2018 patent litigation study - ipwatchdog, incpwc. 01 patent itigation tudy. 3. idenix (merck) v....
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2018 Patent Litigation Study
May 2018
PwC | 2018 Patent Litigation Study 2
1,000
2,000
3,000
4,000
5,000
6,000
7,000
'17'16'15'14'13'12'11'10'09'08'07'06'05'04'03'02'01'00'99'98Year
Years are based on September year-end.Sources: Performance & Accountability Report (USPTO) and Judicial Facts and Figures (US Courts)
Patents GrantedCases Filed
Cas
es F
iled
Patents G
ranted
CAGR = 4.4%
CAGR = 3.4%
100,000
150,000
200,000
250,000
300,000
350,000
Fig 1: Patent case filings and grants
Patent case filings and grants Fig 1
The number of patent cases filed in District Court and the number of patents granted by the US Patent & Trademark Office (USPTO) continue to move in diverging directions after many years of concurrent growth. Patent cases have now dropped to the lowest level since 2011, while patent grants continue to set new highs.
PwC | 2018 Patent Litigation Study 3
Idenix (Merck) v. Gilead remains the largest initial damages award, although it was reversed by the District Court in February 2018. No awards in 2017 breached the top ten.
Year Plaintiff Defendant Technology Award (in $M)
2016 Idenix Pharmaceuticals Gilead Sciences Inc. Hepatitis C drugs $2,540
2009 Centocor Ortho Biotech Inc. Abbott Laboratories Arthritis drugs $1,673
2007 Lucent Technologies Inc. Microsoft Corp. MP3 technology $1,538
2012 Carnegie Mellon University Marvell Technology Group Noise reduction on circuits for disk drives $1,169
2012 Apple Inc. Samsung Electronics Co. Smartphone software $1,049
2012 Monsanto Company E.I. Du Pont De Nemours and Co. Genetically modified soybean seeds $1,000
2005 Cordis Corp. Medtronic Vascular, Inc. Vascular stents $595
2015 Smartflash LLC Apple Inc. Media storage $533
2004 Eolas Technologies Inc. Microsoft Corp. Internet browser $521
2011 Bruce N. Saffran M.D. Johnson & Johnson Drug-eluting stents $482
Top ten largest initial adjudicated damages awards: 1998–2017 Fig 2
Even though juries have grown to be the predominant trier of fact, the percent of cases decided by juries has stayed relatively consistent over the last 10 years. (Percent of cases decided by juries excludes Abbreviated New Drug Application (ANDA) cases).
Percent of cases decided by juries Fig 3
2013−20172008−20122003−20071998−2002
77%74%
61%
42%
Fig 3: Percent of cases decided by juries (excluding ANDA cases)
PwC | 2018 Patent Litigation Study 44
Years
1998−2002 2008−20122003−2007 2013−2017
22 5045 60
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Number of cases per year
Median time-to-trial (in years)
Fig 4: Median time-to-trial
The number of identified decisions is indicated within the respective column.
Median time-to-trial Fig 4
Time to trial has not increased in recent years despite delays caused by detours to the Patent and Trial Appeal Board.
PwC | 2018 Patent Litigation Study 5
Median damages award ($M) Fig 5a
1998−2002
64
2003−2007
134
2008−2012
142
2013−2017
203
The number of identified decisions is indicated within the respective column.
$7.3
$5.1$6.0$6.1
Fig 5a: Median damages award
Median damages award excluding summary and default judgments ($M) Fig 5b
60 128 124 173
$7.8 $7.9$9.2
$6.5
1998−2002 2003−2007 2008−2012 2013−2017
The number of identified decisions is indicated within the respective column.
Fig 5b: Median damages award (excluding summary and default judgment)
The annual median damages award between 1998 and 2017 ranged from a low of $1.9 million (2010) to a high of $17.4 million (1999), with an overall median award for the entire 20-year period of $5.9 million. The 2017 median damages award increased to $10.2 million, up from $6.1 million in 2016.
Median damages have been trending upward for the last 20 years when summary and default judgments are excluded.
PwC | 2018 Patent Litigation Study 6
The gap between median bench and jury awards has narrowed in the most recent 5-year period, but remains significant.
Median damages award: Bench vs. jury decisions ($M) Fig 6
Bench Jury
1998−2002 2003−2007 2008 −2012 2013−2017
$5.7
$1.1 $0.4$1.9
$11.9$9.5
$14.5
$10.2
Fig 6: Median damages award: bench vs. jury decisions
Among Practicing Entities (PEs), reasonable-royalty-only awards continue to be the type of damages most frequently awarded—more than 3 times as often as lost-profits-only awards.
Composition of damages awards (practicing entities only) Fig 7
26%
62%
12%
1998−2007
19%
60%
21%
2008−2017Lost profits only
Reasonable royalties only
Lost profits and reasonable royalties
Fig 7: Composition of damages awards (practicing entities only)
PwC | 2018 Patent Litigation Study 7
Over the last 20 years, patent holders have enjoyed much higher trial success rates with juries than with the bench.
43%
76% 76%
52%
74%73%
57%51%
Bench Jury
1998−2002 2008−20122003−2007 2013−2017
Fig 8: Trial success rates: bench vs. jury
Trial success rates: Bench vs. jury Fig 8
PwC | 2018 Patent Litigation Study 8
Patent holder success rates: 1998–2017 Fig 9
66%62%
Trial
16%
6%
Pretrial
37%
25%
Overall NPEs PEs
Fig 9: Patent holder success rates: 1998-2016
Patent holder success rates at trial: 1998–2017 Fig 10
76%72%
Jury decisions
54%
36%
Benchdecisions
Fig 10: Patent holder success rates at trial: 1998-2017
NPEs PEs
While Non-practicing entities (NPEs) have consistently been less successful than PEs, both have experienced increasing success rates over time. However, NPE success rates have declined slightly in the last 5 years, while PE success rates continue to rise.
There is a pronounced difference in trial success rates for NPEs vs. PEs depending on the trier of fact. While both entity types experience similar—and higher—success rates with juries, NPEs are much less successful with the bench.
PwC | 2018 Patent Litigation Study 9
NPEs continue to rack up higher damages awards, reflected in a much higher median award compared to PEs—a recurring trend since the early 2000s.
Median damages award: NPEs vs. PEs ($M) Fig 11
NPEs
PEs
1998−2002 2003−2007 2008−2012 2013−2017
$6.2$3.4
$14.1$4.8 $7.7 $3.9
$14.8$4.2
Fig 11: Median damages award: NPEs vs. practicing entities
PwC | 2018 Patent Litigation Study 10
31%Company success
rate falls inthe middle
47%Universities/non-profitslead the pack in overall
success rate
18%Individual NPEs lag
far behind, below theoverall 26% success
rate for NPEs
Fig 13: Patent holder success rates by NPE type: 1998-2017Patent holder success rates by NPE type: 1998–2017 Fig 13
University/non-profits continue to garner the highest damages awards and success rates—although the sample size of cases is significantly smaller than company and individual NPEs.
University/non-profits
The number of cases is indicated within the respective row.
Company
Individual
9
90
38
$11.8
$16.6
$7.1
Fig 12: Patent holder median damages award by NPE type: 1998-2017
Patent holder median damages award by NPE type: 1998–2017 ($M) Fig 12
PwC | 2018 Patent Litigation Study 11
Consumer Products and Biotech/Pharma hold the top spots as most active industries for patent infringement litigation. NPE concentration is highest in the Software industry.
0% 5% 10% 15% 20%
Chemicals
Automotive
Business/Consumer Services
Telecommunications
Medical Devices
Industrial/Construction
Software
Computer Hardware/Electronics
Biotech/Pharma
Consumer Products
4%
4%
6%
3%
9%
12%
14%
7%
6%
3%
1%
2%
1%
1%
3%
3%
2%
1%
4%
<1%NPEs
PEs
Fig 14: Distribution of cases: top ten industries: 1998-2017
Distribution of cases: Top ten industries: 1998-2017 Fig 14
PwC | 2018 Patent Litigation Study 12
Biotech/Pharma surpassed Medical Devices in this year’s study as the industry with the highest median damages award.
0 5 10 15 20 25
Chemicals
Automotive
Business/Consumer Services
Telecommunications
Medical Devices
Industrial/Construction
Software
Computer Hardware/Electronics
Biotech/Pharma
Consumer Products
20
41
58
20
94
28
101
50
49
16
The number of identified decisions is indicated within the respective row.
Median damages awarded ($M)
Median damages for allindustries is about $5.9M
Fig 15: Median damages award: top ten industries: 1998-2017
Median damages award: Top ten industries: 1998–2017 Fig 15
PwC | 2018 Patent Litigation Study 13
0% 10% 20% 30% 40% 50%
Chemicals
Automotive
Business/Consumer Services
Telecommunications
Medical Devices
Industrial/Construction
Software
Computer Hardware/Electronics
Biotech/Pharma
Consumer Products
Overall success rate 34%
22%
28%
40%
33%
40%
41%
39%
33%
24%
29%
Fig 16: Patent holder success rates: top ten industries: 1998-2017
Patent holder success rates: Top ten industries: 1998–2017 Fig 16
Along with the highest median damages, patent holders in the Biotech/Pharma industry have experienced the highest overall success rates (although only by a slim margin).
13
PwC | 2018 Patent Litigation Study 14
After the Supreme Court’s TC Heartland decision, a continued shift to Delaware as the most popular venue for patent litigation should not be surprising. It will be interesting to see how the shift to Delaware continues to impact these metrics over the coming years.
District Court rankings for the last ten years: 2008–2017 Fig 17
Overall rank District Case
Count RankOverall
success rate
Rank Median damages award Rank
Median time-to-trial (in years)
Rank
1 Delaware 241 1 41% 5 $15,332,276 3 2.1 6
2 Texas Eastern 184 2 54% 2 $11,932,921 4 2.2 8
3 New Jersey 81 4 48% 4 $11,048,463 5 2.7 12
4 Virginia Eastern 36 10 22% 13 $26,366,936 2 1.0 1
5 Florida Middle 37 9 49% 3 $369,863 14 1.9 3
6 Wisconsin Western 29 13 31% 8 $9,996,534 8 1.4 2
7 California Southern 34 11 32% 7 $1,676,460 12 1.9 4
8 Texas Southern 30 12 17% 14 $108,123,900 1 2.1 7
9 Florida Southern 27 14 37% 6 $3,149,243 11 2.0 5
10 Texas Northern 20 15 55% 1 $8,117,824 9 2.5 11
11 California Northern 163 3 28% 10 $4,591,222 10 2.7 13
12 California Central 80 5 28% 11 $809,244 13 2.3 9
13 Massachusetts 43 8 30% 9 $10,210,071 7 3.5 14
14 Illinois Northern 76 6 16% 15 $10,563,047 6 4.0 15
15 New York Southern 69 7 25% 12 $327,666 15 2.4 10
All identified decisions
1,634 37% $5,647,065 2.4
The rankings for these courts are based on their relative ranking for each of the four statistical measures, equally weighted.
PwC | 2018 Patent Litigation Study 15
While Texas Eastern has the highest percentage of NPE activity when looking at a ten-year history, Delaware saw the biggest year-over-year jump in NPE cases. This trend is not surprising given the TC Heartland ruling.
District Decisions involving NPEs
Total identified decisions
NPE % of total decisions
NPE success rate
Texas Eastern 73 184 40% 52%
Delaware 53 241 22% 25%
California Northern 38 163 23% 13%
Illinois Northern 23 76 30% 9%
California Central 16 80 20% 31%
New York Southern 15 69 22% 13%
All identified decisions 358 1,634 22% 28%
District Courts with most identified NPE decisions: 2008–2017 Fig 18
The vast majority of trial outcomes are appealed in some capacity, with more than half of the appeals receiving a written opinion from the Federal Circuit.
16%
2%
22%
22% 78%
Not appealed
Appealed
Appeal pending
Dismissed/Settled
Opinion
Summary affirmance
60%
Fig 19: Status of trial outcomes: 2006-2015 decisions
Appellate status of District Court cases: 2006–2015 decisions Fig 19
PwC | 2018 Patent Litigation Study 16
Patent holder successat District Court
Patent holder lossat District Court
27% 21% 8% 43%
25% 23% 8% 44%
20% 29% 39% 11%
Not appealed
Both parties appealed
Alleged infringer appealed
Patent holder appealed
Fig 20: Appeals after district court decisions: 2006-2015
Appeals after District Court decisions: 2006–2015 Fig 20
Appeals are largely driven by the unsuccessful party. Still, a decent number of successful parties in patent litigation appeal, with 11% of winning patent holders and 8% of winning accused infringers filing an appeal.
Over the last ten years, the Federal Circuit has affirmed a significantly higher percentage of trial decisions where the patent holder lost.
Patent holder success at
District Court
22%
40%38%
Affirmed in total
Reversed/vacated/remanded
Mixed decision (*)
Patent holder loss at
District Court
13%
67%20%
(*) Mixed decisions are decisions in which the appeal was both affirmed in part and reversed, vacated or remanded in part.
Fig 21: Appeal outcome by success of patent holder in district court: 2006-2015
Appellate outcome: 2006–2015 Fig 21
PwC | 2018 Patent Litigation Study 17
It’s not surprising that the likelihood of a willful infringement finding increased after Halo v. Pulse, but it is intriguing that the average enhancement multiplier declined at the same time. Only time will tell whether this lower multiplier is the new reality or merely a random occurrence.
Willful infringement Fig 22
42 cases requested
36%
Pre- Halo
46 cases requested
54%
Post- Halo
Fig 22a: Willful infringement
Willful infringement found
Willful infringement not found
2.5x 2.1x
Fig 22b: Willful infringement
Pre- Halo
Post- Halo
1.0
0.5
2.0
2.5 2.5
1.5
1.0
0.5
2.0
1.5
Willfulness findings Damages multiplier
PwC | 2018 Patent Litigation Study 18
To study the trends related to patent decisions, PwC identified final decisions at summary judgment and trial recorded in two Lexis Advance databases, US District Court Cases and Jury Verdicts and Settlements, as well as in corresponding docket entries from LexisNexis CourtLink.
The study identified 2,570 District Court patent decisions issued since 1998. Some figures cited in this study have been rounded, therefore totals may not equal the sum of their components.
Definitions for important terms used throughout the study are listed here:
• Cases decided at summary judgment include those District Court patent infringement cases where a judge has issued a dispositive opinion regarding invalidity and/or infringement at summary judgment.
• Cases decided at trial include those District Court patent infringement cases where a decision was rendered by a judge or jury after trial.
• Successes are instances where a liability decision was made in favor of the patent holder.
• Time-to-trial is calculated from the complaint date to the first day of either the bench or jury trial for each case.
• A nonpracticing entity (NPE) is an entity that does not have the capability to design, manufacture, or distribute products with features protected by the patent.
• Median damages have been adjusted for inflation to 2017 US dollars.
Methodology
18
Authors:
Landan Ansell, Ronen Arad, Doug Branch, HyeYun Lee, Adil Pasha, Paul Robinson
Additionally, the following individuals contributed significantly to this study:
Abhishak Singh, Abigail Cariker, Adrian Fowler, Alexis Egidio, Andrew Breckel, Chloe Partsch, Chris Vatti, Fareed Yousif, Hanbi Lee, Jimmy Wang, Julia Chura, Matthew Rao, Roberta Bazotti Stelkens, Samantha Donovan, Sarah Jaffe, Sarah Stanley, Valarie Jeffries, Wyllesha Curry, Natasha Birch, Peter Adamo, Andrew Quinn
Contacts:
Doug BranchPartner(214) [email protected]
Landan AnsellDirector(678) [email protected]
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This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 42665-2018