The number of patent lawsuits declined 13% in 2014 and non-practicing entities were less successful than practicing entities, according to a study published May 20 by PricewaterhouseCoopers.
The consulting firm said the decline was the first since 2009 and was driven by the U.S. Supreme Court’s decision limiting the eligibility of software patents in Alice Corp. v. CLS Bank, according to a study by PricewaterhouseCoopers.
The decline also was in stark contrast to the 24% compound annual growth rate in the number of patents over the last five years. The number of patents granted by the U.S. Patent and Trademark Office increased 14%, suggesting a continued strong correlation (95%) between the number of patent cases filed and patents granted.
The 2014 median damages award in patent cases fell to $2 million, the second lowest level in 20 years. The annual median damages award between 1995 and 2014 ranged from $1.9 million to $17 million, with the overall median being $5.4 million.
Non-practicing entities continued to win larger awards than practicing entities as they have done since 1995. In the period between 2010 and 2014, NPEs won median awards of $8.9 million, more than four times the median award of $2 million for practicing entities.
To be sure, 52% of appealed cases in 2014 were modified in some way the study found and of those appealed to the U.S. Court of Appeals for the Federal Circuit to address damages, 80% were modified.
The overall success rate for practicing entities was 9% higher than for NPEs between 1995 and 2014 at 35% versus 26%. NPEs won only 4% of summary judgment rulings versus 10% for practicing entities. At trial, practicing entities were successful 67% of the time compared with 65% for NPEs.
NPEs had their highest success rates in the the federal district courts in Western Pennsylvania at 67%, Middle District of Florida at 63%, Northern District of Texas at 56%, Eastern District of Texas at 49% and Colorado at 43%.
The Eastern District of Texas led all district courts in the number of cases handled involving NPEs with 55. The Northern District of Illinois came in second with 36 cases, followed by the Southern District of New York with 34 cases, the Northern District of California with 31, and Delaware with 26.
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