Monday, June 26, 2017

Gugliuzza & Lichtman on the Timing of Patent Litigation

Are patent cases being litigated too quickly or too slowly? Two recently posted articles tackle this problem from different angles:

Paul Gugliuzza's Quick Decisions in Patent Cases argues that patent litigation is "notoriously expensive and time consuming," but that there is a beneficial trend toward quicker decisions through practices such as pleadings-stage dismissals on patent eligibility grounds, post-grant revocation at the PTO, and heightened pleading requirements. These changes have been controversial, and Gugliuzza discusses ways each development might be further improved in terms of the overall tradeoff between accuracy and cost. But overall, Gugliuzza argues that the benefits of faster litigation resolution probably outweigh the downsides.

On the other hand, Doug Lichtman's Patient Patents begins with the provocative claim that "a large number of patent cases are today being litigated too quickly." His basic argument is straightforward: Delay is most costly in cases that potentially involve injunctions, but post-eBay, many patent plaintiffs are denied injunctive relief. In these cases, "delay takes a day for which the accused infringer would have been paying a court-ordered ongoing royalty and transforms it into a day for which the accused infringer will instead pay court-ordered backward-looking damages." Thus, these cases "are the ideal candidates for which to consider tailored, accuracy-enhancing litigation delay." This is not to say that delay is costless; perhaps most importantly, as Lichtman acknowledges, it "increases the duration of patent uncertainty." His point is simply that the optimal balance has been shifted by the increased prevalence of damages over injunctions.

Although these two articles might initially seem contradictory, they are really focused on different aspects of the cost-benefit analysis of litigation timing. Indeed, Gugliuzza notes and does not dispute Licthman's argument, but contends that it does not affect the majority of cases because "nearly seventy-five percent of successful patentees still obtain permanent injunctions, and that figure increases to eighty percent when PAEs are excluded." I think both are worth a read.

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