“Last year marked the most dramatic change to the U.S. patent system in nearly six decades, with the passage of the Leahy-Smith America Invents Act (AIA), which converted the patent system from a ‘first to invent’ to a ‘first inventor to file’ system,” says a new report by PricewaterhouseCoopers. “The AIA ... indeed brought significant changes in certain areas. But it did not address the calculation of damages in patent infringement matters,” as prior drafts of the bill suggested. Nor did it help reduce the number of patent infringement filings.
Indeed, according to the PwC 2012 Patent Litigation Study, patent holders filed over 4,000 infringement claims in 2011—the highest number recorded since the annual study began (in 1980)—and a 22% jump over the previous year. Additional highlights of the 2012 PwC study:
- Expect more demands for jury trials. From 2006 to 2011, the annual median damages award was $4 million; however, the median jury award during the same time amounted to more than 20 times the median bench award;
- Expect lower awards. From 1995 to 2011, the annual median award ranged from $1.9 million to $16.1 million; divided into thirds, the median damages award over the most recent five-year period (2006 to 2011) represents the lowest relative point, falling to less than half of the median award between 2001 and 2005; and
- Expect royalty claims to continue. Reasonable royalties “remain the predominant measure” of recovery, representing more than 80% of patent damages awards over the past six years;
- Expect continued scrutiny from the courts. The absence of reform in the damages area means the courts will continue to play the primary role in determining the methods and measure of patent infringement remedies—as evidenced by the Federal Circuit’s rejection of the 25% rule of thumb and its tightening of the requirements to prove reasonable royalty damages.
Patent attorneys and IP experts “should monitor ongoing rulings that could affect damages opinions and methodologies,” the PwC report advises.
Expect to find the most current rulings on IP damages at BVLaw.
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