Patent litigation has growing impact on bottom line

Record number of patent suits were filed last year.

Companies’ patent litigation costs continue to rise, and the number of patent suits filed each year continues to grow, according to PricewaterhouseCoopers’ (PwC) annual study on patent litigation, which suggests such litigation will play an increasingly important role in shaping companies’ bottom lines.

A record 4,015 patent actions were filed in 2011, with the annual growth in patent actions averaging 6.4% since 1991, according to PwC. But median damage awards are falling, though awards to non-practicing entities (NPEs)—plaintiffs who never intend to produce the patented products—have nearly doubled, the study finds.

In some cases, such acquisitions enable companies to protect against patent lawsuits. But NPEs—or patent trolls—also can use patent purchases to wring awards out of companies.

Robin Feldman, a professor at the University of California’s Hastings College of the Law and author of “Rethinking Patent Rights,” says the PwC study shows patent litigation continues to create significant risks for companies, with the higher awards paid to NPEs especially noteworthy.

John Hintze

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