Patent Litigation: Slow, Costly, Error-Prone

Patent Litigation: Slow, Costly, Error-Prone

Litigation between patent holders and those accused of infringement is resolved in federal district courts. These courts impose large, unproductive process costs that eventually hit consumers, and outcomes there vary widely depending on a number of legally irrelevant factors. It is long past time for Congress to address this.

First of all, some judges issue a "summary judgment" -- meaning a verdict without a full trial -- far more often than others do. A few even do this more than half the time. That may seem egocentric, but it may legitimately save costs and time.

At the opposite end of the spectrum are trials where a jury decides the award. While 24 percent of trials with damages during the years 1995 to 1999 were jury trials, that figure rose to 61 percent in the 2010-13 time frame. In the latter period, the median damage award was $4.3 million -- with jury trials giving a median of $15 million, compared to a paltry $400,000 for bench trials.

Further, getting a trial underway can take a long time. A "time to trial" of two to four years is not uncommon. Big time delays can warp litigants' view of what is a reasonable settlement. Some are more able to endure years without cash flow, and that may play a role in their decision to settle.

With anomalies like these, it can be tempting for the plaintiff's legal team to go court shopping. The payoff can be huge from getting the case heard before the right judge. Indeed, patent cases seem to pile up in particular courts: The district courts of Texas Eastern, Texas Northern, Florida Middle, and Delaware are atypically "favorable venues for patent holders with shorter time-to-trial, higher success rates and greater median damages awards."

A district-court decision isn't the end of the ordeal, however: A surprising 71 percent of district-court patent decisions are appealed to the Federal Circuit, and in 75 percent of those appeals, the higher court reverses at least part of the original decision. That means 53 percent of district-court decisions require some sort of correction. This likely stems not from attorney or judge ineptness but from other factors, like jury emotions and the vagueness of the law. We should be grateful that patent infringement is not a capital offense.

This area is ripe for reform. Something is very wrong when courts can't get it right more than half the time.

Alan Daley writes for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.

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