|Patent litigation can cost you ...|
Addressing the RPX findings, Wild conceded that, prima facie, even the mere $12.2 billion sum the defensive aggregator said operating companies faced as a result of NPE litigation was still pretty large. However, drilling down to take a look at where the costs actually come from, it was soon apparent that a large part of those costs was incurred as a consequence of decisions that operating companies themselves have taken ("self-inflicted wounds"). Wild continued:
" ... 70% of the $12.2 billion for 2014 (around $8.5 billion) was incurred because operating companies either agreed pre-trial to accept that they were infringing NPE patents or were found at trial to be infringers. Of course, some may have settled just to make a suit go away, but, generally speaking, if the operating companies concerned had not used NPE patents without authorisation they would not have needed to fork out the money they did. Put another way, the expense of fighting an NPE suit is generally dwarfed by the cost of being found out using NPE IP without permission. And it’s hard to see why NPEs should be blamed and demonised for owning stuff that other people have decided to take without asking.These figures -- and the legal and commercial context in which they are calculated -- offer a good deal of food for thought, with the proviso that they are derived from competing methods of establishing how much patent litigation costs industry in the United States. The unique combination of conditions that pertain in that jurisdiction is not replicated elsewhere.
So, based on the RPX figures what we can conclude is that infringing NPE patents led operating companies to pay out $8.5 billion to NPEs in 2014. Other direct NPE related costs – including legal fees and agreeing licensing deals pre-litigation – amounted to a further $3.7 billion. The lesson here, it seems to me, is not that NPEs are wicked, but that getting caught stealing their IP is going to cost you a good deal of money".
It would be good to know the extent to which the patent litigation rulings and pre-trial settlements affect infringements and licences that govern territories outside the United States as well as within it. There is a good argument for suggesting that much of the cost of establishing liability and setting royalty rights for the non-US versions of some patents is incurred solely in the US. In an increasingly global market, with technologies bundled into packages that can create technical standards with international effect, should we be factoring in the global savings that can be made by litigating patents in the US as well as the costs incurred?