12 June 2013

Patent Litigation Histories

'Across Five Eras: Patent Enforcement in the United States 1929-2006' by Matthew Henry and John L. Turner uses univariate structural break analysis to estimate rates of patent enforcement in infringement suits in the United States over 1929-2006.
We separately estimate rates of validity and infringement for series constructed with district court and appellate court decisions. We find multiple structural breaks in series of both validity and infringement, and find that the breaks do not coincide. Our most reliable results suggest the rate of validity falls around 1939 and rises around 1983, and that the rate of infringement rises around 1951 and falls around 1990. We estimate an overall rate of winning on both validity and infringement to be between 27-29% for all years except for 1939-51 (when it falls to about 20%) and 1983-90 (when it rises to nearly 50%). ... 
[The] results lay out a sharp set of stylized facts to use in trying to understand the relation- ship between patenting, litigation and R&D. In light of these findings, it is interesting to note that the increase in the rate of patent validity in 1983 coincides with a surge in patenting and litigation, but the drop in the rate of patent infringement in 1990 leads to no similar reduction in patenting. Moreover, since 1990, we have seen the incidence and costs of patent litigation continue to grow (Bessen and Meurer 2008; Turner, Bessen, Neuhausler and Williams 2013). 
This suggests that the rate of patent validity may be a more important driver of patenting than the rate of patent infringement. Bolstering this argument, there is evidence for the impor- tance of the 1939 break in the rate of validity (for the rate of patenting) as well. Schmookler (1966, pp. 28-29) notes that from 1900-30, the number of technical engineers in the US econ- omy grew about five-fold, from 43,000 to 226,000. Contemporaneously, the number of patents quadrupled. Hence, the growth in patent roughly mirrors that in technical expertise. From 1938-54, the relationship between patents and technical know-how was far different. While the number of scientists, engineers and supporting personnel performing industrial research continued to explode, increasing six-fold, the number of corporate patents increased just 23%. 
In contrast, rates of infringement seem to have qualitatively different effects. It appears that, at least in the 1990s and 2000s, patentees’ willingness to initiate litigation has not been significantly dissuaded by a weaker doctrine of equivalents. This is also a period when non- practicing entity (NPE) litigation has flourished.