Project Counsel ? Blog Archive ? Patents: enormous legal expense ...

Posted on May 19th, 2012 by projectcounsel

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19 May 2012- Much of the e-discovery work we do involves intellectual property, and it has involved us in both the ongoing global patent and copyright litigation wars as well as proactive reviews of internal processes related to e-discovery with an eye toward reducing risks and costs associated with future litigation or government investigations.?? This has also afforded us the opportunity to attend several World Intellectual Property Organization (WIPO) conferences on managing IP litigation, and the role played by e-discovery, as well as attending the recent?Mobile World Congress in Barcelona.

Ah, patents.? Developed to create more incentives for people to invest time and money in research and development, which in turn would advance technology.? But seemingly having morphed into patent wars that ? the cynics say ? have limited innovation as more and more money is spent on patent lawsuits instead of technological advancement.? According to the U.S. Patent and Trademark Office, an average of 2,500 patent infringement cases are filed per year.

And the money is big.? Google bought Motorola at $12.5 billion and its more than 17,000 mobile-related patents, and Facebook spent $550 million on patents from Microsoft to bolster its legal battle with Yahoo.

Note:? Twitter, on the other hand, has announced the Innovator?s Patent Agreement, promising not to use patents in a way that harms innovation.

Corporations are caught between Scylla and Charybdis, between incredible revenues ? and incredible legal fees.

An example:? Microsoft is involved in more than 60 patent infringement lawsuits, according to recent Securities and Exchange Commission filings.? Microsoft does not diluge what it spends on legal fees.? But a survey published by the American Intellectual Property Law Association? found that when $25 million was at risk, companies spent close to $5 million on legal fees.

Now, the math is not so straight forward.? If every Microsoft patent infringement case were worth $25 million or more, a conservative estimate would be $300 million in legal fees for Microsoft to fight battles over intellectual property.? But one suspects sometimes the legal fees are required.? Microsoft has estimated that if it were forced to pay the licensing fee that Motorola has demanded for its video compression and WiFi patents, it would cost the company $4 billion per year.? And no doubt all of this is a bonanza for lawyers. The Microsoft-Motorola case involves 27 attorneys at five law firms, as well as in-house counsel.

But patent licensing is also a huge source of revenue for companies.? Deloitte has estimated that software publishers generated $16.9 billion in revenue in 2010 from intellectual property licensing, which made up 82% of that industry?s revenue.

And the licensing deals are the biggie.? Android?s patent strength is increasingly under fire and with companies lining up for their share of licensing fees, many IP pundits see the platform headed off the tracks.? Just look at Microsoft and how it could be poised to turn Android into its next billion-dollar business if it can get enough Android licensees to agree to pay royalties due to alleged infringed use of Microsoft patents.? And in a similar vein, Oracle?s campaign although we?ll need to wait-and-see how the Oracle/Google litigation plays out.

Yes, a rise in attorneys? fees in IP cases will continue.? But as we learned at a recent WIPO conference in Geneva which focused on managing IP litigation (and the role played by e-discovery), this rise in costs has to be seen in context.??Most IP disputes now require a very high level of specialization, knowledge and market understanding in order to direct such cases.

Tags: e-discovery, ediscovery, global patent and copyright litigation wars, intellectual property, Microsoft, Motorola, patent, patent licensing, WIPO | Category Intellectual Property

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