Patent lawsuits involving nonpracticing entities (NPEs) have increased dramatically over the last decade—by an average of 22 percent per year since 2004. The continued rise in issued patents over the last few decades suggests that significant levels of patent enforcement by NPEs are likely to continue for the foreseeable future. In terms of financial impact, in 2011, United States businesses accrued $29 billion of direct costs defending against these patent assertion entities. Where NPE enforcement used to be an issue only for the high-tech sector, that is no longer the case. The adverse impact of nuisance patent enforcement is now felt by companies of all sizes across all industries.
Until recently, companies had little choice but to defend against infringement allegations by fighting the NPE in district court litigation. Typically, this fight would include a denial of infringement and a counterattack challenging the validity of the asserted patent. The cost of defending against such a patent infringement suit, however, is close to $1 million in lawsuits that end in summary judgment and $3.6 million for those that end in a trial verdict.
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