Patent Compliance

Technology companies understand that one of their greatest operational risks is being successfully sued for patent infringement. Patents represent a large and persistent strategic threat to operating companies. A successful patent infringement lawsuit can destroy profit margins, eliminate bargaining power, divert valuable resources, and distract executives from critical tasks.

While companies understand that they must actively manage the creation of their own patent assets, many have failed to fully appreciate, and address, the magnitude of the liability threat posed by third party patents. Given the number of patent lawsuits filed annually and the median amount at risk in these lawsuits, the total annual liability exposure to US companies from patent infringement lawsuits exceeds $35 billion dollars.

The patent infringement liability exposure figure does not take into account, however, the costs of distracted management, opportunity costs, or the value of license fees being paid out annually for lawsuits filed and concluded in prior years. Moreover, it does not capture the depth of the trend. Patent infringement lawsuits are growing three times faster than non-patent civil suits. In 1991, over 1178 patent suits were filed. In the year 2000, 2486 suits were filed. Awards have also increased. Total patent infringement damages awarded in the 1990s were double the total awarded in the 1980s, far exceeding the cumulative inflation rate of approximately 30 percent. Additionally, the cumulative average of all awards from 1996 to 1999 was 55 percent higher than the cumulative average of all awards from 1992 to 1995.

With patent infringement lawsuits becoming a business reality, it is an absolute imperative for companies to understand the patent landscape within which they are expected to compete. Managers must be empowered to efficiently identify potential threats and opportunities. Engineers must be empowered to efficiently screen their designs to avoid creating infringing products and services.

Patent compliance is, however, one of the last major areas of liability that does not have an established best practices approach and is addressed more by loose rules of thumb and outmoded conventional wisdom as opposed to clearly defined methodologies. In the absence of cost-effective managerial and informational tools that enable an efficient liability management process, companies have often had no choice but to ignore the issue. Consequently, patent compliance is one of the most difficult to manage operational processes and patent infringement liability looms as one of the most difficult to mitigate operational risks.

As leaders in the Patent Compliance market, we provide a set of products that:
     • Empower your engineers to create infringement-free designs;
     • Enable your attorneys to conduct highly focused, relevant analyses; and
     • Educate your executives on what patent opportunities exist in the market.

We look forward to hearing from you. Please contact us at info@patentmetrix.com. To download our white paper “Mitigating Patent Infringement Liability—A Best Practices Approach”, please click here.