Patent Suit Trends Aiding Infringers

A new study of patent litigation finds significant, troubling changes in U.S. patent litigation patterns

Republicans and conservatives tend to react in knee-jerk fashion to civil litigation. We reflexively react as though all civil lawsuits are tantamount to advertising ambulance-chaser lawyers who clog the courts with shady shakedown cases.

While there are plenty of sketchy attorneys playing a numbers game against corporate deep pockets, conservatives should be more discerning, more astute, more prudent, and differentiate between the dregs and the cream.

Indeed, much civil litigation is legitimate. Courts exist in large part to settle legal disputes between private parties.

Patent litigation is one such critically important category of civil lawsuits. Unlike copyright, patent law provides only civil, not criminal, penalties for infringement.

Patent owners’ only recourse to defend their intellectual property is civil litigation. At stake in these cases is the right to exclude anyone else from making, using, selling or importing their invention.

The inventors have already invested much in their invention: Time, money and other resources poured into research and development perfecting a working item that represents newly created property. Then there are the costs of commercializing an invention.

In exchange for exclusivity for a limited time, their patent has disclosed the invention’s details to the degree than someone else could make a functioning model of the invention. The patent (i.e., a deed) is supposed to secure exclusivity, enforceable only by litigation.

The patent litigation study by Marcum reports that patent case filings have fallen over recent years, from 6,497 in 2013 to 3,639 in 2022. This drop has occurred even after the 2011 America Invents Act antijoinder provision forced separation of infringer defendants into their own cases. Compared to the number of patents granted, only 1.7% of patents on average were involved in infringement litigation in 2013 to 2017; that percentage has fallen to a negligible 1%.

Damages awards in patent infringement cases have dropped, as well. Median damages that courts award in patent litigation only amount to $3.7 million. In just 22 percent of cases with damages awarded do court levy enhanced damages against infringers for willfulness.

Marcum confirms that awards of permanent injunction are less likely now. Courts awarded patent-owner plaintiffs 80 injunctions between 2008 and 2012—after the Supreme Court’s infamous 2006 eBay v. MercExchange ruling. Injunctive relief was granted in a mere 36 cases between 2018 and 2022.

Marcum's assessment also puts the lie to the patent infringers’ lobby’s “patent troll” propaganda--as though there were actually all these bad actors driving up a patent litigation explosion and preying on Big Tech “innovators.” In fact, nonpracticing entities, which are innovators that don’t make their own inventive products (e.g., R&D firms that, like most of the iconic American inventors, license their patents to manufacturers, and universities) were awarded only 23% of remedies against patent infringers from 2013 to 2022, including just 12 injunctions to NPEs.

These results demonstrate that enforcing patent rights of exclusivity through civil litigation today holds much less hope of bringing patent owners justice. U.S. patents have lost value while predatory infringement has put the gangsters in charge of IP. This development threatens property rights and U.S. innovation.

On World IP Day, Appreciate IP's Economic Benefits

World Intellectual Property Day, Friday, April 26, offers the opportunity to reflect on the importance of intellectual property rights to a healthy, functioning society.

Strong IP protections are vital not only for responding to pandemics and putting natural materials to constructive use for humankind’s benefit; they're also integral to a strong job market and economic growth.

The U.S. Patent and Trademark Office documents the tremendous blessings that IP-intensive industries bring to the U.S. economy. IP-intensive sectors accounted for 41% of domestic economic output in 2019.

IP-intensive industries provide 47 million U.S. jobs and support another 15.5 million jobs that supply those sectors—totaling 62.5 million or 44% of U.S. jobs. IP-intensive industries typically pay higher wages and provide employer-sponsored health insurance and retirement benefits.

The Bayh-Dole Act, which outlines specific instances in which—and only in which—the government can "march-in" and take over licensing of patents, "has yielded four decades of practical benefit from otherwise wasted government grants."

The Bayh-Dole Coalition has shared a graphic touting economic benefits from academic technology transfer, 1996-2020. Some of the highlights include:

• $1.9 trillion toward U.S. gross industrial output;

• $1 trillion in gross domestic product;

• 6.5 million jobs;

• 17,000 startups.

IP rights make the world go 'round. However, in recent years, we've seen how threats to intellectual property are threats to American innovation and our global leadership in fields like health care, AI, quantum computing and biotechnology.

A strong culture of IP rights is critical to the jobs available to Americans as well as innovations in biomedical sciences and creative industries that power our everyday lives.

Imagine, for a moment, you're a filmmaker. You and your crew—actors, writers, costume designers, caterers, and more—have worked for months to make a movie. Your movie then gets illegally uploaded to the Internet on pirate websites while the feature film is still in theaters.

Some people will avoid paying ticket prices to see in theaters what they can illegally stream online, virtually for free. Your studio loses money, and perhaps it can't pay all of the people who made your film possible—including you. This puts your (and your collaborators') next project in jeopardy.

That's the reality for a world without strong protections for IP. Films and video games aren't the only things threatened by piracy. Patents for innovative inventions and life-saving medications also stand at risk. Recent measures at the World Trade Organization and the World Intellectual Property Organization damage the security and strength of patents.

At the WTO, waiving the TRIPS Agreement for COVID-19 vaccine IP, then considering expansion of the waiver to IP of COVID diagnostics and therapeutics has threatened related patents by "set[ting] a reckless precedent for foreign expropriation of U.S. companies’ IP.” This WTO effort, led by South Africa and backed by the Biden administration, hinders innovation and opens the floodgates to future waivers of IP rights.

IP made the successful worldwide response to the pandemic possible. Waiving IP rights to invaluable medications and therapies doesn't help efforts—domestic or foreign—to respond to COVID-19 or future crises.

In fact, the U.S. International Trade Commission last year conducted a thorough, months-long investigation that provides no basis for expanding the TRIPS waiver to COVID diagnostics and therapeutics. The USITC found no indication that waiving TRIPS IP protections further is warranted. Rather, IP facilitated collaboration, making supply of COVID vaccines, diagnostics and therapeutics available, including to poor countries.

WIPO is supposed to support secure, reliable IP rights and to promote adoption of these property rights worldwide. Yet, WIPO recently proposed mandatory patent disclosure requirements on genetic resources. This proposal would weaken IP rights by requiring a patent applicant to disclose the source or origin of traditional knowledge and genetic resources used in an invention.

Rather, WIPO would cause the cost and burden on innovation to increase. It would force innovators to limit the scope of their discoveries to domestic genetic material. Such a restriction would foreclose access to the full breadth of what our planet has to offer for scientific and medical breakthroughs. A slower, less predictable, more expensive patent application process would follow. And that would discourage ingenuity and quash productive economic activity in the United States and elsewhere.

Clearly, it’s critical to America’s economic success, our job market, our emergency responsiveness and our continued leadership in innovation that we protect IP rights. Without strong IP protections, all that progress and innovation goes out the window.

Force-Feeding U.S. Electric Vehicles . . . Despite The Downsides

The Biden administration’s electric vehicle mandate has come—in the form of an Environmental Protection Agency emissions rule.

Biden’s EPA leaves no doubt that forcing internal-combustion-powered vehicles off the road is the ultimate goal. The rule dictates that no more than 30% of vehicles sold in 2032 may run on gasoline. The bureaucrats do this by throttling down the amount of tailpipe emissions. Car manufacturers will have to build four EVs for every internal-combustion vehicle by 2032.

The ugliest of ugly faces of the Administrative State hath spoken—and it denies consumer choice and competition, market-based production and product offerings. The iron fist of Big Government has slammed the table.

The U.S. government forcing private-sector companies to stop providing the types of vehicles American consumers want certainly is un-American and violates property rights on multiple levels.

How do we know that consumers don’t want EVs? The few early adopters pretty much all have EVs. And they’re wealthy. Which is critical because most EVs sold in the United States are Teslas or other luxury brands. Less than 8% of last year’s U.S. vehicle sales were EVs—which means more than 90% of 2023 autos sold were gas-powered or hybrid.

Car dealers see EVs occupy valuable space on the lot and in the showroom. EVs lose money for auto companies. What are selling are gas-engine trucks and cars and hybrids, which run on both electric and gas power.

Why don’t most Americans want EVs? They’re expensive. Charging their batteries costs more than a tank of gas, and is a lot slower. Their maintenance and repairs cost more. Resale value remains uncertain; used car lots have many EVs that they can’t unload.

EVs are less dependable. Consumers complain that EVs’ features such as door locks and window switches stop working, while batteries die faster in cold weather and some won’t charge. A Dallas doctor told the Wall Street Journal the family Tesla “often requires a full night of charging at home, and even then, its range on a single charge often fell below estimates displayed by the vehicle.” EV models have had recalls due to one malfunction or defect or another.

And there’s greater risk of EVs catching on fire.

A Consumer Reports survey last fall reported 79% more problems with EVs than consumers have had with vehicles powered by internal-combustion engines.

Then there’s the fraud of EVs being “environmentally friendly.” Mining the minerals and manufacturing the batteries cause particulate emissions, while the heavier, battery-operated EVs degrade roads, which pollutes.

EVs draw an unfair share of the electricity infrastructure, risking energy security and reliability while increasing energy consumption.

Holman Jenkins writes: “Norway has seen no decline in oil consumption related to EVs, though users receive thousands of dollars in annually recurring subsidies and EVs accounted [in 2022] for 64% of new-car sales.

“The reason is increased use and ownership of gas-powered cars, especially for trips that EVs aren’t suited for.

“Now comes an update from the natural-resource consultants Goehring & Rozencwajg that . . . [d]espite some of the greenest electricity on Earth, a Norwegian still needs to get 45 years of use out of his imported EV battery (expected life 15 years) to offset the global CO2 cost of producing it.”

Jenkins, an astute Journal columnist, shines the light on what Al Gore might call “inconvenient facts” for his and Biden’s hypocritical ecosanctimony. Consider: “[T]he vehicles you and I drive, while large in number, sit parked 95% of the time and play a minor role in U.S. transportation emissions.

“It elides the fact that U.S. transportation emissions themselves are a small and shrinking share of global emissions.

“On the friendliest assumptions, the Biden plan would reduce global emissions by 0.18%. But the friendly assumptions are false because . . . every electric vehicle doesn’t displace a conventional one, every electric mile driven doesn’t displace a gasoline mile.”

Then there’s the economics. They suck for EVs and steal from internal-combustion vehicle buyers. Established automakers lose tens of thousands of dollars on each EV they sell. So those companies hike the prices on popular, selling autos. Jenkins notes that “GM has been enjoying some highly profitable quarters thanks to five-figure markups on pickups.” News flash: It’s not just GM robbing Peter to pay Paul.

EV startups are burning money, and each sale comes at a loss. Many if not most could go bankrupt before the Biden EV mandate can save them.

This charade has become Detroit’s game, thanks to Obama, Biden, Califoney and ecozealots. These criminals are more Rube Goldberg than Milton Friedman. The damage they’re inflicting on Americans at such an exorbitant fiscal and social cost to achieve a negligible 0.18% reduction in global emissions is unconscionable.