Patent-litigation costs nosedive in the US

For a particular type of litigation, costs for cases with more than US$25m at stake dropped 78%

Patent-litigation costs nosedive in the US
The cost of patent litigation in the US has dropped precipitously over the last two years, a report from Bloomberg Law said.

The American Intellectual Property Law Association’s (AIPLA) “2017 Report of the Economic Survey,” a copy of which was obtained by the publication, shows that the median overall cost of a patent infringement case involving risk of US$1m to $10m has dropped to US$1.7m in 2017, a 47% decline from 2015. The cost for a case with less than US$1m at stake fell 27% over the last two years to US$800,000 in 2017.

For a particular type of case, those that are brought to court under the Hatch-Watchman Act that concerns generic drug market approval, the median cost for a case with more than US$25m at stake nosedived 78% from 2015 to $1.8m in 2017. For a case under this law with less than US$10m at risk, the cost dropped 74% to US$706,000.

For defence against non-practicing entities, or holding companies that don’t make products or offer a service but hold intellectual property, cases that involve more than US$25m in risk declined 45% from 2015 to US$3.3m in 2017. Cost of cases under this category with less than US$25m in risk decreased 39% to US$2m.

Several factors have brought about the downtrend, Bloomberg said. A lawyer the publication talked to said that more and more litigants are challenging patents at the US Patent and Trademark Office using the body’s Patent Trial and Appeal Board (PTAB), which was created by the America Invents Act of 2011.

In addition to being able to go through “inter partes reviews” (IPR) at the PTAB, more patent holders are also increasingly using “motions to dismiss under Section 101 of the Patent Act,” which are known as “Alice motions” after the US Supreme Court’s Alice Corp. v. CLS Bank Int’l ruling in 2014.

The cost to file IPRs increased, however, from 2015 to 2017. The median cost rose 25% to US100,000. Nonetheless, the median cost of a PTAB hearing declined 9% to US$250,000 during the period.

Companies are now also increasingly controlling costs, another lawyer said. He added that there has been an increase in cases where at least one party is under an alternative fee arrangement.

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