Less than 5% of patent claims filed reach trial: report
Report finds that only small number of patent infringement cases reach trial | Costs of UK litigation cited by lawyers as key barrier | Mewburn Ellis | Finnegan | Haseltine Lake & Kempner | Bird & Bird.
Only a small percentage of patent claims filed in UK courts reach trial and only a third of these claimants achieve a successful outcome, a new report has revealed.
The findings, published by Mewburn Ellis yesterday, November 30, examines data collected between January 1, 2020 and December 1, 2021 in both the Patents Court and the Intellectual Property Enterprise Court (IPEC).
According to the results, only 5% of complaints concerning an alleged patent infringement filed in court reach trial.
Further, in the UK, a claimant can only be fully successful if the judge finds that their patent is both valid and infringed. The report found that in the Patents Court, only a third of claimants were successful on that basis, while invalidation in the IPEC was found to be highly likely (71%).
The results indicate the significant risk of patent litigation that goes all the way to trial for the claimant in terms both of financial cost and, in many cases, loss of the patent asset itself, according to the report.
A risky endeavour
Commenting on the findings, Sean Jauss, partner, solicitor, litigator and head of legal at Mewburn Ellis, underscored the challenges for the patent owner.
“The figures in this report indicate that patent litigation in England and Wales is a risky endeavour for the claimant, chiefly because a patent at trial is likely to be revoked for invalidity and ultimately lost.
“However, the vast majority of claims do not proceed to trial, either because the claim is weak or the claimant has strong infringement arguments and a robust validity position, which encourages settlement.
“It is important, therefore, for claimants and defendants to be aware of the risks and to develop litigation strategies that maximise the likelihood of a desirable outcome.”
The report further found that the majority (75%) of claims in the Patents Court were filed by large or very large multinational companies, but that small and medium-sized businesses made up a similar majority of claims in the IPEC.
There was also a split between the Patents Court and the IPEC in terms of claims by country. IPEC claimants mostly originated from the UK, while claims in the Patents Court came largely from US-based companies.
Also commenting on the findings, Nicholas Fox, partner in the London office at Finnegan, drew attention to the cost of litigation in the UK.
“UK patent litigation is and has always been significantly more expensive than litigation in continental Europe. The cost inevitably puts pressure on parties to reach settlement and it is and always has been the case that the vast majority of patent cases settle before they reach the court.
The costs of UK litigation, he added, also means that most cases which are litigated in the UK and which reach trial “either involve pharmaceutical clearing-the-way-actions or licensing actions in the telecoms field”, centring on fair, reasonable, and non-discriminatory (FRAND) terms.
Little statistical inference
“In the case of the former, the patents which are being attacked are always the final patents which give a pharmaceutical company an exclusive right to operate in the field which are frequently not the strongest of rights,” noted Fox.
“And given the high stakes involved in FRAND licensing actions, it is not surprising that defendants put in every effort to invalidate the patents involved in such suits,” he added.
However, such trends presented considerable drawbacks, he said.
“The combination of the small numbers of actions which are brought and the unrepresentative nature of patents involved in UK litigation means that relatively little statistical inference can be drawn from outcomes in these cases.”
Richard Kempner, partner and head of litigation at Haseltine Lake & Kempner, agreed that the costs of litigating UK patent infringement cases is prohibitive for many.
“In the UK, the loser pays the winner's costs. That very fact helps stop either party prosecuting or defending a bad case; after all, why would you want to pay not only your own legal fees but your opponent’s as well?” he queried.
London based litigation teams, he added, often quote very high sums of money to litigate UK patents.
“This can be £1 million, for example, per patent, per defendant. But it doesn't need to be that way and in the UK we benefit from the IPEC where we have had success both in prosecuting and defending UK patent litigation for under £250,000.”
Front-loading
According to Wouter Pors, partner at Bird & Bird, the UK situation also starkly contrasts with Continental Europe, especially the Netherlands and Germany, which favours ‘front-loaded proceedings’.
“Most patent cases are handled in the so-called accelerated regime. They start with a writ of summons, the defendant files a Statement of Defence, which normally contains a counterclaim; the claimant then files a Statement of Defence to the counterclaim and then the case goes to trial. The trial hearing takes less than a day,” he explained.
By contrast the report found that in the period under examination, proceedings in the Patents Court tended to take 18 months, whereas in the IPEC they took 22 months.
“Indeed, litigating in the UK is more expensive, but the procedure is also cut up in stages and parties may reconsider whether they want to continue or settle at any stage in the litigation,” Pors noted.
And Finnegan’s Fox added that, given these issues particular to the UK, the claimant determined to pursue patent litigation needs to find the right formula to ensure success and evade a risk-dominated lawsuit.
“Spending more time in preparing and prosecuting patents on the best inventions will often pay better dividends than a scatter-gun approach, which treats patent protection simply as a numbers game,” he explained.
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories sent like this straight to your inbox.
Today’s top stories
