An NPE Update January 16, 2015 Governing

Transcript:An NPE Update January 16, 2015 Governing:
An NPE Update January 16, 2015 Governing Innovation: the law, economics, and political economy of patent systems Harvard University Daniel P. McCurdy, Senior Vice President, RPX Common Questions about NPEs Volume: Is NPE patent risk growing or shrinking? Who is most impacted? Severity: What is the cost? Source: What patents are being asserted? Where did they originate? Market: What is the status of patent sales? Economics: What are the economics of the NPE business model? NPE Defendants Backlog Down as Terminations Outpace Additions Source: RPX Research Methodology Notes: “Total active NPE defendants” is the total number of NPE case/active defendant pairings. “Backlog” is the number of total active NPE defendants at the end of a given year. For example, at the end of 2010 there were 4,659 total active NPE defendants. No One Is Immune ~2,000 Unique Companies Sued in 2014 Source: RPX Research Not Just a Big Company Problem Unique NPE Defendants Named (i.e. AT&T counted once) Total NPE Defendants Named (i.e. AT&T counted 65 times) Source: RPX Research More Litigation in Certain Sectors New Campaigns 2014 Defendants Added 2014 Source: RPX Research Common Questions about NPEs Volume: Is NPE patent risk growing? Who is most impacted? Severity: What is it costing the industry to resolve NPE suits? Source: What patents are being asserted? Where is their origin? Market: What is the state of the secondary market for patents? Economics: What are the economics of the NPE business model? NPEs Cost Industry ~$13B in 2013 Total Direct Costs of NPEs Source: RPX Research. RPX NPE Cost Study Report 2013 ~70% of NPE Cost Is Litigation Source: RPX Research. RPX NPE Cost Study Report 2013 Patent litigation Legal fees to outside counsel / vendors Settlements and judgments Non-litigation assertions Legal fees to outside counsel License fees Other NPE-related costs Patent acquisition Validity challenges outside of litigation Clearance searches 95%-tile $17.2M Wide Distribution of Resolution Costs Cost to Resolve an NPE Suit Source: RPX Research. RPX NPE Cost Study Report 2013 Median $520K Up to $500M+ 75%-tile $1.9M 25%-tile $150K Larger Companies Pay More to Resolve Suits Source: RPX Research. RPX NPE Cost Study Report 2013 Average Cost to Resolve Defendant Revenue Average Cost to Resolve (Excluding Suits >$10M) Defendant Revenue Legal Costs Generally Exceed Settlements Source: RPX Research. RPX NPE Cost Study Report 2013 Total Cost to Resolve Legal Cost Settlement Common Questions about NPEs Volume: Is NPE patent risk