shutterstock_397699138_tashatuvango
9 August 2019PatentsSarah Morgan

Larger and more complex claims driving IP litigation spend: MoFo

IP litigation matters are becoming more complex and riskier, with nearly one in five being classified as bet-the-company or high risk, according to the latest report from law firm Morrison & Foerster.

The firm’s “Benchmarking IP Litigation 2019” report noted that IP litigation spending by large companies in the US has skyrocketed, nearly doubling in 15 years, from an annual spend of $1.7 billion in 2005 to $3.3 billion in 2019.

Morrison & Foerster commissioned in-depth interviews with IP legal decision-makers from 53 companies with at least $750 million in revenue.

Between 2005 and 2010, spending ballooned by 42% but has since slowed. Between 2010 and 2015, the rate of growth  increased 14%, and 15% between 2016 and current expected levels in 2019. MoFo attributes the rising spend to two factors: larger claims and the increased complexity of claims.

“These large claims are increasing the exposure that companies face, which appears to be causing them to spend more resources defending themselves. In bet-the-company cases, the average exposure for large companies is over $1 billion, with the high end at $2 billion,” said the law firm.

As claims have grown, so have awards in litigated cases. A 2018 report from PwC found that the median damages award for patent infringement in 2017 was $10.2 million, an increase from $6.1 million in 2016.

MoFo said that patent infringement litigation is becoming more complex, covering new innovations and developing technologies. Concurrently, plaintiffs are more aggressive, which forces companies to defend against claims involving numerous sources of alleged infringement.

“It is common for plaintiffs today to assert multiple claims for multiple patents in one lawsuit. This strategy can reduce the risk that a lawsuit will be dismissed based on inter partes review. The more patents asserted, the less likely it is that a lawsuit will be dismissed in its entirety,” said the report.

The multijurisdictional nature of matters also plays a role in the growing complexity, with companies needing to “locate and hire counsel around the world and to develop a cohesive strategy across markets”.

While spending has increased, the number of litigation matters that companies are managing has fallen by 27%, from 15 matters on average in 2015 to 11 matters in 2019.

The decline in matters follows a string of US Supreme Court decisions, including TC Heartland v Kraft and Alice v CLS Bank, that have generally made it tougher on plaintiffs in patent litigation, said the law firm.

According to MoFo 40% of IP litigation decision-makers said that TC Heartland had been helpful to their companies.

The future

Survey respondents predict that the next wave of litigation will be fueled by increased activity outside of the US. The IP decision-makers indicated that nearly 70% of new matters against their companies over a recent (unspecified) 12-month period had been filed outside the country.

Genetics and biosimilars were among the industries that respondents believe are likely to see more litigation in the near future.

In 2017, the US Supreme Court addressed some of the issues presented by biosimilars under the Biologics Price Competition and Innovation Act (BPCIA) in Amgen v Sandoz.

However, despite clarifications, more disputes around biosimilars are emerging. “Last year saw a record number of new BPCIA suits filed in US  federal district courts,” said MoFo.

Autonomous technology, artificial intelligence, medical devices, and internet streaming are other areas respondents expect to generate litigation.

Did you enjoy reading this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.

Today's top stories:

Apple requests en banc rehearing in $440m suit after VirnetX claims invalidated

USPTO warns ‘bad actors’ are changing attorney records

UPC on hold pending Brexit: Germany

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Adrian Tapping at atapping@newtonmedia.co.uk


More on this story

Copyright
19 October 2022   California-based litigation firm Durie Tangri is to join Morrison Foerster, strengthening Morrison Foerster’s technology and life sciences practices.