in dispute as well as firm-level data for the litigating parties. We employ the dataset to analyze characteristics of the court cases, = litigating parties, as well as the contested patents. We also provide detailed discussion of the cases that were heard by the House of Lords/Supreme Court as well as of the costs involved in patent litigation before the courts in England and Wales.".
This study, which shows inter alia that the most frequent outcome of any patent litigation is revocation, is fascinating -- but not too much should be read into it as a predictor since there has been a substantial overhaul of patent litigation procedures with the revitalisation of the Patents County Court in October 2010.  This blogger hopes that there will be a follow-up, to measure the degree of change which, at present, is more anecdotal than carefully quantified.

According to the abstract for Trolls at the High Court?:
"This article investigates the phenomenon of litigation undertaken by Patent Assertion Entities (PAEs), often referred to as ‘patent trolls’, within the legal system of the Patents Court (PHC) of England and Wales during the period 2000-2008. Our analysis shows that patent suits involving PAEs at the PHC are rare – they account for less than 6% of all patent cases. We suggest two reasons why the PHC does not provide a welcome venue for PAE litigation. Firstly, the majority of patent cases which reach a judgment in the UK result in a ruling invalidating the patent. Secondly, the costs regime in the legal system of England and Wales requires that the losing party pay the costs of the other side. In other words, even if its own costs are kept low, a PAE which loses a case may have to spend a substantial amount of money in order to cover the costs of the other side. When taken together, it is likely that these two aspects discourage litigation by PAEs at the PHC, which accounts for the low volume of cases when compared with other jurisdictions such as the US. We also offer interesting insights to the wider debate concerning whether it is likely that in the near future there will be a similar increase in PAE litigation in Europe as has already occurred in the US over the last decade. This article also discusses potential implications for the design of the proposed European Unified Patent Court".
Presumably PAEs have to go to court from time to time, even if they can regularly expect their patents to be invalidated, otherwise the threat of infringement litigation which underpins their business model will be reduced.  If patent litigation is costly and inconvenient enough, even the certainty that an action for infringement brought by a PAE would fail and that its patent would be revoked wouldn't entirely negative the attraction of settling quickly and easily by paying a smallish royalty fee.

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