Last year, the U.S. Supreme Court heard the highest proportion of intellectual property (IP) cases in history. According to a recent study by Lex Machina, a provider of legal analytics, the rise in patent litigation will continue.
In 2013, plaintiffs filed 6,092 new patent cases in U.S. District Courts, a 12.4% increase from 2012. The majority of patent lawsuits were filed against large technology companies, and the most prolific filers were non-practicing entities (NPEs). An NPE — better known as a “patent troll” is a person or company that derives most of its income from licensing patents rather than by developing or manufacturing a product or service.
NPEs have increasingly been involved in more patent assertions and activity over the past decade, leading to a rise in multi-defendant litigation. Only 128 patent cases out of the thousands filed actually went to trial in 2013, with a significant increase in settlement rates making this a profitable business for NPEs.
Another factor in the spike in patent litigation is a growing awareness of the value of IP, due in part to media coverage of cases involving household names. As a result, investors and boards of directors have a better understanding of IP and its value to business and are giving it more attention.
Organizations should create and implement programs to address IP issues in a way that will enable them to both protect their own patents and avoid exposure to liability from the infringement of a competitor’s.
These five steps are helpful to effectively managing patent issues:
Develop an IP policy. An IP policy should reflect the organization's business plan and include uniform policies and procedures for filing patent applications and perfecting other Intellectual Property rights . Consultation with IP counsel on all IP decisions is also essential.
Know what competitors are doing. Organizations should monitor competitors’ new products and services and the IP rights generated in connection with them so they will be aware of potential infringement issues.
Audit patent rights. Conduct an audit to determine exactly what patent rights are owned by the organization or in the process of being prepared and exactly what those patents cover.
Address IP in employment agreements. Include provisions acknowledging that all discoveries made during employment belong to the company and that the employee agrees to cooperate fully in the prosecution of patent applications and litigation.
Educate all personnel involved in the patent process. Employees should be trained to understand what patents are, how they need to be protected and how important proper documentation is for creating a valuable patent portfolio.
Comprehensive IP policies can be very complex, and it’s critical that organizations tailor them to their own particular needs. Providing intellectual property training to employees is an important way for organizations to protect their IP assets and avoid violations in the face of increasing litigation.