ANNUAL GLOBAL PATENT LITIGATION REPORT 2014,

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1 //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// ANNUAL GLOBAL PATENT LITIGATION REPORT 2014, Patent, Trademark & Copyright Journal Global IP Project

2 S-3 GLOBAL IP PROJECT: Annual Global Patent Litigation Report 2014 Global Trends Country Spotlight A. Alleged Infringers Are Becoming More Proactive... S-5 B. The Trend Toward IP-Specialty Courts Continues... S-5 C. The Unified Patent Court (UPC) May Lead to Increased Forum Shopping in Europe... S-7 D. Litigation in China Continues To Increase and Leads a Global Movement of Patent Litigation to Asia... S-7 E. America Invents Act (AIA) Has Given U.S. Litigation a More Bifurcated Appearance... S-7 F. The Negative Climate in the U.S. for Non- Practicing Entities (NPEs) and the Availability of Injunctive Relief and Profits Damages Abroad Suggest NPEs Will Begin to Look Outside the U.S.... S-7 Global Patent Litigation Data A. Comparison of Country Patent Litigation Systems... S-7 B. Annual Patent Litigation Filings... S-9 C. Patent Owner Infringement and Validity Win Rates... S-13 D. Largest Damage Awards Globally... S-13 E. Most Patent Owner-Friendly Courts in the World Using Objective Metrics... S-20 F. Most Patentee Owner-Unfriendly Courts in the World Using Objective Metrics... S-20 G. Comparative Patentee Win Rates by Country by Industry (Infringement Win Rate Only in Bifurcated Countries)... S-20 A. Germany... S Patent Infringement and Validity Win Rates... S Time From Filing to Decision on the Merits... S Remedies... S-33 B. China... S Patent Infringement and Validity Win Rates... S Time From Filing to Decision on the Merits... S Remedies... S-34 C. United States... S Patent Infringement and Validity Win Rates... S Time From Filing to Decision on the Merits... S Remedies... S-42 Methodology and Data Sources Explanation... S-42 Global IP Project Participating Firms and Attorneys... S-43 Reproduced with permission from BNA s Patent, Trademark & Copyright Journal, 89 PTCJ S-5, 2/13/15. Copyright 2015 The Bureau of National Affairs, Inc. ( ) PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

3 S-4 LIST OF EXHIBITS 1. First-Instance Patent Litigation Filings in China... S-6 2. U.S. First-Instance Patent Litigation Filings... S-6 3. U.S. Ex Parte Reexamination Petition Filings... S-8 4. U.S. Inter Partes Review Petition Filings... S-8 5. Comparison of Country Patent Litigation Systems.. S Annual Judicial Patent Infringement Litigation Filings for Category 1 Countries ( Annual Patent Litigation Filings)... S Annual Judicial Patent Infringement Litigation Filings for Category 2 Countries ( Annual Patent Litigation Filings)... S Annual Judicial Patent Infringement Litigation Filings for Category 3 Countries (501+ Annual Patent Litigation Filings)... S Busiest Court and Percentage of Cases Filed Going Through to Decision on the Merits... S Patent Owner Infringement Win Rates in First-Instance Patent Infringement Litigation Decisions on the Merits ( )... S-15 10A. Patent Owner Infringement Win Rates in First-Instance Patent Infringement Litigation Decisions on the Merits ( ) by Unified and Bifurcated Systems... S-15 10B. Patent Owner Infringement Win Rates in First-Instance Patent Infringement Litigation Decisions on the Merits ( ) by Common Law and Civil Law Systems.... S Patent Owner Validity Win Rates ( )... S Largest Damage Awards Globally... S Most Patent Owner-Friendly Courts in the World Using Objective Metrics... S Most Patentee Owner-Unfriendly Courts in the World Using Objective Metrics... S Biotechnology Patentee Win Rate... S Chemical/Materials Engineering Patentee Win Rate... S Electrical Patentee Win Rate... S Mechanical Patentee Win Rate... S Pharmaceutical Patentee Win Rate... S Medical Device Patentee Win Rate... S Computer Hardware/Software Patentee Win Rate... S Semiconductor Patentee Win Rate... S Other Patentee Win Rate... S Bifurcation of Patent Infringement Cases From the Düsseldorf First-Instance Court, S Bifurcation of Patent Infringement Cases from the Düsseldorf First-Instance Court, 2012, Invention Patents Only... S Patent Validation Rate for Invention Patents That Have a Patent Infringement Case Decided by the Düsseldorf First-Instance Court in S Comparing Validation Rates Between European Patent Office (EPO) Opposition Actions and BPG Cancellation Actions, in 2012 for First-Instance Invention Patent Infringement Decisions on the Merits in S Procedure Duration in Different German Jurisdictions for First-Instance Invention Patent Infringement Decisions in S Bifurcation of First-Instance Invention Patent Infringement Cases from Beijing 1 st Intermediate People s Court, S Bifurcation of First-Instance Utility Model Infringement Cases From Beijing 1 st Intermediate People s Court, S Patentee Infringement Win Rate in First- Instance Invention Patent Decisions on the Merits in China, in S Patentee Infringement Win Rate in First- Instance Utility Model Decisions on the Merits in China, in S Validation Rate in SIPO Validity Decisions on the Merits, S Procedure Duration of First-Instance SIPO Patent Reexamination Board Decisions on the Merits in China in S Procedure Duration of First-Instance Patent Infringement Decisions on the Merits in China in S Bench and Jury Patentee Win Rates in Most Active U.S. Federal District Courts (By Patent Infringement Litigation Filings)...S Outcomes of PTAB Final Written Decisions... S Time From Filing to Termination by Contested Judgment in the 10 Most Active U.S. District Courts (in Months)... S PTAB Final Written Decision Timing... S COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

4 S-5 Global IP Project Annual Global Patent Litigation Report 2014 I. Overview of Global Trends 1 T oday, corporations face a panoply of options on how and where to litigate against competitors. Patent owners and alleged infringers often face off in multiple countries with varying legal systems and consequent varying results. Although patents remain a national property right, patent owners and alleged infringers must develop a global strategy for IP litigation to maximize resources and leverage litigation results for the best business outcome. Understanding the attributes of different legal systems and procedures is only one part of a complex process for developing a winning strategy. Companies must also understand the costs, risks, and benefits of bringing an action in various market-driven countries. As a result, the question for litigants now is Where in the world should I sue? An early win may be crucially important, whether for the patentee or the alleged infringer. In the Global IP Project, the term first-strike strategy is used to describe the approach of trying to obtain a good first result that can be leveraged to favorably resolve parallel litigation conflicts in other countries. While the prospect of litigating in several countries simultaneously can be overwhelming, winning a first litigation a first strike provides significant leverage in settling disputes globally. This first Global IP Project Annual Report based on analysis and insight from practicing lawyers around the world and objective data 2 compares qualitative and quantitative information from 19 jurisdictions to provide patent owners and patent challengers substantive, fact-based information to use as they decide how to best obtain the desired business results. The Global IP Project Annual Report authors believe that the more litigation strategies are based on objective metrics, the sounder the strategies will be. In the U.S., the availability of objective data is extremely high, with all 98 firstinstance courts on a single electronic database accessible by the public. There are also multiple private and academic database sources and sources of data analysis readily available. But the picture globally differs significantly, with many countries lacking centralized data collection (e.g., Germany, Italy, China, Brazil, Spain), accessibility (e.g., Israel, South Korea), or electronic data (e.g., Russia). The Global IP Project s founding purpose was to fill this data void so that global firststrike strategies could be developed with objective data. Using the Global IP Project s objective patent infringement and validity litigation data, practitioners can intelligently advise clients on a forum for that crucial first strike (inter-country and intra-country, if applicable) where they have the best chance of obtaining a favorable result. The context of patent litigation is ever-changing. Significant trends are developing as the world moves to a more harmonized IP framework and emerging markets grow in size and importance. A. Alleged Infringers Are Becoming More Proactive Both patentees and alleged infringers have increasingly more judicial and administrative options on where to launch a first strike. Traditionally, alleged infringers have hesitated to initiate defensive first strikes because of a preference not to litigate at all and to be left alone. But there is a noticeable trend among alleged infringers of becoming more proactive, possibly spurred on by high success rates in some jurisdictions. The best global example of this proactive behavior is in London, where the patentee win rate is relatively low 27% (35/129), but the plaintiff win rate is 54% (69/129) and the alleged infringer plaintiff win rate is 77% (50/65). 3 Of the 129 patent litigation decisions for the time period , 51% have an alleged infringer plaintiff (66/129). 4 The best U.S. example of this behavior is represented by the high rate of filings of inter partes reviews (IPRs) by alleged infringers and third parties, where the petition grant rate is 77%. 5 So far, the Patent Trial and Appeal Board (PTAB) has held 68% of the challenged claims unpatentable. 6 Several countries have double-tracking where a patent claim s validity may be disputed in both a judicial proceeding and an administrative proceeding, in some jurisdictions even simultaneously. 7 This provides alleged infringers with two forums in which to attack patents. With the availability of comparative intracountry and inter-country data, which will soon be issue-specific because of resources such as the DARTS-IP database, it will become more apparent to alleged infringers that the option is available for them to bring proceedings proactively to get a favorable decision they can then use in negotiations with the patentee. B. The Trend Toward IP-Specialty Courts Continues According to the 2012 Study on Specialized Intellectual Property Courts by the International Intellectual Property Institute (IIPI) and the U.S. Patent and Trademark Office (USPTO), there are already 90 different IP specialty courts around the world. 8 Because of the inherent complexity of patent cases in particular, it is expected that this trend will continue. Just in the last few years, Finland, France, Russia, Switzerland, and Taiwan moved to single IP-specialty courts. In addition, in China, on November 6, 2014, the Beijing IP court was established and by the end of 2014, the Shanghai and Guangzhou IP courts will be established. Arguably, the PTAB in the U.S. is consistent with this trend because it includes, for the first time in the U.S., a panel made up of administrative law judges with both legal and technical training. 9 The Unified Patent Court (UPC) in Europe marks another step toward IP-specialty courts with its plan to have specific courts designated for specific technologies (e.g., London: human necessities, chemistry and metallurgy; and Munich: mechanical engineering, lighting, heating, weapons and blasting). 10 PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

5 S Exhibit 1: First-Instance Patent Litigation Filings in China. Filing numbers include infringement cases for invention patents, utility models and design patents. The numbers for are estimates because the Chinese courts stopped publishing the specific numbers for patent infringement litigations since 2010, and now they disclose only the total number of patent cases, which includes patent infringement disputes, ownership disputes, licensing disputes and others. The numbers of all types of first-instance patent cases in are 5,785, 7,819, and 9,680, respectively. 11 Exhibit 2: U.S. First-Instance Patent Litigation Filings. 12 The 2014 filing number represents a 17% decrease from district court patent infringement filings in COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

6 S-7 C. The Unified Patent Court (UPC) May Lead to Increased Forum-Shopping in Europe It is expected that data metrics will play an increasing role in European forumshopping because of a plethora of options that will be available to litigants, including the ability to opt European patents out of the new UPC system during the transitional period, as well as the ability to choose where to bring an action in the UPC system (subject of course to the new venue and jurisdictional requirements) for European patents having unitary effect. Increasingly litigants will file (when they have a choice) in those divisions of the UPC where the data metrics are most favorable to their case objectives. Of course, as of January 2015, the UPC is not up and running and there are no data metrics available for any of the proposed new UPC courts. Also, the past practices of national courts may not turn out to indicate how the new UPC courts in corresponding regions or countries will act. 13 D. Litigation in China Continues to Increase and Leads a Global Movement of Patent Litigation to Asia Patent litigation filings in China have more than doubled in the last 5 years to now about 8,000 annual filings. 14 While this number includes invention patents, utility models, and design patents the upward trend is clear. 15 The historical patentee win rate in China is very high (for all three types of patents), costs are low, time to termination for both infringement and validity proceedings averages under one year, and a significant damage award in CHINT v. Schneider Electric Low Voltage (Tianjin) Co. Ltd. (2007) appears to reflect at least a partial acceptance of patent infringement damages. 16 The recent institution of IP-specialty courts in Beijing, Shanghai, and Guangzhou is a positive development addressing foreign concerns about the credibility and integrity of Chinese courts. While patent litigation filings in Japan and Taiwan have been increasing more slowly, the possibility of damage awards there is attractive to patent owners, 17 while the relatively low patentee win rate in both countries 18 will attract alleged infringers. E. America Invents Act (AIA) Has Given U.S. Litigation a More Bifurcated Appearance The significant increase in patent litigation filings in U.S. district courts from 2011 to 2013 shown in Exhibit 2 perhaps reflects, in part, an impact of the new America Invents Act (AIA) joinder provisions, which came into effect in September 2012 and limits the number of defendants that can be joined and named in the same lawsuit. The abrupt downturn in 2014 filings (shown in Exhibit 2) may be driven by recent U.S. Supreme Court decisions and the new postgrant options offered by the AIA, including IPRs. For example, since they became available in September 2012, there has been a rapidly rising number of IPR filings, as shown in Exhibit 4. While not a direct correlation by any means, it is difficult not to compare the significant number of IPR Petitions filed through October of 2014 with the corresponding significant decrease in U.S. district court patent infringement filings for Not surprisingly, with the new AIA post-grant proceeding options, there has been a 61% decrease in ex parte reexamination filings from 2012 to 2013 (Exhibit 3), further supporting the conclusion that IPRs are a new driving force in the litigation landscape. As a consequence, the U.S. is becoming a more bifurcated jurisdiction in appearance, where alleged infringers seem to perceive the new PTAB as a more favorable forum in which to litigate the issue of patentability. Factors supporting the favorability of the PTAB forum in which to resolve patentability are a high success rate to date, a statutory timeline of one year from institution, no presumption of validity for the patent, a lower burden of proof and potentially lower costs. More details of the impact of the AIA on U.S. patent litigation are found on the GIP Project website, www-.globalpatentmetrics.com. It is worth noting that many of the more than 2,000 PTAB reviews filed in the first two years of the new U.S. AIA post-grant proceedings have related district court litigation, providing a strong example of double-tracking. 19 F. The Negative Climate in the U.S. for Non-Practicing Entities (NPEs) and the Availability of Injunctive Relief and Profits Damages Abroad Suggest NPEs Will Begin to Look Outside the U.S. According to the PriceWaterhouseCoopers 2014 Patent Litigation Study, NPE patent litigation filings grew from 28% in 2009 to 67% in It is still too early to tell the full impact of the AIA on NPE litigation in the U.S., but recent court decisions and efforts at reforming laws in the past few years indicate the political and legal climate has been unfavorable to them. While little data at this point suggests that NPEs are focusing more enforcement efforts outside the U.S., 21 the following factors suggest that this may change. First, in almost all countries outside of the U.S., an injunction is not only typically the principal objective, it is still essentially automatic and available to NPEs and other patentees. 22 Moreover, unlike the U.S., many countries allow a patentee to pursue the infringer s profits. For an NPE, this type of damage award can prove to be higher than what would be available to a practicing entity s lost profits award. When combined with lower litigation costs as compared to the U.S., NPEs may be encouraged to consider litigating in those countries where both an injunction and the infringer s profits are available to obtain favorable monetary outcomes. II. Global Patent Litigation Data Overview, A. Comparison of Country Patent Litigation Systems The table in Exhibit 5 shows a number of important qualitative and quantitative factors of the patent litigation system for each country discussed in this report. A country is designated unified if validity and infringement can both be raised in a single forum or bifurcated if the two issues must be decided by separate bodies. This is an important factor in terms of litigation strategy, but it also indicates whether a country may have double-tracking. Bifurcated countries do not have double-tracking. A further column indicates whether double-tracking is available and the name of the administrative validity tribunal. The table in Exhibit 5 also shows whether a country operates under common law or civil law. Among other things, this helps to indicate how much discovery and cross-examination will be involved, and whether a proceeding will be largely based on written submissions or live trial arguments. The number of first-instance patent infringement litigation courts in a country identifies whether there is a possibility of forum-shopping within the country. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

7 S Exhibit 3: U.S. Ex Parte Reexamination Petition Filings as of Sept. 30, The drop in ex parte reexamination cases from 787 in 2012 to 305 in 2013 represents a decrease of 61% Oct Oct Oct Exhibit 4: U.S. Inter Partes Review Petition Filings. 25 It is interesting to compare the significant number of IPR Petitions filed through October 2014 with the corresponding significant decrease in U.S. district court patent infringement filings for COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

8 S-9 A specialized court or judge is one with technical as well as legal training. The number of trials to determine the issues of validity, infringement, and damages is important to know in terms of having a realistic comparison of time and costs between countries. In the U.S., for example, firstinstance litigation is expensive relative to other countries, but all three issues may be resolved in a single trial. By contrast, in Germany, there will be one proceeding for infringement, one for validity and a separate hearing on damages, if required. The column showing whether damages are usually tried or settled in each country indicates the likelihood of facing a damages hearing. As a practical matter in Europe, there are very few damages trials because the principal patentee objective is usually an injunction and in most cases the parties settle after the issues of validity and/or infringement have been decided by the court. This is discussed in the German context in Section III. In Asia, the issue of damages is often decided by the court, and Japan, Taiwan and South Korea have, on occasion, had relatively large awards. In Brazil, China, Russia and India, the number of damage awards is generally very small and where damages have been decided, the awards have usually been very low. It is expected that the number of damage awards outside the U.S. will increase as (1) the law of damages becomes more developed globally; (2) courts become more familiar with resolving damage disputes; and (3) if NPEs begin to enforce patents globally, all of which currently appear to be changing slowly. Of the 19 countries discussed in this report, only 5, namely, Brazil, China, Germany, Russia and South Korea are bifurcated (shaded in Exhibit 5). Of the 14 unified countries, only Argentina and Australia do not have double tracking. 26 The issue of damages is usually settled in 11 countries without a trial; tried in 5 countries; a little of both in 2 countries (Argentina and Japan), and typically not sought in South Korea. The 6 common law countries are Australia, Canada, England, India, Israel and the U.S. In general, and not surprisingly because of the typically more extensive discovery in common law, those countries, excluding India, are among the most expensive. B. Annual Patent Litigation Filings The Global IP Project uses annual patent litigation filings to rank countries from most active to least active jurisdictions. Three broad categories emerge: countries with fewer than 100 filings annually (Category 1), countries with (Category 2), and countries with 500+ (Category 3). Switzerland is not included in these charts because of the insufficient filing data for its new court, established January 1, In 2012, there were 9 patent infringement litigations filed. Unfortunately, most countries do not provide data on the actual number of patent litigations filed annually. Accordingly, in those countries, the data are based on estimates, and often shown as straight lines in the relevant exhibits. 27 Category 1 (fewer than 100 filings annually) includes Argentina, Australia, Brazil, Canada, Finland, Israel, Netherlands and South Korea. For the bifurcated countries, Brazil and South Korea, these filing numbers represent infringement litigations only. Category 2 ( filings annually) includes England, France, India, Italy, Japan, Russia and Taiwan. For the bifurcated countries, Russia and Taiwan, these filing numbers represent infringement litigations only. Category 3 (more than 500 filings annually) includes China, Germany, and the U.S., currently the 3 most active patent infringement litigation countries in the world by patent litigation filings. As such, those 3 countries are highlighted and compared in Section III below. For the bifurcated countries, China and Germany, these filing numbers represent infringement litigations only. Accordingly, when one attempts to compare the win rate of unified countries, where the issues of both validity and infringement are tried in the same court, as in the U.S., with the infringement issue-only win rate in bifurcated countries like China and Germany, the comparison is obviously incomplete, or one of apples and oranges. In an attempt to develop the comparative win rate data between bifurcated and unified countries, the GIP Project has chosen to represent the validity and infringement win rates in bifurcated countries separately. In part this is a necessary consequence because the win rate data must be obtained from different tribunals. It is also necessary, however, because to date, the Global IP Project has been unable to obtain parallel validity and infringement data from the different courts for the same litigated patents. This is considered in greater detail below because the DARTS-IP database is now developing procedures to track the same patent in both venues in bifurcated systems. Historically, the U.S. was the most litigious country in the world when it came to patent infringement. As of 2008, China has had the greatest number of annual patent litigation filings in the world. But this comparison is not totally accurate because more than 65% 28 of Chinese patent infringement litigation involves design and utility model patents, most of which were not examined prior to issuance while U.S. patent litigation almost entirely involves invention patents. Clearly, in terms of numbers of cases filed and market size, China has become the proverbial elephant in the global IP room. On the other hand, while Germany remains the most patent infringement active country in Europe and the third most active country in the world, the estimated number of annual filings appears to be relatively constant. Furthermore, German courts often follow a practice of issuing separate case numbers for each patent when multiple patents are asserted by the same patentee in the same case, while other countries assign one case number no matter how many patents are asserted. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

9 S-10 Country Unified/ Bifurcated Common law/ Civil law Number of first-instance patent infringement litigation courts 29 Specialized courts/ judges? Number of trials to determine validity, infringement, and damages Damages usually tried or settled Administrative Validity challenge forum Argentina U CI 11 No 1 mixed No Australia U CO 1+ De facto 2 settled No Brazil B CI 27 state (infringement) 5 federal (validity) Yes 2 tried Canada U CO 1+ De facto 1 or 2 settled China B CI 127 (infringement) 31 1 (validity) usually federal courts of Rio de Janeiro Canadian Intellectual Property Office Yes 2 settled State Intellectual Property Office England U CO 2 Yes 2 settled EPO for EP(UK)-designated patents, UKIPO for EP(UK) designated-patents and GBs. Doubletracking available? 30 Finland U CI 1 Yes Usually 1 tried Finnish Patent and Registration Office Yes France U CI 1 Yes 1 tried EPO for France-designated patents Yes Germany B CI 12 (infringement) 1 (validity) Yes 3 settled India U 32 CO 5 High Courts/ 600 District Courts No 1 settled Israel U CO 6 No Usually 2 settled Federal Patent Court (BDG); EPO for Germany-designated patents; German Patent Office for national patents Intellectual Property Appellate Board Israeli Patents and Trademarks Office Italy U CI 21 Yes/No 1 settled EPO for Italy-designated patents Yes Japan U CI 2 Yes 1 both Japan Patent Office Yes Netherlands U CI 1 Yes 1 settled Russia B CI 81 (infringement) 1 (validity) Yes for appeal/ Yes South Korea B CI 12 (infringement) 1 (validity) Yes 2 2 tried Not usually sought EPO for Netherlands-designated patents Chamber for Patent Disputes, Russian Federal Service for Intellectual Property Korean Intellectual Property Office Intellectual Property Tribunal Switzerland U CI 1 Yes 1+ settled EPO for Swiss-designated patents Yes Taiwan U CI 1 Yes 1 tried Taiwan Intellectual Property Office Yes U.S. U CO No 1 settled U.S. Patent and Trademark Office Yes Yes Yes Yes Yes Yes Exhibit 5: Comparison of Patent Litigation Systems of Countries Addressed in this Report COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

10 S-11 Exhibit 6: Annual Judicial Patent Infringement Litigation Filings for Category 1 Countries. 33 The Category 1 countries for which accurate data exists are Australia and Canada, both common law countries. Data for Brazil, Finland, Israel, Netherlands and South Korea are estimates because annual data on judicial patent infringement litigation filings is not available. In Canada actual patent infringement filing data as reported by the Federal Court of Canada is shown as well as the number of annual Patented Medicines (Notice of Compliance) Filings (PM(NOC)) filings. PM(NOC) is a special litigation procedure for pharmaceutical patents in Canada. The filing trend in each is similar until 2012 when the PM(NOC) filings increased while the litigation filings continued downward England France India Italy Japan Russia Taiwan Exhibit 7: Annual Judicial Patent Infringement Litigation Filings for Category 2 Countries. 34 The Category 2 countries for which accurate data is available are England, Japan and Taiwan. Regionally, Japan has had the lowest historic patentee win rate, until the emergence of the new specialty IP court in Taiwan, which, somewhat surprisingly, has had even lower patentee win rates in recent years. Data for France, India, Italy and Russia are estimates because annual data on judicial patent infringement litigation filing is not available. It is believed that the actual number of patent infringement litigations in India is on the rise primarily because of more recently streamlined procedures after decades of protracted proceedings that generated few final judicial decisions on the merits. As indicated earlier, while both Italy and Russia are becoming more transparent, accurate data extraction is a problem. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

11 S-12 Exhibit 8: Annual Judicial Patent Infringement Litigation Filings for Category 3 Countries. 35 Statistics for Germany are estimates because annual data on judicial patent infringement litigation filing is not available. The German system is slowly becoming more transparent and the numbers, while not complete, represent an estimate by the Global IP Project. Filing numbers for China include infringement cases for invention patents, utility models and design patents. The numbers for are estimates, because the Chinese courts stopped publishing the specific numbers for patent infringement litigations in 2010, and now they disclose only the total number of patent cases, which includes patent infringement disputes, ownership disputes, licensing disputes, and others. The numbers of all types of first-instance patent cases in are 5,785, 7,819, 9,680 and 9,195 respectively COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

12 S-13 Exhibit 9 shows the busiest court in each country (by patent litigation filings), as well as the percentage of cases filed going through to decision on the merits. The busiest court may be important information in a country with more than a single court and the possibility of forum-shopping. There are many factors that drive litigants to a particular court. Among them are the patent experience of the judges, quick time to termination, large damage awards, and/or a court s location with respect to economic activity. In many countries, the percentage of cases filed going through to a decision on the merits is not tracked so the relevant data is estimated by the Global IP Project. When the annual filing data is not known, the percentage necessarily has to be an estimate. But percentage of cases filed going through to a decision on the merits is another important factor to know before deciding whether and where to litigate. In the U.S., for example, fewer than 4% of the cases filed go through to a decision on the merits. That means it is highly likely that a U.S. case will terminate by settlement. Generally speaking, the percentage of cases going through to a decision on the merits is lower in common law countries than in civil law countries, and the percentage is higher in countries where IP law is still maturing, e.g., India, Russia. For bifurcated countries (shaded), the number indicated is for infringement litigation filings only. C. Patent Owner Infringement and Validity Win Rates Among global litigation metrics, the patent owner win rate is often considered to be one of the most important. Exhibit 10 shows the win rates in first-instance patent infringement litigation decisions on the merits for The Global IP Project defines a win as a case terminated with at least one claim found both valid and infringed. The percentage is calculated by wins/wins+losses. Because the U.S. is the only country in the world where summary judgment (SJ) is important, the above definition of a win gives an artificially high U.S. win rate. This is so because in the U.S. fewer than 4% of all filed cases go to trial. It is estimated that approximately 12% of all cases filed are decided by SJ. Accordingly, in the U.S. it is necessary also to provide a win rate for contested decisions, including the summary judgment decisions that are case dispositive and never proceed to a trial on the merits. While not discussed in detail here, the bottom line U.S. statistic is that if a patent case survives summary judgment, the patentee s chances for success at trial almost double. 36 It is also necessary in the U.S. to include a third win rate, namely the overall win rate that takes into account both default and consent judgments, which obviously result in a higher win rate because all consent and default judgments result in wins for the patentee. The numbers for the U.S. in Exhibit 10 are national averages. The patentee win rates in the 94 federal district courts vary dramatically. For bifurcated countries (shaded), the data in Exhibit 10, represents the infringement win rate only. These countries will have a separate validity win rate. 37 The patentee win rates range from a low of 15% for invention patents in Taiwan (unified country) to a high of 86% (on the issue of infringement only) for design patents in China (bifurcated country). In some countries, the data sample is bigger and provides a more robust and statistically reliable number, but even when the sample size is small, the win rate number is still considered instructive. For validity challenges, in either bifurcated countries or unified countries where double tracking exists, there are usually three possible outcomes reported: claims maintained without change (a win for the patent owner), claims all canceled (a loss for the patent owner), and a third category of either amended claims allowed or partially valid. This third category is a gray area where it is not clear if the patent owner won: yes if the amended claim/remaining claim still covers the allegedly infringing product, no if the amended claim/ remaining claim no longer covers the allegedly infringing product. To resolve this and permit the calculation of an estimated win rate, one-half of the decisions in the gray area are considered a win and one-half a loss. The calculation of the patentee win rate for validity challenges, therefore, equals the percentage of all claims maintained without change (percentage of decisions with at least one claim amended). The validity win rate formula applies in bifurcated countries where the issue of validity is tried separately from infringement. It also applies in unified countries to validity decisions of administrative proceedings, where double tracking is available. For example, the U.S., Japan and Taiwan are countries with a unified system (both validity and infringement may be determined in one judicial proceeding), and an administrative validity challenge route (in the national patent office) is also available. It is questionable whether, in bifurcated countries, the two win rates should be multiplied to come up with a single, combined win rate as in unified countries. While this could apply if the same patent was at issue in infringement and validity proceedings in a bifurcated country, not every patent involved in one proceeding is involved in the other. For a historical win rate, therefore, it may only be appropriate to multiply the two win rates together with some sort of weighted factor to account for the likelihood of being involved in both. DARTS-IP is beginning to link infringement and validity proceedings in bifurcated countries, discussed further in Section III. At this preliminary stage, we refrain from multiplying the two win rates together and believe it most instructive to report the win rates separately. It should be noted that most of the win rate data is extracted from national patent office reports or comparable sources for the particular forum. The Global IP Project is collaborating with DARTS-IP to improve this data going forward, particularly in the joint effort to link both the patent infringement and validity decisions wherever possible, as discussed further in Section III. D. Largest Damage Awards to Date Globally The amount of damages a patent owner could receive upon a finding of infringement plays an important role in deciding whether and where to sue. Awards are significantly lower in countries outside of the U.S. In most countries, particularly in Europe, an injunction is the patent owner s primary objective. The largest damage awards to date for some of the most litigious countries outside of the U.S. is reflected in Exhibit 12 (each reported in U.S. $M). As shown in Exhibit 12, the largest damage awards in Europe are generally lower than elsewhere in the world. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

13 S-14 Country (Common law/civil law) Argentina (CI) Annual patent litigations filed ( ) 20 ( ) (federal courts of Buenos Aires only) Busiest Court Nacional Court on Civil and Commercial Federal Matters, Buenos Aires Percentage of cases going to trial (decision on the merits) 100% (est.) Australia (CO) 280 (est.) Federal Court Sydney/Melbourne/ 15% (est.) Canberra Brazil (CI) 480 (est., infringement only) State Court Rio de Janeiro 90% (est.) Canada (CO) 493 Federal Court Primarily Toronto/Ottawa 6% (28/493) China (CI) 30,000 (est.) Intermediate People s Court Design: 33% Guangdong Guangzhou Invention: Shanghai 1st Utility Model: Guangdong Guangzhou England (CO) 807 Patents Court London (95%) 13% (105/807) Finland (CI) 130 Market Court Helsinki (100%) 60% (est.) France (CI) 2,390 (est.) Tribunal de grande instance de Paris 17% (412/2,390 est.) Paris (100%) Germany (CI) 10,000 (est.) Patent Chamber (Patentstreitkammern) (est.) of the Regional Court (Landgericht) Düsseldorf India (CO) 1,225 (est.) Delhi High Court Delhi n/a Israel (CO) 70 (est.) District Court Tel Aviv 20% (est.) Italy (CI) 1,325 (est.) Corporate Court Milan 33% (est.) Japan (CI) 1,265 Tokyo District Court Tokyo 40% for all IP-related cases (21%, 259/1,265) 38 Netherlands (CI) 360 (est.) District Court Specialized Patent Chamber 54% (193/360 est.) The Hague Russia (CI) 700 (est.) (infringement only) Commercial Court Moscow 90% (est.) South Korea (CI) 420 (est.) (infringement only) Seoul Central District Court Intellectual (est.) Property (IP) Panel Switzerland (CI) 9 (2012 only) Federal Patent Court St. Gallen (100%) 10% (est.) Taiwan (CI) 1,088 (est.) Intellectual Property Court Taipei 50-60% (est.) (100%) United States (CO) 23,014 Eastern District of Texas 3.1% (720/23,015) Exhibit 9: Busiest Court and Percentage of Cases Filed Going Through to Decision on the Merits COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

14 S-15 Country Patentee win rate on first-instance patent infringement litigation decisions on the merits ( ) Argentina (4/8) ( only) (federal courts of Buenos Aires only) Australia 54% (25/46) Brazil (infringement only) 41% (14/34) Canada 46% (19/41) China (infringement only) ( ) Invention patents 68% (231/340); Utility models 72% (381/531); Design patents 86% (1,093/1,278) England & Wales 27% (35/129) ( ) Finland New court established Sept. 1, 2013; insufficient data so far France 39% (161/413) Germany (infringement only) 66% ( ) (Düsseldorf Regional Court) ( ) India Preliminary injunction grant rate 39 ( ): 45% (14/31) Israel 33% (1/3) ( ) Italy 40% (37/92) ( only) 40 Japan 22% (58/259) Netherlands 36% (48/133) Russia (infringement only) 42% (183/434) (2009 1st half of 2013) South Korea (infringement only) 26% (106/406) ( ) 41 Switzerland The historical patentee win rate is 44% ( ). Insufficient data to assess win rate under new patent court. Taiwan ( ) Design patents 36% (4/11); Invention patents 15% (8/52); Utility models 16% (16/97) United States 42 overall 59.4% (7,924/13,340); contested 24% (987/4112); combined trial win rate (bench and jury) 60.4% (696/ 1152) Exhibit 10: Patent Owner Infringement Win Rates in First-Instance Patent Infringement Litigation Decisions on the Merits ( ). 80% 70% Bifurcated (infringement only) Unified 60% average 40% 30% 20% 10% 0% China (invention patents) 68% 231/340 Germany 66% 534/812 Russia 42% 183/434 Brazil 41% 14/34 South Korea 26% 106/406 U.S. (trial) 60% 696/1152 Australia 54% 25/46 Argentina 4/8 Canada 46% 19/41 India 45% 14/31 Patentee win rate Italy 40% 37/92 France 39% 161/413 Netherlands 36% 48/133 Israel 33% 1/3 average England 27% 35/129 /259 Japan 22% 58/ Taiwan (in nvention patents) 15% 8/52 Exhibit 10A: Patent Owner Infringement Win Rates in First-Instance Patent Infringement Litigation Decisions on the Merits ( ) by Unified and Bifurcated Systems. The average patentee win rate in bifurcated countries for infringement is 49%. The average patentee win rate in unified countries is 39%. Switzerland is not included because the new court does not have sufficient data yet. The time periods represented by the patentee win rates are generally , except for the following countries where the reported time period is Argentina ; China , England ; Germany ; India ; Israel ; Italy , Netherlands , Russia st half of 2013; South Korea ; Taiwan ; and the U.S PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

15 S-16 80% Common law Civil law Bifurcated Civil law Unified 70% 60% average average 40% 30% 20% 10% 0% U.S. (trial) 60% 696/1152 Australia 54% 25/46 Canada 46% 19/41 India 45% 14/31 Israel 33% 1/3 England 27% 35/129 China (invention patents) 68% 231/340 Germany 66% 534/812 Russia 42% 183/434 Brazil 41% 14/34 Patentee win rate 106/406 South Korea 26% Argentina 4/8 Italy 40% 37/92 France 39% 161/413 Netherlands 36% 48/133 /259 Japan 22% 58/ average Taiwan (in nvention patents) 15% 8/52 Exhibit 10B: Patent Owner Infringement Win Rates in First-Instance Patent Infringement Litigation Decisions on the Merits ( ) by Common Law and Civil Law Systems. The average patentee win rate in common law countries is 44% (all unified systems). The average patentee win rate in civil law countries is 40% (5 bifurcated countries and 6 unified countries). The average patentee win rate for the 5 bifurcated, civil law countries is 49% (infringement only). The average patentee win rate for the 6 unified, civil law countries is 34%. Switzerland is not included because the new court does not have sufficient data yet. The time periods represented by the patentee win rates are generally , except for the following countries where the reported time period is Argentina ; China ; England ; Germany ; India ; Israel ; Italy ; Netherlands ; Russia st half of 2013; South Korea ; Taiwan ; and the U.S COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

16 S-17 Country (Common law/ Civil law) Patentee win rate (at least one claim valid and infringed) ( ) Patentee win rate on validity issue Double-tracking available Argentina (CI) (4/8) ( only) No (federal courts of Buenos Aries only) Australia (CO) 54% (25/46) No (request for reexamination automatically stayed if court proceedings are commenced in relation to the same patent) Brazil (CI) Infringement 41% (14/34) 41.5% (2012 only) No Canada (CO) 46% (19/41) (per patent) 66% (27/41); on a per-patent basis China (CI) Infringement Invention patents 67.8% (194/286); Utility models 72.7% (336/462); Design patents 86% (940/1,093) ( ) Validity Invention patents 48%; Utility models 44%; Design patents 44% Patentee win rate in administrative validity track (claims maintained +1/2 modified claims) Yes 70% ( ) 43 (Reexamination in Canadian Intellectual Property Office) No England & Wales (CO) 23% (25/107) No 44 Finland (CI) Insufficient data Yes 21.5% 45 France (U) 39% (161/413) 33% of the losses for patentee No 46 were because claims held invalid ( ) Germany (CI) (Düsseldorf Regional Court only) 66% (534/812) ( ) Federal Patent Court 39.1% No India (CO) Preliminary injunction grant Yes 18% 48 rate, : 45% (14/ 31) 47 Israel (O) 33% (1/3) ( ) Yes Average loss rate of at least 48% (233/489) ( ) 49 Italy (CI) 44% (40/91) ( only) 31% of the of the losses for patentee were because claims held invalid No 50 Japan (CI) 22% (58/259) Yes Invention patents: at least 47% (796/1,703); utility models: at least 36% (27/75); design patents: at least 40% (52/130) 51 Netherlands (CI) 36% (48/133) No 52 Russia (CI) 42% (183/434) (2009 1st half Insufficient data 53 No of 2013) South Korea (CI) % (39 106/406) ( ) 54 Invention patents at least 44% (1,486/2,659); Utility models at least 45% (754/1,361) 55 No Switzerland (CI) Taiwan (CI) United States (CCO) (C.D. Cal.) The historical patentee win rate is 44% ( ). 19% for invention patents; 17% for utility models; 33% for designs ( data) overall 59.4% (7,924/13,340); contested 24% (987/4112); combined trial win rate (bench and jury) 60.4% (696/1152) 58 No 56 32% of the of the of the losses for patentee were because claims held invalid Yes At least 53% (1,375/2,571) 57 61% ( ) 59 Yes 55% 60 23% 61 Exhibit 11: Patent Owner Validity Win Rates ( ). (Shading indicates bifurcated country.) PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

17 S-18 $ $ $ $ $ $ $ $ $50.00 $82.00 $70.00 $65.80 $44.00 $12.30 $11.80 $7.00 $6.00 $6.00 $3.90 $2.70 $0.73 $- Brazil Canada Japan S. Korea Taiwan China France Finland Italy England Spain Netherlands Germany Israel Exhibit 12: Largest Damage Awards to Date Globally (U.S. $M). 62 Note: The largest damages award in the United States was $1.8 billion (Centocor Ortho Biotech, Inc. v. Abbott Laboratories, 669 F. Supp. 2d 756 (E.D. Tex. 2009) (Judge Ward denied judgment as a matter of law to overturn jury verdict), rev d, 636 F.3d 1341 (Fed. Cir. 2011) (holding that the patent was invalid for lack of written description)). The median damage award in the U.S., which in recent years has been on a downward trend, was only $4.3 million ( ), according to the PriceWaterhouseCoopers Patent Litigation Study No award was reported for Australia or Switzerland, where damages are rarely determined. Indeed, in Australia, there can be no trial on the issue of damages until the validity and infringement issues have been finally resolved through appeal. No award was reported for India; damages have not yet been awarded in a patent infringement litigation case. The largest damage award reported for Russia is less than $100K COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

18 S-19 High patentee win rates: China, U.S., Germany High chance preliminary injunction granted: Australia, Germany Fast time to trial: China, Germany, Russia, England China, Germany, U.S. High chance case filed will go to trial: Russia, Brazil, Taiwan, Finland Highest damage awards: U.S., Canada, Taiwan, Japan, Australia Exhibit 13: Most Patent-Owner-Friendly Courts in the World Using Objective Metrics. 63 Low patentee win rates: England, Taiwan, Japan Low chance preliminary injunction granted: U.S., England*, China, Brazil (infringement) England Slow time to trial: India, Brazil, Italy Low chance case filed will go to trial: U.S., Canada, England Low damage awards: Germany, Israel, Russia Exhibit 14: Most Patent-Owner-Unfriendly Courts in the World Using Objective Metrics (Alleged Infringer- Friendly). PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

19 S-20 E. Most Patent-Owner-Friendly Courts in the World Using Objective Metrics 64 The decision of whether and where to sue is a multifaceted one, and includes both tangible and intangible factors. Intangible factors such as a company s relationship with its competitors and future plans, familiarity and comfort with a particular legal system, or perceptions of local bias are not the subject of this report. Instead, this report attempts to focus on tangible factors, like patentee win rate and average time to trial, and put them in a framework to assist patent litigation strategies and planning. By focusing on a number of objective factors, a visual representation can be made of the countries that, objectively, are appealing to patent owners. While patentee win rate is usually the most important factor, all patent litigations are unique and have different business objectives. Accordingly, no one factor or size fits all. Therefore, depending upon business objectives and which factors are most important, the litigant can forum-shop based on those particular factors. Nevertheless, when focusing on factors indicative of a patentowner-friendly court, the three countries showing up most often are, in fact, the three busiest jurisdictions in the world: China, U.S. and Germany. F. Most Patent-Owner-Unfriendly Courts in the World Using Objective Metrics (Alleged Infringer-Friendly) 65 The same can be done to provide a visual representation of countries that, objectively, are appealing to alleged infringers. The one showing up the most often is England, where there has been a significant increase in the number of cases filed by alleged infringers. Alleged infringers are plaintiffs in over half of the patent litigation decisions in England (66/129, ). 66 The plaintiff win rate in England when the patentee is the plaintiff is 30% (19/64, ), but the alleged infringer plaintiff win rate more than doubles that: 77% (50/65, ). 67 While England continues to have the lowest win rate in Europe and has become known as the revocation capital of Europe, there does appear to be an overall increase in the win rate in recent years from what it has been in the past. In England & Wales, if there is a finding of a valid and infringed claim, the court ordinarily grants a final injunction, among other remedies. The party held to infringe must comply with this order, and failure to do so can be treated as contempt (with criminal sanctions). The patent owner does not have to provide a bond to enforce the decision. Accordingly, if the trial judgment is reversed on appeal, the enjoined party is unable to claim compensation from the patent owner for the period that it has been kept off the market between trial and appeal. G. Comparative Patentee Win Rates by Country by Industry (Infringement Win Rate Only in Bifurcated Countries) 68 As soon as the Global IP Project started looking at patentee win rates, clients asked for industry-specific data. They were correct to do so. There can be large differences in win rates across different technologies. But that can introduce the issue of much smaller data populations and consequent less statistically significant data. However, with this limitation in mind, the Global IP Project operates on the premise that having some data is better than having no data at all. It is helpful when considering a patent litigation strategy to have at least some idea of what the particular industry-specific win rate is, however small the data set. Moreover, the reader must always be mindful that the unified win rates represent an outcome on validity and infringement (at least one claim held valid and infringed is counted as a win ), while the bifurcated win rates are for infringement only. The Global IP Project started tagging patent litigation decisions according to ten categories: biotechnology, chemical/materials engineering, electrical, mechanical, medical device, pharmaceutical, software, semiconductor, computer hardware and a catch-all category, namely other. Going forward, the DARTS-IP database will provide even more industry-specific data because DARTS-IP will be tagging cases according to the much more extensive European Patent Office (EPO) classification system. The industry-specific data reported here comes from the Global IP Project and is just beginning to develop. 69 Often the win rate for mechanical cases is the most reliable because there are more cases. The biotechnology data, on the other hand, often represents a very small number of cases. The relevant exhibits include only those countries with at least one case decided on the merits in the specific technology from the time period , except for the following countries where the reported time period is China ; England ; Germany for overall, for industry-specific; Italy ; Netherlands ; and Taiwan The data for Germany only represents the Düsseldorf court of first instance. South Korea s win rates are from the Global IP Project data collection only. The pharmaceutical industry is also globally unique because it is the one industry where a first strike decision in one country, whether successful or unsuccessful, has virtually no bearing on leveraging a global settlement elsewhere around the world. Typically pharmaceutical patent litigation is about obtaining an injunction, hence increased market share. Accordingly, even if a brand manufacturer or a generic is successful in one country, that first strike outcome is not likely to influence a settlement in another jurisdiction because any market where the pharmaceutical product has regulatory approval remains important. Again, the bifurcated countries patentee win rates in the pharmaceutical area are significantly higher than in the unified systems. In 3 of the bifurcated systems, Brazil, Germany and South Korea, the pharmaceutical win rate is actually higher than the overall country win rate averages. In the unified systems, on the other hand, only 2 of the 8 countries, Australia and Japan, have a higher pharmaceutical win rate than the overall country win rate average. The patentee win rate in medical device cases is very low in unified systems; lower than the overall average patentee win rate, in some cases, significantly lower (e.g., Canada). In all the countries represented in the chart, China stands out as the only one where the medical device patentee win rate is higher than the overall average COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

20 S % 100% 100% 100% 100% 90% 80% 70% Bifurcated systems (infringement only) 68% 66% Unified systems 60% 54% 40% 41% 39% 40% 36% 30% 20% 25% 25% 22% 15% 10% 0% 0% 0% Brazil China (invention patents) 0% Germany Australia England France Italy Japan Netherlands Taiwan (invention patents) 0% 0% Biotechnology Overall Country Number of Biotechnology Patentee Wins Number of Biotechnology Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil China (invention patents) Germany (invention patents) Unified countries Australia England France Italy Japan Netherlands Taiwan (invention patents) Exhibit 15: Biotechnology Patentee Win Rate and Overall Patentee Win Rate. 71 Again the reader is cautioned to remember the small data population represented. Still it is interesting to note that some European countries (Germany, Italy, Netherlands all 100%) generally seem more patentee-friendly in biotechnology cases than Asian countries (China, Japan, Taiwan all 0%). 7 of the 8 German biotech cases were plant variety cases. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

21 S % 90% Bifurcated systems (infringement only) 100% Unified systems 80% 76% 70% 68% 66% 63% 60% 40% 41% 54% 46% 43% 39% 40% 36% 30% 20% 14% 26% 25% 25% 19% 26% 22% 13% 15% 10% 0% Brazil China (invention patents) Germany (invention patents) South Korea Australia Canada England France Italy Japan Netherlands Taiwan (invention patents) Chemical/Materials Engineering Overall Country Number of Chemical/Material Engineering Patentee Wins Number of Chemical/Material Engineering Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil China (invention patents) Germany (invention patents) South Korea Unified countries Australia Canada England France Italy Japan Netherlands Taiwan (invention patents) Exhibit 16: Chemical/Materials Engineering Patentee Win Rate. While the win rates reported here derive from larger data sets than reported in Exhibit 15, it is again not surprising, but nevertheless interesting to see how the win rates vary from a low of 14% in Brazil (1/7) and 13% in Netherlands (1/8) compared with a high of 100% (2/2 in Canada), 76% (16/21) in Germany, and 63% (5/8) in Australia. Note that the bifurcated countries win rates relate solely to the infringement issue COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

22 S-23 80% 70% Bifurcated systems (infringement only) 68% 71% 66% Unified systems 60% 40% 41% 52% 54% 39% 36% 30% 26% 25% 29% 22% 20% 14% 15% 10% 0% Brazil China (invention patents) Germany (invention patents) South Korea 0% 0% 6% Australia England France Japan Netherlands Taiwan (invention patents) 0% Electrical Overall Country Number of Electrical Patentee Wins Number of Electrical Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil China (invention patents) Germany (invention patents) South Korea Unified countries Australia England France Japan Netherlands Taiwan (invention patents) Exhibit 17: Electrical Patentee Win Rate. Only in Germany is the electrical patentee win rate higher than the overall average patentee win rate (invention patents; infringement only). There were also two utility model decisions related to electrical technology; the patentee win rate was (1/2). In all 4 bifurcated countries, the win rate is or higher, but it is on infringement only. In the Unified countries, the electrical win rate is very low: 0% in Australia (0/1), England (0/4), and Netherlands (0/2), and 6% for Japan (3/48), 14% for Taiwan (8/58), and France is the highest at 29% (21/72). PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

23 S % 90% 80% 83% Bifurcated systems (infringement only) 77% 100% Unified systems 70% 68% 67% 66% 63% 60% 54% 40% 30% 20% 41% 26% 38% 46% 30% 25% 40% 41% 39% 40% 28% 22% 37% 36% 16% 15% 10% 0% Brazil China (invention patents) Germany (invention patents) South Korea Australia Canada England France Italy Japan Netherlands Taiwan (invention patents) Mechanical Overall Country Number of Mechanical Patentee Wins Number of Mechanical Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil China (invention patents) Germany (invention patents) South Korea Unified countries Australia Canada England France Italy Japan Netherlands Taiwan (invention patents) Exhibit 18: Mechanical Patentee Win Rate. The mechanical industry sector has the most cases, so the data is closest to the overall average win rate in most countries. Germany also has a utility model mechanical win rate of 68% (19/28). Generally, the bifurcated systems have a much higher patentee win rate in mechanical cases (averaging 82%) than the unified systems (averaging 37%). The rate for bifurcated countries of course only represents the infringement win rate. This suggests that in unified systems, alleged infringers are often successful at proving invalidity in mechanical cases, lowering the patentee win rate COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

24 S % 90% 80% Bifurcated systems (infringement only) 81% 100% Unified systems 70% 60% 40% 30% 20% 67% 41% 68% 66% 26% 60% 54% 30% 46% 24% 25% 39% 40% 29% 17% 33% 22% 35% 36% 15% 10% 0% 0% Brazil China (invention patents) Germany (invention patents) South Korea Australia Canada England France Italy Japan Netherlands Taiwan (invention patents) Pharmaceutical Overall Country Number of Pharmaceutical Patentee Wins Number of Pharmaceutical Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil China (invention patents) Germany (invention patents) South Korea Unified countries Australia Canada England France Italy Japan Netherlands Taiwan Exhibit 19: Pharmaceutical Patentee Win Rate. England reports the greatest number of decisions in the pharmaceutical field. The 24% win rate in England encourages generic drug companies to initiate their defensive first strike patent litigations there, as discussed in Section I. The pharmaceutical win rate for Canada represents infringement litigation. This is different from the Patented Medicines (Notice of Compliance) Decisions (PM(NOC)) cases, a special pharmaceutical proceeding in Canada. In the PM(NOC) cases, the patentee win rate for is 38% (25/ 66). PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

25 S-26 90% 80% Bifurcated systems (infringement only) 79% Unified systems 70% 68% 66% 60% 40% 30% 20% 41% 33% 54% 46% 25% 20% 40% 22% 17% 36% 29% 15% 10% 0% Brazil China (invention patents) Germany (invention patents) 0% 0% Australia Canada England Italy Japan Netherlands Taiwan (invention patents) 0% Medical device Overall Country Number of Medical Device Patentee Wins Number of Medical Device Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil China (invention patents) Germany (invention patents) Unified countries Australia Canada England Italy Japan Netherlands Taiwan Exhibit 20: Medical Device Patentee Win Rate. Often medical device litigation is initiated first in Europe because the U.S. regulatory process at the FDA typically takes longer than its counterparts in Europe. Similarly to the pharmaceutical industry, that the low patentee win rate in medical device cases mean it is not surprising to see defensive first strikes filed by alleged infringers at the London Patents Court COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

26 S-27 Bifurcated systems (infringement only) Unified systems 100% 100% 90% 80% 70% 75% 68% 60% 54% 40% 46% 40% 36% 30% 20% 26% 25% 22% 17% 25% 15% 10% 0% China (invention patents) 0% 0% 0% 0% 0% South Korea Australia Canada England Italy Japan Netherlands Taiwan (invention patents) Computer hardware/software Overall Country Number of Computer (hardware/ software) Patentee Wins Number of Computer (hardware/ software) Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) China (invention patents) South Korea Unified countries Australia Canada England Italy Japan Netherlands Taiwan Exhibit 21: Computer Hardware/Software Patentee Win Rate. The universe of global data for computer hardware/ software results is very small. Even so, it is safe to say that in unified systems, owners of computer hardware or software patents have a very low chance historical win rate, usually significantly lower than the overall average. One exception is Taiwan, where the win rate (25%; 3/12) is about 10% higher than the overall average Taiwan patentee win rate of 15%. It is somewhat surprising that with how poorly these patents do in litigation globally, the win rate in China exceeds the overall average patentee win rate. This of course only represents the issue of infringement and is based on very limited data. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

27 S-28 80% 70% Bifurcated systems (infringement only) 68% Unified systems 60% 40% 30% 20% 25% 26% 17% 22% 15% 10% 0% 0% China (invention patents) 0% South Korea Japan Taiwan (invention patents) Semiconductors Overall Country Number of Semiconductor Patentee Wins Number of Semiconductor Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) China (invention patents) South Korea Unified countries Japan Taiwan Exhibit 22: Semiconductor Patentee Win Rate. The universe of data for semiconductor results is very small. There were no reported semiconductor first-instance patent litigation decisions reported outside of four Asian countries. Of these four, China and Taiwan have a 0% patentee win rate (0/3), while South Korea has one win and Japan has two. Even though the data universe is small, it is interesting that the patentee win rates in South Korea and Japan are close to the overall average in each COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

28 S-29 90% Bifurcated systems (infringement only) Unified systems 80% 77% 70% 68% 60% 40% 41% 54% 46% 40% 35% 44% 36% 30% 20% 20% 26% 25% 22% 19% 23% 15% 10% 0% Brazil China (invention patents) 0% South Korea 0% 0% Australia Canada England Italy Japan Netherlands Taiwan (invention patents) "Other" Overall Country Number of Other Patentee Wins Number of Other Cases Number of Overall Patentee Wins Number of Overall Cases Bifurcated countries (infringement only) Brazil 1 5 China (invention patents) South Korea Unified countries Australia Canada England Italy Japan Netherlands Taiwan Exhibit 23: Other Patentee Win Rate. For the sake of completeness, Exhibit 23 presents the remaining Global IP Project other technology category. No meaningful technology-specific conclusions can be drawn, however, because the cases represented by the data are possibly very diverse. England also reports a patentee win rate for telecoms of 32%. It is not reported in this report, because the Global IP Project does not have this technology category. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

29 S-30 III. Spotlight: 3 Most Active Patent Litigation Countries 72 The three most active patent litigation jurisdictions by measure of annual filings are the U.S., China and Germany. 73 All three have multiple courts in which to initiate an infringement action 74 and, consequently, forum-shopping is a significant factor in developing an effective strategy. Germany (12 first-instance infringement courts) and China (127 first-instance infringement courts) are bifurcated systems, but the U.S. (94 trial courts) 75 is a unified system. However, as noted in Section I, the U.S. is becoming a more bifurcated jurisdiction in appearance because of the rapid adoption of the new post-grant procedures under the AIA and preference to use the new PTAB as a forum in which to litigate the issue of patentability. Notably, about 43% (364/ 850) of IPRs are involved in district court litigation 76 and about 2/3 of those cases are stayed in favor of an IPR. 77 Of course, if a district court does not stay (which happens at least 1/3 of the time), then there is no bifurcation but rather parallel proceedings with a race to a final decision. Although both are bifurcated systems, the validity challenge routes in Germany and China are very different. For example, first-instance validity challenges in Germany are handled at the Federal Patent Court (FPC 78 ) (a court independent of the Germany Patent Office) whereas in China they are handled by the Patent Reexamination Board of the Chinese Patent Office (SIPO). The costs for both the infringement and validity proceedings are considerably more in Germany than in China, and in Germany, the loser usually pays a substantial portion of the winning party s litigation fees in both validity and infringement proceedings. One would expect that the loser pays model discourages litigation, and that therefore the percentage of Chinese infringement litigations with a corresponding validity challenge will be much higher than that for Germany. To date, this data has not been available because in both countries it has been extremely difficult to track those patents involved in both an infringement proceeding and a validity challenge. However, with DARTS-IP, it is now possible to begin to track this information. The chart generated by DARTS-IP for Germany and China is a first attempt to provide data indicating what percentage of infringement litigations in each country include a corresponding validity challenge, together with the resultant, combined win rate for each country. There are challenges obtaining the data. In Germany and China, each issue, if litigated, is not initiated at the same time, not coordinated with each other in any way, and may terminate months apart. Moreover, the parties challenging validity are not necessarily the same as the parties to the infringement litigation in each case. Once issue-specific win rate data can be obtained for the same patents that are litigated separately for both infringement and validity in bifurcated countries, it will then be possible to provide a combined win rate that will be more directly comparable to the win rates for the unified countries under the Global IP Project methodology (i.e., a win is where at least one asserted claim of a patent is found both valid and infringed). Currently, because of the limited data developed to date, the authors estimate that the percentage of German patents litigated for both infringement and validity is 30-40%. 79 While the combined data for China is not sufficient at this point to support a meaningful, corresponding estimate, the authors anticipate that the percentage of Chinese infringement cases that also include a validity challenge should be significantly higher than Germany. So far, the data indicates otherwise. Indeed, as can be seen from Exhibit 29, 16 out of 84 Beijing 1st Intermediate Court patent infringement decisions, roughly 19%, also included a corresponding validity challenge before the SIPO Patent Reexamination Board. In contrast, as shown in Exhibit 24, 40% (37/88) of patents litigated in the Düsseldorf Regional Court in Germany have a corresponding validity proceeding (5 in the EPO and 28 in the BPG). As more data becomes available, it will be interesting to see if this trend remains the same or moves toward what is anticipated by the Global IP Project. A. Germany 1. Patent Infringement and Validity Win Rates For the population of 88 Düsseldorf infringement decisions in 2012, 61 were patentee wins for a win rate of 69%. Of the 88 decisions, 51 did not include a validity challenge within the 2-year period searched and 37 did. Accordingly, the first DARTS-IP attempt to correlate win rate data for the bifurcated issues of both infringement and validity for the same patent indicates that 40% of Düsseldorf patents litigated for infringement also included a corresponding validity challenge in either the European Patent Office (EPO) or the Bundespatentgericht (BPG/FPC). The authors caution the reader about the preliminary nature of this data because the number of cases is limited and the procedures for correlating validity and infringement challenges (as well as the common identity of the parties) are not fully developed. It is anticipated that more complete and accurate data will become available in the future. For the population of 67 invention patent decisions, the patentee win rate is 59.7% (47/67). Moreover, as can be seen from the right-hand side of Exhibit 25, 49% (33/ 67) of the same population of invention patent infringement decisions include a corresponding validity proceeding (with 5 decisions on the merits in the EPO and 28 decisions on the merits in the BPG). Exhibit 26 doesn t use Global IP Project methodology. According to the Global IP Project formula, the cases for which there is no data are excluded. Accordingly, using the Global IP Project formula for the 4 EPO cases with an outcome, the calculated patent validation rate in the EPO is + 1/2() = 75%, and 44% + 1/2(22%) = 55% for the 9 BPG cases. The DARTS-IP charts report the results of the validity decisions from both the EPO and the BPG in the same manner as can be used with the Global IP Project formula. According to that formula, the patent validation rate for invention patents in the EPO for 2012 is 66% + 1/2(2%) = 67%; and the rate for invention patents in the BPG for 2012 is 39% + 1/2(13%) = 45.5%. For very rough, comparison purposes, it is noted that the earlier calculated, corresponding patent validation rate for invention patents that have a patent infringement case decided by the Düsseldorf First-instance Court in 2012 is 75% in the EPO; whereas the rate is 55% in the BPG. Of course, it must be considered that for the earlier, bifurcated win rate calculations, the universe of cases was much smaller: 4 in the EPO; and 9 in the BPG. On the other hand, Exhibit 29 is drawn from 1,372 EPO decisions and 103 BPG decisions COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

30 S-31 Infringement win rate * (Düsseldorf first-instance court) Corresponding validity challenges ** Patentee Loses Patentee Wins Total No known validity challenge *** EPO only 21 Ongoing validity challenge BPG only 11 5 Decision on the merits of validity Exhibit 24: Bifurcation of Patent Infringement Cases From the Düsseldorf First-Instance Court, As indicated earlier, this chart represents 88 cases published by the Düsseldorf Regional Court in The Global IP Project estimates that there were 129 proceedings on the merits published by the Düsseldorf Regional Court in Infringement win rate (Düsseldorf lower court) Corresponding validity challenges * Patentee Loses Patentee Wins 0 Total No known validity challenge ** Ongoing validity challenge 5 Decision on the merits of validity EPO only BPG only Exhibit 25: Bifurcation of Patent Infringement Cases From the Düsseldorf First-Instance Court, 2012, Invention Patents Only. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

31 S-32 Patent Validation rate, European Patent Office (EPO) (# of decisions/patents) Patent Validation rate, Bundespatentgericht (BPG) (# of decisions/patents) 1, 20% 2, 40% 3, 30% 1, 10% 4, 40% 2, 40% 2, 20% Totally valid Not valid Partially valid No Data Totally valid Not valid Partially valid No Data Exhibit 26: Patent Validation Rate for Invention Patents That Have a Patent Infringement Case Decided by the Düsseldorf First-Instance Court in In other words, the patent validation rate for patents that have a patent infringement case that was decided in 2012, and a corresponding validity challenge (opposition action in front of EPO or cancellation proceeding in front of the Bundespatentgericht, the German patent court) within the 2 years (before or after) the infringement decision. European Patent Office (EPO) Bundespatentgericht (BPG) 445, 32% 50, 48% 40, 39% 32, 2% 927, 66% 13, 13% Totally valid Partially valid Not valid Totally valid Partially valid Not valid Exhibit 27: Comparing Validation Rates Between EPO Opposition Actions and BPG Cancellation Actions, in 2012 for First-Instance Invention Patent Infringement Decisions on the Merits in COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

32 S-33 Average duration of infringement action in months (# of decisions) Average duration of cancellation action in months (# of decisions) Mannheim (9) Bundespatentgericht (128) 21. Düsseldorf (6) Exhibit 28: Procedure Duration in Different German Jurisdictions for First-Instance Invention Patent Infringement Decisions in The reader is cautioned that Exhibit 28 chart is based on a limited population of decisions. The reason for the small number is because very few German patent decisions report both the date the case was filed and the date of the final decision on the merits. The authors hope that in the future it will be possible to obtain this information from reliable sources. 2. Time from Filing to Decision on the Merits The average duration of infringement and validity proceedings in Germany is a little less than 2 years. Of course, as mentioned earlier, these two time periods may or may not be running simultaneously. A patent could survive infringement litigation and then face a validity challenge in the FPC much later, or vice versa. If the proceedings are simultaneous, the German infringement proceeding is not likely to stay a decision pending the outcome of the validity challenge. 80 The average time of less than 2 years compares favorably with many district courts in the U.S. but is about twice as long as the average time for infringement and validity proceedings in China. 3. Remedies The most important remedy in Germany is an injunction. Damages hearings rarely occur there. The court will consider damages only after a determination of liability, and often the parties settle before the hearing is held. The largest damage award to date was for about U.S. $2.7M, 81 which is small compared with the largest awards elsewhere in the world. In Germany, damages actually suffered are compensated. There are no punitive damages. Damages may be calculated as lost profits, infringer s profits, or a reasonable royalty. In German proceedings, a court will decide liability of the defendant to compensate damages and to render accounts. Under German law, there is an obligation of the losing party to reimburse statutory attorney (and patent attorney) fees of the winning party. 82 The attorneys statutory fees are calculated based on the value in dispute, as determined by the court. Accordingly, the obligation to compensate attorneys fees is not based on actual costs of the attorney (which may have been calculated on an hourly fee) but rather statutory fees. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

33 S-34 B. China 1. Patent Infringement and Validity Win Rates Exhibit 29 shows the first-instance patentee infringement win rate in China for the Beijing 1 st Intermediate People s Court for 2012 for 84 decisions is 73.8 % (62/84). The authors caution the reader about this preliminary bifurcation data because the number of cases is limited and the procedures for correlating validity and infringement challenges (as well as the common identity of the parties) are not fully developed. Only 19% of the 84 Chinese infringement decisions appear to have a corresponding validity challenge (16/ 84). For the 15 decisions for which a validity decision could be located, the validation rate according to the Global IP Project formula (excluding the cases for which there is no data) is 87% + 1/2(6.7%) = 90.3 %. The authors provide the same preliminary data caveats as those expressed earlier. Nevertheless, multiplying the patentee infringement win rate 74% by the patent validation rate, 90%, for this limited sample size results in a combined win rate of 67%. This combined win rate is very high. Exhibit 30 shows that the patentee win rate for this population of 104 first-instance utility model infringement decisions from the Beijing 1 st Intermediate People s Court is 65.4% (68/104). It also shows that only 30% (32/104) of those decisions include a corresponding validity challenge. For those 28 cases for which there is actual decision data, the utility model validation rate according to the Global IP Project formula (excluding the cases for which there is no data) is 71.4% + 1/2(7.1%) = 74.9%. Subject to the same caveats expressed earlier, multiplying the patentee infringement win rate 65% by the utility model validation rate, 75%, results in a combined win rate of 49%. For each of the 8 reported courts, the 2012 Invention Patent win rate exceeds 67%, except for Shanghai 2 nd, which is 33%. The universe of cases on which the calculation is based is still small. For each of the 8 courts the 2012 Utility Model Patent win rate exceeds, except for Shanghai 1 st, which is also 33%. The universe of cases on which the calculation is based is still small. For the 1,036 reported decisions from the SIPO Reexamination Board, the patentee validity win rate according to the Global IP Project methodology is 37% + 1/2(14%) = 43%. 2. Time from Filing to Decision on the Merits Exhibit 35 shows that the average duration for 2012 utility patent infringement decisions was less than 1 year for all of the reported courts other than the Changdu and Nanjing intermediate courts. The same was true for invention patent cases in courts other than Zhengzhou and Beijing 1 st. A duration of less than a year makes China one of the fastest patent litigation jurisdictions in the world. Exhibit 34 shows an average time for a validity decision from SIPO in 2012 was 8 months. This number is fairly robust because it is based on 1,096 decisions. This makes China one of the fastest jurisdictions in the world for obtaining a validity decision. 3. Remedies Although perhaps starting to change somewhat, the average damage award in China remains small, relative to the damages awarded in other countries, averaging about U.S. $15, As is the case in Germany, an injunction is also the primary litigation objective in China. The patentee may ask the judges to decide the issues of infringement and damages in one case. Alternatively, it may also file a separate litigation to pursue damages after the court decides that infringement was committed. To determine a damage award, the damages calculation is based on the following four methods, which must be pursued in the below priority order: 1. the patentee s actual loss caused by the infringement; 2. the infringer s benefit acquired through infringement; times reasonable royalties; or 4. statutory compensation ranging from RMB 10,000 to RMB 1,000,000 (about U.S. $1,590 $9,000). 84 Because the calculation of patentee s damage claim must follow the above sequence of proof, only when the previous method of proof fails is the patentee permitted to pursue the following method described above. Attorneys fees are recoverable damages for the plaintiff. 85 However, in practice, courts award only a small portion of the fees actually incurred by the prevailing party. Court fees should also be the responsibility of the losing party, but in many cases the defendant is only ordered to pay part of the court fee. The reasonable expenditures of the plaintiff spent for investigating and confirming the infringement can also be included as part of the prevailing party s damages. 86 In 2012, the losing party in all but two of 385 cases, was ordered to pay the court fee. The average court fee for those 383 cases was RMB 4,756 (about U.S.$792). A permanent injunction is available at the plaintiff s request. However, if an injunction is determined by the court to be detrimental to the public interest, the court may decide not to grant it. For example, if the patent involves technology used by a power plant and an injunction would mean the power plant had to stop production, the public interest would be harmed as a result of the injunction. In that scenario, the court will then likely grant a compulsory license even though Chinese Patent Law assigns the power of granting compulsory licenses to SIPO COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

34 S-35 Infringement win rate *** (Chinese 1st instance cases) Corresponding validity challenges * Corresponding validity win rate , 6% 1, 6% % , 82% Patentee Loses Patentee Wins 10 0 Total No known validity decision ** 16 Decision on validity of patent Totally Valid Not Valid Partially Valid No Data Exhibit 29: Bifurcation of First-Instance Invention Patent Infringement Cases From Beijing 1st Intermediate People s Court, Infringement win rate *** (Chinese 1st instance cases) Corresponding validity challenges * Corresponding validity win rate , 19% 4, 13% 20, 62% Patentee Loses Patentee Wins 0 Total No known validity decision ** Decision on validity of patent Totally Valid Not Valid Partially Valid No Data Exhibit 30: Bifurcation of First-Instance Utility Model Patent Infringement Cases From Beijing 1st Intermediate People s Court, PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

35 S % 90% 100% 3/3 100% 4/4 100% 7/7 80% 70% 60% 67% 4/6 86% 6/7 77% 10/13 76% 13/17 40% 30% 20% 33% 2/6 10% 0% Nanjing Intermediate Court Jiangmen Intermediate Court Shanghai 2nd Intermediate Court Zhengzhou Intermediate Court Chengdu Intermediate Court Beijing 1st Intermediate Court Guangzhou Intermediate Court Shanghai 1st Intermediate Court Exhibit 31: Patentee Infringement Win Rate in First-Instance Invention Patent Decisions on the Merits in China, in % 80% 70% 75% 3/4 80% 4/5 80% 4/5 76% 19/25 60% 40% 2/4 2/4 3/6 53% 8/15 30% 20% 33% 3/9 10% 0% Jiangmen Intermediate Court Shanghai 2nd Intermediate Court Changzhou Intermediate Court Lanzhou Intermediate Court Chengdu Intermediate Court Nanjing Intermediate Court Shanghai 1st Intermediate Court Zhengzhou Intermediate Court Guangzhou Intermediate Court Exhibit 32: Patentee Infringement Win Rate in First-Instance Utility Model Decisions on the Merits in China, in COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

36 S % % % Not Valid Totally Valid Partially Valid Exhibit 33: Validation Rate in SIPO Validity Decisions on the Merits, Average Time in Months Exhibit 34: Procedure Duration of First-Instance SIPO Patent Reexamination Board Decisions on the Merits in China in Average based on 1,096 decisions between January 1, 2012, and December 31, PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

37 S-38 China Utility Patent Infringement Average Duration in months, 2012 Jiangmen Intermediate Court(4) 7.03 Shanghai Second Intermediate Court(4) 4.50 Changzhou Intermediate Court(4) 6.39 Chengdu Intermediate Court(5) Nanjing Intermediate Court(6) Shanghai First Intermediate Court(9) 8.52 Zhengzhou Intermediate Court(15) 4.04 Guangzhou Intermediate Court(25) China - Invention Patent Infringement Average Duration in months, 2012 Nanjing Intermediate Court(3) 6.17 Jiangmen Intermediate Court(4) 9.10 Changsha Intermediate Court(6) Zhengzhou Intermediate Court(6) Chengdu Intermediate Court(7) 6.04 Beijing First Intermediate Court(7) Guangzhou Intermediate Court(13) Shanghai First Intermediate Court(17) Exhibit 35: Procedure Duration of First-Instance Patent Infringement Decisions on the Merits in China in COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

38 S-39 C. United States 1. Patent Infringement and Validity Win Rates In the U.S., there are 94 federal district courts in which patent litigation may be initiated. The U.S. is a unified system, so both infringement and validity may be determined in a single court proceeding. The litigation may be initiated by the patent owner or by the alleged infringer (for a declaration of noninfringement or invalidity). The only other patent infringement venues in the U.S. are the U.S. International Trade Commission (USITC) (where there are certain domestic industry jurisdictional requirements and where money damages cannot be obtained) and the U.S. Court of Federal Claims (where infringement claims against the U.S. government must be filed). 87 In addition, there are a three principal ways a contested case can be terminated on the merits in the U.S: case-dispositive summary judgments, judge verdict, or jury verdict. The result is several different patentee win rates for each first-instance court. The busiest first-instance court in the U.S., by patent litigation filings, is the Eastern District of Texas, with 1,513 cases filed in Second is the District of Delaware with 1,336, followed by the Central District and Northern District of California with 417 and 396 respectively. For the Eastern District of Texas, the overall patentee win rate is 45% (includes consent and default judgments). The patentee win rate in contested cases (excluding consent and default judgments) is 37%. The bench trial win rate is 100% (2/2), and the jury trial win rate is 56.8% (25/44). 89 The appropriate win rate to use depends on the stage of the litigation. Before filing? At this stage the overall win rate is most appropriate unless it is known that the opposing party is litigious, in which case the contested win rate is the appropriate win rate to use. After claim construction? The jury or bench win rate will apply depending on which finder of fact will decide the case. Very few of the patent cases filed in the Eastern District of Texas go to a decision on the merits, 1.6% (46/ 2,862), 90 but the average damage award is $34M, making it a very attractive jurisdiction to patent owners. 91 The AIA created two new post-grant proceedings: post-grant review (PGR) and inter partes review (IPR). Since coming into effect September 16, 2012, 2,144 IPR petitions have been filed. 92 As discussed in Section I, this enthusiastic uptake of the new proceedings is making the U.S. more of a bifurcated jurisdiction. Factors supporting the favorability of PTAB are a statutory timeline of one year from institution, no presumption of validity for the patent, a lower burden of proof, and potentially lower costs. An integral part of the changes to the administrative options is the replacement of the Board of Patent Appeals and Interferences with the Patent Trial and Appeal Board (PTAB). The PTAB is the forum of first instance for IPRs and PGRs. It comprises a panel of three administrative patent judges with technical and legal training. PGR petitions have a time limit of 9 months after issuance, which may remind some practitioners of EPO Opposition proceedings, but there are many procedural differences. 93 As of November 1, 2014, the petition grant rate is 77% and so far the PTAB has held 68% of the instituted claims unpatentable. 94 Nearly 23% of the claims have survived without any changes, and 9% of the claims were conceded by the patent owner. 95 The same patent claims can be at issue simultaneously in an administrative proceeding and a U.S. district court litigation. Neither forum is required to stay its proceeding in favor of the other (except for limited circumstances 96 ). Moreover, a patent held valid in litigation may still be challenged in an administrative proceeding and may be determined unpatentable. 97 In litigation, there is a presumption of patent validity and a clear-and-convincing evidentiary standard of proof. Before the PTAB, by contrast, there is no presumption of validity, the broadest reasonable claim construction applies, and a preponderance-of-evidence standard determines the issue of patentability. There have been cases in the United States where damages awarded by a court after an infringement trial were held unenforceable after a PTAB decision of unpatentability Time from Filing to Decision on the Merits The time from filing to termination in first-instance patent litigation in the United States varies considerably by district. For example, according to the 2014 PriceWaterhouseCoopers Patent Litigation Study, the median time to termination by trial in the Eastern District of Virginia is less than one year (.97 years), whereas the average time to termination by trial in the Northern District of Illinois is more than 3.67 years. 99 Even looking at termination by contested judgments, there is wide variation between the fastest (Eastern District of Virginia at 12.2 months) and the slowest (Eastern District of Michigan at 42.3 months). 100 On average, patent infringement litigation in the United States is likely to take between two to three years, depending in large part on how long discovery takes, and to a lesser degree on which district court is involved. This makes the U.S. the slowest of the three most active patent litigation countries, although it must be remembered that the issues of validity, infringement, and damages may all be determined when a U.S. litigation terminates. In China and Germany, infringement and validity will be separate and an additional hearing for damages may be necessary. The new post-grant proceedings, IPR and PGR, by statute must finish 12 months (or, for good cause, 18 months) from the date on which they are instituted. 101 As of December 4, 2014, 177 IPR Final Written Decisions have issued from 853 IPRs instituted. The PTAB has, for the most part, met the 12-month deadline. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

39 S-40 Bench Jury 100% 90% 80% 70% 60% 40% 30% 20% 10% 100% 2/2 57% 25/44 58% 14.5/25 48% 22/45 100% 4/4 83% 2.5/3 6/12 44% 7/16 100% 1/1 56% 5/9 25% 1/4 75% 3/4 67% 4/6 100% 3/3 18/28 83% 5/8 60% 3/5 63% 7.5/12 38% 3/8 88% 7/8 0% Eastern District of Texas District of Delaware Central District of California Northern District of California Southern District of California Northern District of Illinois Southern District of Florida District of New Jersey Eastern District of Southern District Virginia of New York Exhibit 36: Bench and Jury Patentee Win Rates in Most Active U.S. Federal District Courts (By Patent Infringement Litigation Filings) % % % Instituted Claims Cancelled by PTAB Instituted Claims Conceded by Owner Instituted Claims Survived Exhibit 37: Outcomes of PTAB Final Written Decisions COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

40 S-41 SD New York, 30.6 ED Virginia, 12.2 D New Jersey, 30.6 SD Florida, 20.6 ND Illinois, 31.9 SD California, 25.3 ND California, 24 CD California, 19.6 D Delaware, 28.3 ED Texas, Exhibit 38: Time From Filing to Termination by Contested Judgment in the 10 Most Active U.S. District Courts (in Months). 104 Frequency of Cases Days from Institution to Final Written Decision Exhibit 39: PTAB Final Written Decision Timing. 105 PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

41 S-42 While not as fast as the average time to termination in SIPO in China, that is faster than the FPC in Germany, and marks a significant change from the pre-aia era, when ex parte reexamination was the main administrative validity challenge option and the average time for ex parte reexamination from filing to issued certificate exceeded two years (27.8 months) Remedies Liability for patent infringement in the U.S. is only civil in nature; there is no criminal liability. 107 Remedies for patent infringement include damages, 108 permanent and preliminary injunctions, 109 and attorneys fees. 110 Damages awarded are the largest in the world, by an order of magnitude (see Section II): the largest damages award was $1.8 billion. 111 Damages are a primary objective of patent litigation in the U.S., in contrast to Germany and China (and most countries) where an injunction is the main goal. With the increase in patent litigation in the U.S. by nonpracticing entities, it is no longer automatic that a permanent injunction will be granted upon a finding of liability; permanent injunctions are routinely denied in cases in which the patentee merely licensed its technology and was not offering its own commercial embodiment. 112 There are two calculation methods in the U.S.: lost profits and reasonable royalty. 113 There are no infringer s profits awarded. Damages must not be less than a reasonable royalty. A reasonable royalty is the default calculation when lost profits cannot be sufficiently proved or are otherwise inappropriate as the measure of damages. Prejudgment interest and postjudgment interest are also available to compensate the patentee based on the lost time value of money it should have received. 114 In addition, mixed damages awards are possible. For example, lost profits may compensate for the part of the infringing sales the patent owner proved it could have made, and a reasonable royalty may be applied for the remainder of the infringing sales. 115 Courts have authority and discretion to grant punitive damages. The court may increase the damages up to three times the amount found or assessed ( treble damages ). 116 Typically, increased damages are granted for acts of willful infringement. Willful infringement damages are awarded when the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. 117 The patentee must show the objective recklessness of the infringer by clear-and-convincing evidence. Reimbursement of costs and attorneys fees are possible, but not very likely. Even if some costs are awarded to a winning party, it is very unlikely to cover the actual costs and fees incurred. To be eligible for an award of reasonable attorneys fees, a party must show that the litigation is an exceptional case. 118 This is a discretionary determination by the court, and attorneys fees awards are not very common. IV. Methodology and Data Sources The Global IP Project defines a patent litigation win as a patent litigation case that is terminated in a first-instance trial decision on the merits and in which at least one asserted claim of the patent-in-suit is held both valid and infringed. Any other decision on the merits is considered a loss. To determine a country s win rate for patentees on a per-case basis, the total number of wins is the numerator and the total number of wins + losses is the denominator. For example, if in a given year there are 5 cases that were wins for the patentee and 7 that were losses, the win rate would be 5/(7+5), or 42 percent. The same formula is used to determine the patentee win rate on a per-patent basis, which may be applicable in countries where more than one patent is at issue in a single litigation. For bifurcated countries, the above formula applies to the infringement litigation outcomes. For validity, a second win rate must be calculated. In validity decisions, one of three outcomes is usually possible: 1. All claims are validated without change, which is a clear win for the patentee; 2. All claims are invalidated, which is a clear loss for the patentee; or 3. At least one claim is amended, or some claims invalidated and some claims remain unchanged, or the patent is partially invalidated. The third outcome is unclear for the patentee because the data does not indicate whether the specific claims amended or held invalid were the ones covering the allegedly infringing product or process. Accordingly, it is impossible to determine, without a more detailed review of the actual decision itself, whether the third outcome is a win or a loss for the patentee. To resolve this problem and permit the calculation of an estimated win rate, one-half of the mixed decisions are considered a win and one-half a loss. The calculation of the patentee win rate for validity challenges, therefore, equals the percentage of all claims maintained without change + 1/2(percentage of decisions with at least one claim amended). The validation rate formula also applies in unified countries to validity decisions of administrative proceedings, where that route is available. For example, the U.S., Japan, and Taiwan are countries with a unified system (both validity and infringement may be determined in one judicial proceeding) and an administrative validity challenge route (in the national patent office) is also available. The report is based on data collected by Global IP Project contributors for the Global IP Project, some of which is reported in GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN (copyright 2014 by The Bureau of National Affairs, Inc., and reprinted by permission). It is also based on data collected by DARTS-IP ( as part of a collaboration agreement between DARTS-IP and the Global IP Project. The U.S. data derives from LegalMetric for the U.S. district court data, Courtlink for the U.S. patent litigation filing data, Price- WaterhouseCoopers for the U.S. damage awards data, and the United States Patent & Trademark Office for the PTO post-grant proceedings data COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

42 S-43 V. Global IP Project Participating Firms and Attorneys Argentina Australia Austria Brazil Marval, ÓFarrell & Mairal Ashurst Australia Salomonowitz Horak Lawyers Dannemann, Siemsen, Bigler & Ipanema Moreira Martin Bensadon Ignacio Sánchez Echagüe Maria Laura Etcheverry Marval, ÓFarrell & Mairal Av. Leandro N. Alem 928 C1001AAR, Buenos Aires Argentina Tel: Fax: Mary Padbury Jessica Norgard Kellech Smith Ashurst Australia Level William Street Melbourne VIC 3000 Australia GPO Box 9938 DX 388 Melbourne Tel: Fax: mary.padbury@ashurst.com Jessica.Norgard@ashurst.com Kellech.Smith@ashurst.com Dr. Sascha Salomonowitz Salomonowitz Horak Lawyers Tuchlauben 18 / 9 A-1010 Vienna T: +43 (1) F: +43 (1) s.salomonowitz@sh-ip.at Joaquim Eugenio Goulart Rodrigo Carneiro Dannemann, Siemsen, Bigler & Ipanema Moreira Rua Marquês de Olinda, , Rio De Janeiro Brazil Tel: (general) Tel: (direct) Fax: jgoulart@dannemann.com.br rcarneiro@dannemann.com.br PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

43 S-44 Canada Chile China Denmark England Gowlings Silva & Cia - Santiago Beijing Sanyou Intellectual Property Agency Ltd Zacco Advokater Copenhagen Taylor Wessing - London Michael Crichton Gowling Lafleur Henderson LLP 160 Elgin Street Suite 2600 Ottawa, Ontario Canada K1P 1C3 Tel: Fax: michael.crichton@gowlings.com Francisco Silva Juan Pablo Silva Andrés Grunewaldt Silva & Cia Hendaya 60, PISO 4 Las Condes Santiago, Chile Tel: Fax: fsilva@silva.cl jpsilva@silva.cl AGrunewaldt@silva.cl Lena Shen Beijing Sanyou Intellectual Property Agency Ltd. 16F, Block A, Corporate Square No. 35 Jinrong Street Beijing , P. R. China Tel: Fax: shenlena@san-you.com (Xiaoguang Cui, cipp@cippnet.com) Martin Sick Nielsen Zacco Advokater Hans Bekkevolds Allé 7 DK-2900 Hellerup Denmark Tel.: Fax: msn@zaccoadvokater.dk Chris Thornham Paul England Taylor Wessing 5 New Street Square London EC4A 3TW UK Tel: +44 (0) Fax: +44 (0) c.thornham@taylorwessing.com p.england@taylorwessing.com COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

44 S-45 Finland France Germany India Roschier, Attorneys Ltd. VÉRON & ASSOCIÉS AVOCATS Taylor Wessing - Munich & Düsseldorf Anand and Anand Johanna Flythström Rainer Hilli Mikael Segercrantz Roschier, Attorneys, Ltd. Keskuskatu 7 A Helsinki Finland Tel: +358 (0) Fax: +358 (0) johanna.flythstrom@roschier.com rainer.hilli@roschier.com mikael.segercrantz@roschier.com Pierre Véron Thomas Bouvet VÉRON & ASSOCIÉS AVOCATS 1, rue Volney F Paris, France Tél.: +33 (0) Fax: +33 (0) pierre.veron@veron.com thomas.bouvet@veron.com Dr. Sabine Rojahn Taylor Wessing Isartorplatz 8 D Munich Tel. +49 (0) Fax: +49 (0) s.rojahn@taylorwessing.com Roland Küppers Taylor Wessing Benrather Str Düsseldorf Tel (0) Fax: + 49 (0) r.küppers@taylorwessing.com Pravin Anand Archana Shanker Anand and Anand 1 Jaipur Estate B-41 Nizamuddin East New Delhi, India Tel: Fax: Pravin@anandandanand.com archana@anandandanand.com PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

45 S-46 Ireland Israel Italy Japan Korea Mexico A&L Goodbody Gilat Bareket& Co. Franzosi - Dal Negro - Setti Kaneko & Iwamatsu - Tokyo Kim & Chang Uhthoff, Gomez Vega & Uhthoff SC John Whelan John Cahir A&L Goodbody International Financial Services Centre North Wall Quay Dublin 1, Ireland Tel: Fax: jcahir@algoodbody.ie jwhelan@algoodbody.ie Eran Bareket Gilat Bareket & Co. 26A Habarzel Street, Tel-Aviv , Israel P.O.Box 13136, Tel-Aviv , Israel Tel: Fax: eranb@gilatadv.co.il Vincenzo Jandoli Franzosi - Dal Negro, et al. Via Brera Milano Tel.: Fax: jandoli@franzosi.com Shinichi Murata Attorney-at-law (admitted in Japan and New York) Kaneko & Iwamatsu 12th Fl. Daido Seimei Kasumigaseki Bldg Kasumigaseki, Chiyoda-ku Tokyo Japan Tel: Fax: murata@kanekoiwamatsu.com Jay J. Kim Tae-Jun Suh Cy C. Kim Jeongdong Building, 17F Jeongdong-gil Jung-gu, Seoul , Korea Tel: jjkim@ip.kimchang.com tjsuh@ip.kimchang.com cykim@ip.kimchang.com Saúl Santoyo Uhthoff, Gomez Vega & Uhthoff SC Hamburgo No. 260 C.P Mexico D.F. Tel: Fax: /8507 saulso@uhthoff.com.mx COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

46 S-47 Netherlands New Zealand Norway Russia Scotland South Africa Spain NautaDutilh A J Park Zacco Norway AS Gowlings International Inc. Brodies LLP To be identified Gómez-Acebo & Pombo Abogados Professor Charles Gielen NautaDutilh Strawinskylaan XV Amsterdam P.O. Box JC Amsterdam The Netherlands T: F: charles.gielen@nautadutilh.com Matt Adams A J Park Level 22, State Insurance Tower 1 Willis Street Wellington, New Zealand PO Box 949, Wellington 6140, New Zealand Tel: Fax: Matt.Adams@ajpark.com Zacco Norway AS Haakon Vll s gt. 2 PO Box 2003 Vika No-0125 Oslo, Norway Tel: Fax: David Aylen Gowlings International Inc. 11 Gogolevsky Boulevard Moscow, Russia Tel: david.aylen@gowlings.com Gill Grassie Robert Buchan Brodies LLP 15 Atholl Crescent Edinburgh EH3 8HA Scotland UK Tel: + 44 (0) Fax: +44 (0) Gill.grassie@brodies.com robert.buchan@brodies.com To be identified Gonzalo Ulloa Eduardo Castillo Gómez-Acebo & Pombo Abogados, SLP Castellana, Madrid Tel: (34) Fax: (34) ecastillo@gomezacebo-pombo.com gulloa@gomezacebo-pombo.com PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

47 S-48 Sweden Switzerland Taiwan U.S.A. Zacco Sweden AB Schellenberg Wittmer Saint Island International Patent & Law Office Finnegan, Henderson, Farabow, Garrett & Dunner Bengt Eliasson Zacco Sweden AB Sveavãgen 151 Box SE Stockholm Sweden Tel: Fax: bel@zacco.se Andrea Mondini Philipp Groz Schellenberg Wittmer Löwenstrasse 19 Postfach 6333 CH-8023 Zurich Switzerland Tel: Fax: andrea.mondini@swlegal.ch philipp.groz@swlegal.ch Frank Liu Tony T.Y. Chang Saint Island International Patent & Law Office 7th Fl., No.248, Section 3, Nanking East Road, Taipei, Taiwan, Republic of China TEL : FAX : siiplo@mail.saint-island.com.tw tony.chang@mail.saint-island.com.tw Michael C. Elmer C. Gregory Gramenopoulos Jonathan Stroud Stacy Lewis Finnegan 901 New York Ave., NW Washington, DC U.S.A. michael.elmer@finnegan.com c.gregory.gramenopoulos@finnegan.com jonathan.stroud@finnegan.com stacy.lewis@finnegan.com COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

48 S-49 Disclaimer: These materials are public information and have been prepared solely for educational and entertainment purposes to contribute to the understanding of intellectual property law. They reflect only the personal views of the authors and provide no individualized legal advice. It is understood that each case is fact-specific; and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and participating law firms of the Global IP Project cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed here. The presentation of these materials does not establish any form of attorney-client relationship with the joint authors and participating law firms of the Global IP Project. While every attempt was made to ensure accuracy, errors or omissions may appear, for which any liability is disclaimed. About: The Global IP Project was founded in January 2002 by Michael Elmer of Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. One of the main objectives of the Global IP Project was to develop win rate data and other objective global metrics with the assistance of patent attorneys and litigators from law firms around the world. Before 2002, this data did not exist. Through the combined efforts of its members, the Global IP Project has collected litigation data from 1997 through the present for the most litigious countries in the world. Today, the Global IP Project has members from 30 countries and collaborates with DARTS-IP ( a global intellectual property case law database collects decisions daily and currently has over 2,000,000 cases from over 2,000 courts globally (as of September 2014). Each individual decision is analyzed locally by trademark, patent, design or domain name specialists. Search interfaces are tailored to the needs of IP professionals. DARTS-IP has a large number of filters to find cases and to research global data, such as date, main proceeding, substantive discussion, industry, country/court, win rates, proceeding duration, and bifurcation. In 2014, Global IP Project participants representing 16 countries contributed to the treatise GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN, published by Bloomberg BNA. Two more countries (Finland and Israel) were included in the first supplement, to be published in December While the book supplements are intended to provide updated data and developments for the current 18 bookcountries, another objective is to gradually include additional Global IP Project participating countries in the book. Similarly, while this first Annual Report includes data for 19 countries, the objective is to eventually include data from all 30 countries in future annual reports. In addition, the reader is directed to the Global IP Project website, where the authors provide additional global patent litigation data and related information. Acknowledgement: This report was prepared with input from the Global IP Participants representing the 19 countries discussed in the report, with editorial direction and writing from Michael C. Elmer, C. Gregory Gramenopoulos, and Stacy Lewis of Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. NOTES 1 Text in this section excerpted and/or derived from GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN (Bloomberg BNA 2014) and GLOBAL PATENT LITIGATION, 2014 SUPPLEMENT (Bloomberg BNA 2014) is the copyright of The Bureau of National Affairs, Inc., and is reprinted by permission. For information on the treatise and supplement, see 2 Data sources listed in Section V. 3 Source: Global IP Participant for the time period Source: Global IP Participant instituted, 258 denied. Does not include joinder decisions. As of Nov. 27, Source: graph.pdf 6 1,457/2,133. An additional 9% of the challenged claims were conceded by the patent owner (194/2,133). Source: Finnegan research, as of Nov. 1, 2014, See also, Jonathan R.K. Stroud & Mark Consilvio, Unraveling the USPTO s Tangled Web: An Empirical Analysis of the Complex World of Post-Issuance Patent Proceedings, 20INTELL. PROP. L. REV. (Georgia) (2014). 7 Only unified systems have the possibility of doubletracking because bifurcated systems separate infringement and validity proceedings. See Exhibit 5. Global IP Project countries with double-tracking are Canada, Denmark, England, Finland, France, India, Israel, Italy, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, Taiwan, and the U.S. 8 See also Michael C. Elmer and Stacy Lewis, Global Trend to IP Specialty Courts, Managing IP China Edition (July 2013). 9 The patent pilot program in the U.S. district courts was a step in this direction also, but the judges do not have technical backgrounds enhanced-european-patent-system.pdf 11 Source: Global IP Participant for China. 12 Source: Courtlink. 13 Details and discussion of the UPC can be found in Chapter 5, The Unified Patent Court of GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN (Bloomberg BNA 2014). 14 Source: Courtlink. See also, Chapter 15 of GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN (Bloomberg BNA 2014). 15 The GIP Project authors define an invention patent as a patent that has been subject to prior art examination, to distinguish from other patents such as the PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

49 S-50 utility model and design patents in China, which have not been examined. It should also be noted that in China, more than 65% of all patent infringement litigations are based on utility model and design patents; 11% cases filed for invention patents, and 24% not known. Source: Global IP Participant. 16 About U.S. $44M. Settled for U.S. $24 million before an appeal was heard. 17 Largest award to date in Japan is U.S. $82M, Aruze Corp. v. Sammy Corp., Hanrei Times No. 1119, 222 (2002). Largest award to date in Taiwan is U.S. $65.8M, Celanese Far East Limited Taiwan Branch (Hong Kong) v. China Petrochemical Development Corporation, 95 Zhi 5 (Taipei D.C. 2007) Taiwan Taipei District Court (overruled in Aug. 2010). Source: Global IP Participants. 18 Japan: 22% (58/259) ( ); Taiwan: Design patents 36% (4/11), Invention patents 15% (8/52), Utility models 16% (16/97) ( ). Source: Global IP Participants. 19 The USPTO 2014 Annual Report shows 330 requests in 2012 and 260 IPR requests in 2013 were known to have related litigation. Since inter partes review replaced inter partes reexamination on Sept. 16, 2012, we use an estimate of 104 for 2012 for a total of 364 IPR requests known to have related litigation. This represents about 43% (364/850). The 850 requests are estimated from the bar graph at ip/boards/bpai/stats/112714_aia_stat_graph.pdf. Litigation may be stayed pending termination of the IPR. An average of 66% of litigation stay requests were granted according to LegalMetric Nationwide Report: Stay Pending Inter Partes Review in Patent Cases, August 2012-June 2014 ( based upon 212 decisions in contested stay pending inter partes review motions found in the dockets of the courts. Of these 212 decisions, 136 were granted, 6 were granted in part, and 70 were denied. The grant rate, of course, varies by district.). 20 PriceWaterhouseCoopers 2014 Patent Litigation Study, p NPE data is extremely difficult to obtain. While there are a few well-known NPEs, there is no universal way to tell if a plaintiff is an NPE by looking at the name. In addition, the meaning of what constitutes an NPE is often debated and the real party in interest is not always evident from the pleadings. 22 This is not the case in the U.S. in view of ebay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006). 23 Text in this section excerpted and/or derived from GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN (Bloomberg BNA 2014) and GLOBAL PATENT LITIGATION, 2014 SUPPLEMENT (Bloomberg BNA 2014) is the copyright of The Bureau of National Affairs, Inc., and is reprinted by permission. For information on the treatise and the forthcoming supplement, see Source: parte_historical_stats_roll_up_eoy2013.pdf. 25 Estimated from bar graph at ip/boards/bpai/stats/112714_aia_stat_graph.pdf. 26 Canada, England & Wales, Finland, France, India, Israel, Italy, Japan, Netherlands, Switzerland, Taiwan and the U.S. have double tracking. 27 The Global IP Project, through its collaboration with DARTS-IP, is attempting to encourage other countries to adopt a practice similar to that in the U.S., where a civil cover sheet is prepared and submitted, indicating a patent infringement case. Only when and if this (or a similar practice) is implemented, together with an electronic reporting system, will it be possible to obtain more accurate, comparative filing data. 28 Source: Global IP Participant means that while technically multiple courts have jurisdiction, virtually all patent infringement cases are brought in one court. 30 Double-tracking question applies only to unified countries intermediate courts, 6 basic courts, 31 high courts, and 3 IP-specialty courts all have jurisdiction to hear first-instance patent infringement litigation cases. 32 India considers itself a hybrid system because post-grant oppositions and patent revocation actions can be brought only before the Intellectual Property Appellate Board (IPAB). However, the authors consider India a unified system because invalidity can be raised as a defense in patent infringement litigation and the court can make a validity determination. Uniquely, multiple validity challenge routes may not be used simultaneously. 33 Source: Global IP Project. 34 Source: Global IP Participants. 35 Source: Global IP Participants for China and Germany; Courtlink for U.S. 36 This issue is discussed in detail in chapter 3 of GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN. The bench and jury trial win rates are based on decisions on the merits in cases that have survived summary judgment. It is more than twice as high as LegalMetric s contested win rate, which includes other case outcomes such as case-dispositive summary judgment motions. For example, as shown in Exhibit 10 for the U.S., the contested win rate is only 24% whereas the combined (bench and jury) trial win rate is 60.4%. 37 As will unified systems where double tracking is available. 38 Although the data shows 259 patent litigation cases decided on the merits, the 1,265 patent cases filed include all patent-related cases such as patent license cases and employee invention cases. 259/1,265 gives a figure of 21%, which is too low, considering the denominator is not just patent infringement litigation cases filed; 40% is considered a reasonable estimate. 39 Preliminary injunction data is reported for India because there is insufficient data for decisions on the merits in the first instance. One decision on the merits, Roche v. Cipla, Delhi High Court, Sept. 7, The Italian patent litigation data is provided by DARTS-IP based on decisions provided by the Judges of Corporate Courts. 41 South Korean patent infringement litigation data provided by Professor Chaho Jung s analysis of 406 patent infringement cases between , which indicates the patentee won or partially 106 times and lost 300 times. Accordingly, the South Korean patentee win rate is 26% (106/406). Prof Jung characterizes a case as partially won where the patentee won on the issue of infringement (according to the book definition) but was not awarded all of the damages requested. 42 Source: LegalMetric Nationwide Patent Litigation Report February 2014 for the time period January 1991 February Patentee win rates vary widely among the U.S. federal district courts. 43 Source: Canadian Intellectual Property Office (CIPO) COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

50 S Patent validity is ordinarily challenged in the court, but can be challenged post-grant in the UKIPO in revocation proceedings (rarely used) and EPO oppositions are available for European patents if filed within nine months of grant, or if there is an opposition pending into which a litigant can intervene. 45 Finnish Patents and Registration Office s First- Instance Decisions on Patent Oppositions No national validity challenge track, but EPO oppositions available for European patents. 47 Preliminary injunction data is reported for India because there is insufficient data for decisions on the merits in the first instance. One decision on the merits, Roche v. Cipla, Delhi High Court, Sept. 7, Data from Intellectual Property Appellate Board (IPAB) revocation proceeding; patentee win rate calculated differently than Global IP Project methodology. 49 The Israel Patent Office (ILPTO) validity win rate is not recorded in a manner consistent with the Global IP Project methodology, but rather a refusal of the opposition and withdrawal of the opposition (cumulatively) are counted as a win for the patent applicant, and withdrawal of the patent application and allowance of the opposition (cumulatively) are counted as a loss for the patent applicant. This data, however, is probably skewed towards showing a higher win rate than the true one. This is because the patentee loss data should be fairly accurate (there is little doubt that withdrawal of the patent application and allowance of the opposition are a loss for the patent applicant), but the other two results are not necessarily a complete win for the patentee. Refusal of the opposition may have been achieved after a narrowing amendment of the claims, and withdrawal of the opposition may have been achieved after granting a license or a covenant not to sue to the opponent. Therefore, we have reported the loss rate of at least 48% to be as consistent as possible with the Global IP Project methodology. 50 No national validity challenge track, but EPO oppositions available for European patents. 51 The win rate cannot be determined more precisely according to the Global IP Project methodology (all claims maintained without change + half of the claims amended) because this level of data is not available. The number indicated here represents the requests for invalidation not accepted or dismissed (patent claims remain intact without change; a win for the patentee). Source: 2013 Japan Patent Office (JPO) Annual Report Part 5 ( ). 52 No national validity challenge track, but EPO oppositions available for European patents. 53 The Russia Patent Chamber validity win rate is not recorded in a manner consistent with the Global IP Project methodology. Rather, for , 64% of the time in validity challenges the claims were all maintained or maintained-in-part. This includes patents, trademarks and appellation cases 54 South Korean patent infringement litigation data provided by Professor Chaho Jung s analysis of 406 patent infringement cases between , which indicates the patentee won 39 times, partially won 67 times, and lost 300 times (in actuality, 408 cases were evaluated; however, two cases were mediated). Accordingly, the patentee win rate is 26% (106/406). As noted previously, Professor Jung characterized certain cases as partially won where the patentee, after winning on the infringement issue, was not awarded all of the damages requested. 55 The win rate cannot be determined more precisely because the required level of data is not available. The number indicated here represents the decisions where no claims were invalidated (patent claims remain intact without change; a win for the patentee). Source: Korean Intellectual Property Office (KIPO) Intellectual Property Tribunal (IPT), No national validity challenge track, but EPO oppositions available for European patents. 57 The win rate cannot be determined more precisely because the required level of data is not available. The number indicated here is the requests for invalidation denied (patent claims remain intact without change; a win for the patentee). Source: TIPO Annual Report Invalidation Decisions ( ). 58 Source: LegalMetric Nationwide Patent Litigation Report February 2014 for the time period January February Patentee win rates vary widely among the U.S. federal district courts. 59 Source: reported on issue-byissue, not case-by-case % percent of all claims confirmed (66% of at least one claim amended). Source: United States Patent and Trademark Office (USPTO) statistics, June 1, 1981 Sept. 30, 2013 ( 61 Source: Finnegan research, PTAB results surviving claims (23%) (482/2,133). Data as of Nov. 1, Brazil: Lune v. Americel, 2nd Chamber of the Civil Courts of Brasília, case n ; Canada: Merck v. Apotex, 2013 FC 751 (2013); Japan: Aruze Corp. v. Sammy Corp., Hanrei Times No. 1119, 222 (2002); South Korea: Kimberly-Clark Corp. v. Ssang Yong Paper Co. Ltd. (2004); Taiwan: Celanese Far East Limited Taiwan Branch (Hong Kong) v. China Petrochemical Development Corp., 95 Zhi 5 (Taipei D.C. 2007) Taiwan Taipei District Court (overruled in Aug. 2010); China: Zhejiang province, CHINT v. Schneider Electric Low Voltage (Tianjin) Co. Ltd. (2007) (utility model patent) (settled for $24M before appeal heard); France: TGI Paris, 3rd Chamber, section 2, (2007), Ethypharm/Fournier; Finland: District Court of Helsinki, decision, No. 11/14339, dated 15 April 2011, in the matters L 02/1623, L 02/9097, L 02/9513, L 09/47725, L 09/47735, L10/20063, and L 10/ ; Italy: Court of Appeal of Milan, No. 2199/10, October 7, 2010; England: Ultraframe v. Eurocell (2006) ($6.15M); Gerber Garment Technology Inc v. Lectra Systems Ltd. (Ct. App.) (1996) ($6M); Spain: Pfizer v. Bexal; Netherlands: Excluding approximately 15 years of statutory interest, District Court The Hague, 6 September 2006, nr. 3563/ HAZA , BIE 2007, 103: Bom/Alcoa; Germany: EUR 2.04M plus interest; Düsseldorf Regional Court, June 22, 2010, File No. 4b O 57/09, Occluder (Infringement was, however, not confirmed by Federal Court of Justice and, consequently, damages became re-payable); Israel: the Ein Tal matter (2003). 63 Australia preliminary injunction grant rate: 74% (14/19) ( ); Germany preliminary injunction grant rate: : 55% (79/145) (Düsseldorf firstinstance court only). 64 There are regional versions of this diagram on the Global IP website, wherein the most patentee-friendly and patentee- PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

51 S-52 unfriendly countries are identified for Asia and Europe, respectively. The most patentee-friendly countries in Europe are Germany, France, and the Netherlands, and the most patentee-unfriendly is England. In Asia, the most patentee-friendly country is China, and the most patentee-unfriendly are Japan and Taiwan. 65 There are regional versions of this diagram on the Global IP Project website, 66 Source: Global IP Participant. 67 Source: Global IP Participant. 68 In this Report, the authors provide industryspecific data from the Global IP Project. For industry data from DARTS-IP, the reader is directed to Appendix A of GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN, where the first-ever global industry-specific data is provided from early data extractions from the DARTS-IP database. While the data is embryonic, the DARTS-IP database is also interesting because it captures industries according to the more extensive EPO classification system. 69 Although the Italy cases come from DARTS-IP database, the analysis of industry-specific win rates comes from the Global IP Project. 70 For more technology-specific patentee win rates in France, see chapter 17 of GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN. The only French technology-specific patentee win rate data included in this report is that corresponding to the Global IP Project technology categories. 71 When the UPC is established, London will be the specialty court for human necessities, chemistry and metallurgy. 72 The charts in this section on Germany and China are provided by DARTS-IP. The data represents a limited number of cases. For example, in 2012, the DARTS-IP German bifurcation data chart is based on 88 of decisions from Düsseldorf. 73 In the U.S., nearly all patent litigation filings relate to invention patents. In Germany, they relate to invention patents and utility models. In China this number represents invention patents, utility models and design patents. Design patents and utility models make up at least 65% of the patent litigation filings; invention patents 11%, unknown 24%. Source: Global IP Project. 74 Germany has 12 first-instance infringement courts; the U.S. has 94 first-instance federal district courts plus the ITC and Court of Federal Claims; and China has 87 intermediate people s courts, 6 basic courts, 31 high courts, and 3 IP-specialty courts that can hear the firstinstance patent infringement litigation cases. 75 While not discussed here, the U.S. has two additional trial courts, namely, the U.S. International Trade Commission (USITC) and the U.S. Court of Federal Claims. 76 The USPTO 2014 Annual Report shows 330 requests in 2012 and 260 IPR requests in 2013 were known to have related litigation. Since inter partes review replaced inter partes reexamination on Sept. 16, 2012, we use an estimate of 104 for 2012 for a total of 364 IPR requests known to have related litigation. This represents about 43% (364/850). The 850 requests are estimated from bar graph at boards/bpai/stats/112714_aia_stat_graph.pdf. 77 Litigation may be stayed pending termination of the IPR. An average of 66% of litigation stay requests were granted according to LegalMetric Nationwide Report: Stay Pending Inter Partes Review in Patent Cases, August 2012 June 2014 ( based upon 212 decisions in contested stay pending inter partes review motions found in the dockets of the courts. Of these 212 decisions, 136 were granted, 6 were granted in part, and 70 were denied. The grant rate, of course, varies by district. In very limited circumstances, a stay is mandatory (35 U.S.C. 315(a)(2) and 325(a)(2)); otherwise, the decision to grant a stay request is at the discretion of the district court judge. Before the AIA, the proclivity of district court judges to grant requests for a stay pending ex parte reexamination varied widely. See Legal- Metric Nationwide Report Stay Pending Reexamination in Patent Cases, June 1991 February Also known as the Bundespatentgericht (BPG). In Germany, there may also be validity challenges in the European Patent Office (EPO) of European patents designating Germany. 79 As can be seen from the first DARTS-IP German bifurcation chart, 37 out of 88 Düsseldorf patent infringement decisions for calendar year 2012 (40%) also included either a corresponding validity challenge in the EPO or FPC. It is this limited population of decisions that provides the, upper preliminary estimate of 40%. This is considered an upper estimate because the DARTS-IP database is not yet able to confirm that the same parties are involved in both the Düsseldorf infringement case and the corresponding validity challenge. 80 See Chapter 18 in GLOBAL PATENT LITIGATION: HOW AND WHERE TO WIN. 81 Germany: EUR 2.04M plus interest; Düsseldorf Regional Court, June 22, 2010, File No. 4b O 57/09, Occluder (Infringement was, however, not confirmed by Federal Court of Justice and, consequently, damages became re-payable). 82 GCCP Source: Global IP Participant, average damage awards from select Chinese first-instance courts, : Shanghai 2nd, U.S. $35,400; Beijing 1st, U.S. $22,000; Zhejiang Ningbo, U.S. $20,400; Beijing 2nd, U.S. $18,400; Anhui Hefei, U.S. $12,300; Guangdong Shenzhen, U.S. $11,500; Shanghai 1st, U.S. $11,500; Zhejiang Jinhua, U.S. $11,500, 84 Article 65, Patent Law of China (2009). 85 Article 65 of Patent Law of China (2009); Article 22 of Supreme Court s Some Regulations on the Application of Laws to Hearing Patent Dispute Cases (2013). 86 Article 22 of Patent Law of China (2009). 87 For more information on USITC and Claims Court data see the Global IP Project website, 88 Source: Courtlink. 89 Source: LegalMetric, District Report, Jan Feb Source: LegalMetric, District Report, Jan Feb Source: LegalMetric, District Report, Jan Feb Source: _aia_stat_graph.pdf, as of December 4, See Filip De Corte, Anthony C. Tridico, Tom Irving, Stacy D. Lewis & Christina N. Gervasi, AIA Post-Grant Review & European Oppositions: Will They Work in Tandem, or Rather Pass Like Ships in the Night?, 14 N.C. J.L. & Tech. 93 (2012), available at wp-content/uploads/2013/01/11_de-corte_final.pdf COPYRIGHT 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN

52 S ,457/2,133. Source: Finnegan research, as of Nov. 1, 2014, 95 Source: Finnegan research, as of Nov. 1, 2014, U.S.C. 315(a)(2) and 325(a)(2). 97 See, e.g., Fresenius USA v. Baxter Int l, 721 F.3d 1330 (Fed. Cir. 2013), cert. denied, 134 S.Ct (U.S. 2014), and In re Baxter Int l, Inc., 678 F.3d 1357 (Fed. Cir. 2012); ); Interthinx, Inc. v. Corelogic, Inc., CBM Paper 58 (P.T.A.B. Jan. 30, 2014) (holding unpatentable expired patent claims that had been held valid, enforceable, and infringed in patent litigation). 98 See, e.g., RIM $612M settlement of litigation over patents that were later held invalid by the USPTO in reexamination; NTP, Inc. v. Research In Motion, Ltd., 397 F. Supp. 2d 785 (E.D. Va. 2005) PriceWaterhouseCoopers Patent Litigation Study, Chart 9a. 100 LegalMetric District Reports, January 2009 Feb ( average time from case filing to case termination, in months, for all patent cases terminated by contested judgment[.] ) U.S.C. 316(a)(11) and 326(a)(11). 102 Source: LegalMetric, District Reports, Jan Feb The reports indicate that when.5 is shown, half a case was counted because in it is recorded that both parties prevailed. 103 Source: Finnegan research, as of November 1, 2014, Source: LegalMetric District Reports, 2009-Feb Source: Finnegan research, as of November 1, 2014, Source: parte_historical_stats_roll_up_eoy2013.pdf U.S.C U.S.C U.S.C U.S.C Centocor Ortho Biotech, Inc. v. Abbott Laboratories, 669 F. Supp. 2d 756 (E.D. Tex. 2009) (Judge Ward denied judgment as a matter of law to overturn jury verdict), rev d, 636 F.3d 1341 (Fed. Cir. 2011) (holding that the patent was invalid for lack of written description)). 112 ebay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006) U.S.C U.S.C. 284(1); See Energy Transp., Inc. v. William Demant Holding A/S, 697 F.3d 1342 (Fed. Cir. 2012), for a short mention of prejudgment interest in damage awards. 115 Crystal Semiconductor Corp. v. TriTech Microelectronics Int l, 246 F.3d 1336, 1354 (Fed. Cir. 2001) U.S.C. 284(2). 117 In re Seagate Technology LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). 118 Id. PATENT, TRADEMARK & COPYRIGHT JOURNAL ISSN BNA

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