The Recorder (California) | June.04.2013
This article, authored by intellectual property partner Alex Chachkes, discusses the rising costs of patent litigation and why a patent small claims proceeding won't succeed in properly reforming the process. An excerpt from the article is included below.
There has been an immense surge in the number of patent-related lawsuits filed in the federal district courts and in the International Trade Commission in the past decade. The costs of responding to this wave of litigation are staggering: With about 4,000 lawsuits filed annually and an average cost of $5,500,000 per lawsuit, American companies spend about $22 billion per year on direct patent litigation costs. Many of these cases are brought by nonpracticing entities — entities that have no products, only patents on which to demand licenses and bring suit. No wonder there seems to be a growing consensus that something needs to be done — particularly for startups and thinly capitalized businesses that cannot afford to defend against these sorts of lawsuits.
One proposal to limit these costs that has received increasing attention lately is the "patent small claims proceeding." The U.S. Patent and Trademark Office recently requested comments from the bar on whether and how a PSCP should and could be implemented. See 77 Fed. Reg. 74, 830-31. In its Platonic form, this PSCP would be a forum that would hear small patent claims — e.g., claims under $1 million or $2 million — and strive to keep litigation costs low and in proportion with the diminished value of the claim. This would be an Article III judge operating under special rules, or perhaps an Article I judge operating under special statutory authority. The PSCP would be streamlined, with the cost cutting coming from having bench trials instead of jury trials and from streamlined discovery.