2010 patent litigation study

The continued evolution of patent damages law

Patent litigation trends 1995-2009 and the impact of recent court decisions on damages.

As the world's largest corporations face increased threats of patent litigation from their competitors and from nonpracticing entities (NPEs), the debate over U.S. patent reform continues. One of the most widely discussed topics in the patent reform debate has been the issue of damages. Some view recent case law as unfairly limiting a patentee's ability to recover adequate compensation, whereas others believe the current law frequently results in excessive jury awards.

While the legislative process has slowly taken its course, the courts continue to address the link between patent damages and the value of the patented feature. Several recent court opinions have focused on the tension between apportionment arguments and the entire market value rule, the latter allowing for the recovery of damages based on an entire product's sales value even when the patented feature is only one component of that product. These decisions over the last year and a half indicate that courts are demonstrating an increased focus on linking damages awards to appropriate evidence regarding the economic value contributed by the patented technology.

Reflecting these developments, PwC has compiled and maintained a thorough database of patent damages awards (from 1980 through 2009), collecting information about patent holder success rates, time-to-trial statistics, and practicing versus nonpracticing entity statistics (all from 1995 through 2009). Based on this study, several observations can be made to help executives, legislators, and litigators assess their patent enforcement strategies, as well as the impact of NPEs.

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