2015 Patent Litigation Study: A change in patentee fortunes

Overview

In a dramatic shift from recent years, which saw the annual growth in patent lawsuits average 20–30%, the number of cases filed in 2014 decreased by almost 13%. This decline in cases, the first year-over-year drop since 2009, largely results from the U.S. Supreme Court’s June 2014 decision in Alice Corp. v. CLS Bank, which raised the bar for software patentees to prove their claimed inventions were patentable subject matter. In contrast, the USPTO continued its sustained rapid growth in patent grants (10.3% CAGR since 2008), growing another 14% in 2014.

Other leading observations:

• Although the “mega” verdicts of recent years were missing, three 2014 cases resulted in damages awards between $250–500 million. Median damages award fell by 45% to $2.9 million in the most recent five-year period (2010–2014).
• Two-thirds of all cases were decided by juries in 2014. Patent holders have experienced higher trial success rates with juries than with the bench over the last two decades; and the median jury award over the last five years was 31x greater than median bench award.
• Nonpracticing entities (NPEs) continue to play a prominent role in patent litigation. As further detailed in the study, NPEs’ median damages award in recent years has been 4.5 times that of practicing entities.