In the News Corporate Counsel

Patent Litigation Survey: The Numbers Just Keep Climbing

01 November 2014

In 2013, the number of patent litigation lawsuits filed in U.S. district court rose yet again, demonstrating that companies will do whatever it takes to protect their intellectual property. And nonpracticing entities, commonly referred to as patent trolls, played a hefty hand in that increase.

All this meant plenty of work for the law firms chosen to file or defend patent suits. Many of those that made Corporate Counsel's 2014 Patent Litigation Survey list, which ranks law firms according to how many federal district court patent suits they handled in 2013, appear high on the list every year. But in some cases there has been slight movement in the rankings.

As it has for the past 11 years, the IP firm Fish & Richardson topped Corporate Counsel's survey, handling almost 200 cases-more than any other firm. Finnegan, Henderson, Farabow, Garrett & Dunner once again ranked second, with 103. DLA Piper, which ranked fifth last year, moved up to the number three spot.

More dramatic movement took place further down the list. Akin Gump Strauss Hauer & Feld, which was 18th in 2012, moved up to sixth in 2013, handling 83 cases. Intellectual property boutique firm Knobbe, Martens, Olson & Bear leaped to the No. 7 spot in 2013, with 82 cases. It was 23rd in 2012. And Latham & Watkins, with 77 cases in 2013, ranked eighth, compared with its No. 16 spot in 2012.

But no matter the ranking, the totals reflect just how pervasive patent litigation has become. "Companies have gotten more sophisticated about IP," said Steve Zager, who heads the IP practice at Akin Gump. "They're no longer afraid to go to trial to defend or assert their IP assets."

Indeed, 6,092 new patent lawsuits were filed in 2013, compared with 5,418 new cases filed in 2012, according to Lex Machina's 2013 Patent Litigation Year in Review. Most of them were filed in the Eastern District of Texas and the District of Delaware.

And not surprisingly, nonpracticing entities (NPEs) were a major factor in those cases, filing 67 percent of all new patent infringement lawsuits in 2013, according to the RPX Corporation's 2013 NPE Litigation Report.

"We saw troll litigation increase across different industries," says John Sganga, chair of Knobbe's litigation practice. "There were a lot of questionable NPE suits out there."

Interestingly, only about 20 percent of identified decisions in 2013 involved NPE patent holders, according to PricewaterhouseCoopers' 2014 Patent Litigation Survey, reflecting the much higher tendency for NPE-filed cases to settle or be dismissed. Patent suits were filed against a variety of different industries, with consumer products leading the way, followed by pharmaceuticals and computer hardware and electronics.

Abbreviated New Drug Application (ANDA) litigation continued to grow, a fact that helped explain Knobbe's notable jump in the rankings. "Our ANDAPharma practice is quite extensive," Sganga says, noting that Knobbe represents many generic drug producers.

Who's being sued? Most lawsuit targets tend to be larger, stable companies, which helped give Akin Gump its boost, says Zager. The firm has represented such companies as Lenovo Inc., Johnson & Johnson, HTC Corporation, Samsung Electronics Co. and Google Inc.

While the continued rise in the number of patent suits filed last year may not be surprising, there was one significant change in 2013: The "mega" verdicts of prior years all but disappeared. In 2012, three cases resulted in damages awards of more than $1 billion.

But in 2013 the largest new award totaled just over $200 million, according to PwC's report. (There were larger awards, but they resulted from a retrial of damages related to Apple v. Samsung litigation originally tried in 2012).

Monetary awards from patent lawsuits generally decreased, but NPEs in 2013 still found litigation very worthwhile. In fact, the median award earned by patent trolls was three times higher than the median award given in competitor vs. competitor lawsuits, according to PwC.

The snapshot from 2013, however, does not necessarily reflect the current reality. This year the U.S. Supreme Court heard six patent cases and made rulings that could gradually change the litigation landscape.

The justices' rulings in the spring of 2014 in Octane Fitness v. Icon Health & Fitness, and in Highmark v. Allcare Health Management Systems, for example, gave district court judges more leeway in awarding attorney fees to the prevailing party-a move that raises the stakes for patent trolls and could discourage them from pursuing litigation.

And the court's recent decision in Alice v. CLS Bank, which clarified the question of what qualifies as patentable subject matter, almost immediately resulted in the invalidation of numerous patents. The justice's ruling could deter companies- especially patent trolls-from asserting weak patents that would not likely hold up under the new standard.

Companies also have a relatively new tool in their arsenal to try to invalidate patents, and this, too, could deter trolls: Increasingly, companies are filing petitions for review with the Patent Trial and Appeal Board (PTAB), which under the patent law passed in 2011 is authorized to examine a patent's claims and issue a ruling on validity, usually within a year.

Still, there were serious and significant attempts at legislative patent reform that began in 2013 and were suddenly and unexpectedly abandoned in 2014. Some attorneys believe the new Congress may resume the effort next year, but they say the need for reform is less urgent than it was a year ago.

Other attorneys concede that there is still room for improvement in the patent system. But they stress that lawmakers should be cautious. "Some change would be good, says Sganga. "But it's important that the pendulum not swing too far, or it could hurt legitimate patent owners."

So with all the gradual changes taking place, should we expect to see the number of patent case filings diminish next year?

Don't count on it, says Zager. Patent trolls are still getting a lot of money- not just from litigation but also from private equity, he says. There is still a large incentive for trolls to find more patents, and more corporations will figure out that they, too, can turn their patents into money-producing assets.

"Patent litigation won't diminish," Zager says. "Just follow the money."

Who’s Doing the Work

The firms that sue over and defend America's patents

WHO'S DOING THE WORK
RANK 2014	RANK 2013	FIRM NAME	DEFENDANT	PLAINTIFF	TOTAL DISTRICT COURT CASES
1	1	Fish	141	58	199
2	2	Finnegan	49	54	103
3	5	DLA Piper	91	9	100
4	2	Kirkland	74	18	92
5	9	Perkins Coie	64	20	84
6	18	Akin Gump	82	1	83
7	7	Alston & Bird	71	11	82
7	23	Knobbe Martens	56	26	82
9	16	Latham	61	16	77
10	13	Kilpatrick Townsend	60	15	75
11	8	Greenberg Traurig	62	12	74
12	4	Winston & Strawn	60	12	72
13	21	Jones Day	56	14	70
14	17	Foley	46	22	68
15	33	Morgan Lewis	54	13	67
16	14	Morrison & Foerster	52	11	63
16	37	Sidley	47	16	63
18	NA	Duane Morris	53	9	62
19	18	McKool Smith	29	32	61
20	5	Cooley	39	21	60
21	15	Baker Botts	49	9	58
22	18	McDermott	47	10	57
23	11	Orrick	46	10	56
23	21	Quinn Emanuel	39	17	56
23	27	Wilson Sonsini	47	9	56

Practices