COVID-19 & The Continued Influx of Patent Litigation
The onset of the COVID-19 pandemic in 2020 brought about an influx of patent related litigation. Experts postulate that both the financial pressures related to the pandemic and the increasing strength of the technology sector sparked this increase in litigation. Now, almost two years after the start of the pandemic, this surge continues and could be considered a new normal.
A report from Aon PLC has found a 15% increase in patent cases since 2019, with steady growth occurring through the first three quarters of 2021. Aon states this increase in litigation can be traced back to March 2020, when COVID lockdowns were first enacted. According to the report, patent litigation has begun to level out; however, there was a noticeable spike in filings throughout 2021.
Aon found that at least 58% of new patent lawsuits filed during the first three quarters of 2021 originate from companies that own patents but don’t produce their own products. Beyond that trend, some of the largest filers include Pfizer, Canon and Cedar Lane Technologies, the latter of which filed at least 75 new lawsuits this year alone.
Between January and September of 2021 there have been 3,087 new federal cases detected, a 1.6% increase from the same period in 2020. The most notable finding from the report is the 15% increase in cases when compared to 2019, which represented a five-year low for patent litigation.
Research from IPWatchdog takes a different perspective. Despite the apparent influx of cases, most never actually make it to trial and many are terminated. “The real growth in patent litigation over the last 40 years has taken place before trial. Between 1980 and 2020, the number of patent cases reaching trial ranged between a low of 63 (in the COVID-19 affect FY 2020) but was otherwise at a low of 64 (in FY 2019) and a high of 164 (in FY 2016).”
A report from Burford hypothesizes that global businesses of all sizes are more compelled to purse IP litigation as a method of offsetting the impacts of recession. Budget shortfalls could very well inspire firms to look towards litigation as a source of revenue. Furthermore, as businesses have been forced to shift operations into the digital space, technology becomes more valuable and patent holders strive to make the most of their patent portfolios.
According to Peter Holz, the head of Aon’s Commercial IP Risk Division, “Many people believe the surge in litigations is a result of companies looking for alternative ways to generate revenue and monetize assets. We have [seen] the trend of litigation increases correlated with downturns in the economy before and would expect this trend to continue in the coming months.”
Despite this increase in litigation, certain practice areas have experienced the boom more than others. The automotive, software and electronics industries are among the most litigated, while the pharmaceutical industry experienced a downtrend in new cases compared to 2020. While these trends remain intact, the economy likely will impact whether patent litigation continues to boom. Should the economy move further into a recession, some firms might wait for a more stable time to initiate long-term litigation.
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