By Malathi Nayak, Bloomberg BNA
Patent litigation costs declined drastically from 2015 to 2017, as litigants controlled expenses and increasingly skipped courtrooms to challenge a patent’s validity at the Patent and Trademark Office, IP attorneys told Bloomberg BNA.
The median overall cost for a patent infringement case with $1 million to $10 million at stake declined 47 percent from 2015 to $1.7 million in 2017, according to the American Intellectual Property Law Association’s “2017 Report of the Economic Survey” obtained by Bloomberg BNA.
The annual survey gathers data such as annual incomes and billing rates of IP law practitioners. In cases with below $1 million at stake, the median cost fell 27 percent from 2015 to $800,000 in 2017, the survey that’s based on responses from 1,160 AIPLA members to an online questionnaire shows.
The survey of litigation cost included infringement lawsuits filed in U.S. courts, challenges at the PTO, and the International Trade Commission. This year’s survey expanded categories in litigation cost questions to include initial case management; discovery, motions and claim construction; pre-trial, post-trial, and appeal; and mediation costs.
“Litigation used to be called the ‘sport of kings’ because it cost so much,” Stephen Y. Chow, an intellectual property and business litigation partner at Burns & Levinson LLP in Boston, said. But the ability to challenge patents at the PTO’s Patent Trial and Appeal Board, as created by the America Invents Act of 2011, has shrunk litigation volume and lowered costs, Chow said.
The PTAB process, known as inter partes review, gives someone accused of infringing a patent another route, in addition to court, for defending themselves by attacking a patent’s validity. With the availability of this less-expensive route, “some of the older knock down and fight to the death litigation is not happening,” Chow said.
Hatch-Waxman Case Costs Drop
Pharmaceutical industry litigation under the Hatch-Waxman Act specifically saw the largest drop in costs, the survey shows. The Act provides a legal framework for generic drug market approval and the resolution of related patent disputes.
Pharmaceutical patent litigation involving Hatch-Waxman Act lawsuits saw median litigation costs in cases involving risk over $25 million fall 78 percent to $1.8 million in 2017 from 2015, the survey says. Moreover, cases with risk less than $10 million fell 74 percent to $706,000 in 2017 from 2015.
Pay-for-delay or reverse payment settlements, which are patent litigation settlements that generally involve payments from branded drug companies to generic drug companies in exchange for keeping the generic off the market, could be driving litigation and related costs down in the pharmaceutical industry, Chow said. Pay-for-delay settlements are a major concern for antitrust regulators.
“Things get negotiated faster now,” Chow said.
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