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Law Offices of David L. Hoffman

 

"TURNING NEW IDEAS, NAMES, PRODUCTS & COMPUTER PROGRAMS INTO POWERFUL INTELLECTUAL PROPERTY"


 

 

 

Newsletter 


Winter 2011
  

 

 PATENT LAWSUITS AND THE ECONOMY

 

            A recent trend is for "Non-Practicing Entities" (NPEs) also known as "patent trolls" to buy patents, and then sue other companies on the patented technology. Who does this benefit?

            The cost to defend a patent lawsuit as of 2004 was typically $1 million or more before trial, and $2.5 million through trial and appeal(s). According to a recent Forbes article, a high stakes patent suit today can cost $10 million to defend, the median patent damages award is $3.8 million (from 2001 to 2007), and fifty seven percent of trials are won by patent holders. Patent litigators can get as much as $1000 per hour.

            A study by Boston University (BU) law school found that "There are a lot of big losers from NPE litigation..." Only the patent litigators and of course the patent trolls win. Unfortunately, this creates a disincentive to innovate. Why? If you create a new company and/or a new product, you run a significantly greater risk of a patent suit. The targets are generally in the software and electronics industry. The recent patent reform act does nothing to stop these suits.

            What can be done? We could limit patent damages for NPEs. The U.S. Court of Appeal for the Federal Circuit (which hears all patent appeals) has already acted to help limit damages that could be obtained in patent suits under the "reasonable royalty" type of damages. NPEs will always fall under "reasonable royalty" (rather than typically much greater "lost profits") because NPEs by definition are non-practicing. They have no profits from the sale of patented product. We can also reform patent litigation in general to streamline it. Perhaps we can use domain name registration as an example. When you register a domain name, you agree to arbitration in the event of a domain name dispute. Can we set up a system whereby you agree to arbitration when you apply for a patent, should your patent issue, and should you decide to pursue an infringement?

Sincerely,

David Hoffman

Law Offices of David L. Hoffman

28494 Westinghouse Place, Suite 204

Valencia, California 91355

(661) 775-0300

(661) 775-9423 Fax

David@DLHpatent.com

DLHpatent.com

 

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Tip of the Month

 

 

DO A PATENT SEARCH

Any time you create a new product or service, it is a good idea to do a patent search even if you do not want to apply for patent protection. This can help reduce the risk of an infringement suit.