Survey predicts big jump in IP litigation settlements 18 Jul 14
It seems that this is the survey season for the IP world. After Lex Machina’s debut damages report in June (as well as its first annual patent litigation report released in May) and PwC’s patent litigation survey published earlier this month, BTI Consulting has issued its own analysis of the IP market. There are a couple of points in the BTI study that are worth highlighting.
The general counsel at over 175 Fortune 1000 companies and IP decision makers at top spending organisations that were surveyed expect to see the number of IP disputes that they settle to more than double in the next year. In 2013-2014 respondents said they settled 15.4% of cases. They forecast that to jump to 36.3% in the next year.
Now, of course, we may not see an actual doubling in the number of disputes that are settled but, as BTI President Michael Rynowecer pointed out, the key is the shift in attitude that it reflects. “Our experience from other areas of litigation is that it’s directionally significant and represents a change in mindset,” he commented.
According to the BTI study, IP budgets are expected to see a modest increase of 1.1% to $8.6 billion, up from $8.5 billion this year and $8.35 billion in 2013. As in many other legal sectors, companies are now far more cost conscious when it comes to IP. “Three years ago the thinking was protect IP assets at any cost; now it’s we can protect them at reasonable cost,” Rynowecer remarked. “The market is clearly not collapsing but the goldrush is probably over and the mega-dollar cases are more limited.”
In terms of companies’ overall budgets, BTI found that licensing accounts for a fairly small amount at just 2.4%. That might be expected to increase slightly as companies move away from litigation and the settlement climate improves. However, as Rynowecer highlighted, successful licensing negotiations can play an outsized role in the financial contribution that an IP function makes to a company’s bottom line.
He also stressed that their conversations with companies suggested that much of the current hype around the threat of NPEs is overplayed. “NPEs are clearly out there but they’re not viewed as big a threat as they were’” he said. “In many cases they’ve become nuisances and a cost of doing business.”
This may also reflect a shift in attitude among parts of the NPE community. As we have reported in the last few months, an increasing number, including the likes of WiLAN, are trying to move away from a strategy that places a heavy emphasis on litigation. News that more companies are interested in pursuing settlements would certainly be welcomed by large parts of the NPE community.
Although BTI has carried out more than a dozen privately commissioned studies of the IP market, this is its first survey which it has released publicly.
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