#1 to #4 studies so far,
we have reviewed the real cases of Taiwan involved in the US lawsuits through the Litigation Search function using WIPS Global. We
analyzed the statistics of Taiwan global corporations’ cases as plaintiff in
the US litigation reviewing docket information, analysis of corporations’ IP power on the market and technology, infringement patent analysis, litigation actions and
cases of inactive cases in detail.
This
time, let's take a break and see how patent litigation really affects to the
value of a company and its market.
When
a new technology or product invented by the user is registered as a patent, the
exclusive right of the technology or product is obtained in exchange for the
disclosure. Based on the exclusive rights, it can protect the use of patented
technology from others, and if used without permission, it can be compensated
for infringement of patent rights.
In
most cases, the patent litigation is processed to judge whether it’s infringed
or not. The patentee (patent right owner) argues that the other party has used
his patented technology without permission, while the other party claims that
they have not used the patented technology.
Since
patent infringement litigation varies the amount of compensation and scope of
infringement depending on the outcome of the trial, it can affect the value of
patents as well as the value of company (patent right owner). Whether the
patent is valid or invalid, whether it is infringed or not has a positive or
negative effect on the value of the company.
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| pixabay.com |
Changes in the Value
by the Judgment of Patent lawsuit
In
a patent lawsuit, when a patent is won ‘the patent is infringed and patent is
valid’ corporation value is increased generally by royalties or indemnities.
According to the results of the study, if a patent is filed by a company
(patent right owner), and if the patent is valid and the other party is found
to be infringed, the enterprise value in the market is increased by about 0.7%.
In
addition, from the viewpoint of the patentee, the judgment of 'valid and
infringed' of a patent is positively recognized by the fact that the investor
has a 'strong patent' in addition to the monetary value increase. It may
increase the stability of patent rights by reducing the possibility of
invalidation of patent rights in future lawsuits or the possibility of the
other party's non-infringement judgment.
On
the other hand, if a patentee issues a "invalid" ruling in a lawsuit,
the decline in the value of the company appears sooner. Studies have shown that
the "invalidity" of a patent reduces the value of a patented company
by about 0.85% over three days. In addition, the tendency of decreasing
invalidity rates raises the expectation of 'validity and infringed' of patent
rights. In this trend, 'invalidity' judgment has a greater impact on market and
enterprise, can result in a decline of value.
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| 🔺value of the company by patent lawsuit |
On
the other hand, a statutory "non-infringed" ruling in a patent litigation
does not bring a meaningful change in the value of a patented company. The fact
that a patent is not invalidated and not infringed means that the patent right
is valid but no compensation due to the infringement, so it’s difficult to
judge the profit to the patentee who filed the lawsuit. Furthermore, from a
patentee’s point of view, it may mean that the patent can no longer be a
powerful weapon in a dispute with the other party. In addition, it can be
interpreted that the risk has not completely disappeared because the other
party didn’t infringe but the patents related to the corresponding technology
still exist.
Comparing
the effects of the patent litigation, the value of the corporation increase
about 0.7% when the patentee won, while the value declines by the invalidation
of the patent was more than 0.85%. It shows that there may be more to lose by a
patent litigation.
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| pixabay.com |
The effect of patent
litigation on companies and patent rights.
As mentioned earlier, patent
litigation is more to lose than to gain. But by mid-2010, patent litigation has
been steadily increasing. This means that you need to consider other factors as
well as simply increasing or decreasing the value of the results. Indeed,
according to research by American scholars, patent activities have surged in
the early 1980s. Experts say that the establishment of the Court of Appeals for
the Federal Circuit (CAFC), which specializes in patent litigation in the early
1980s, is one of the reasons for increasing patent activities.
According to statistics, the
percentage of being invalidated by a judgment in a patent litigation has
decreased after the CAFC established, while the number of being infringed has
increased. Among the judgments of the patent lawsuits, judged of the patent
invalidation is 23%, valid and infringed is 44%, and not infringed is 58% after
the CAFC established. This is a 28% decrease in patent invalidation after the CAFC
established. Thus, the decrease of invalidation rate has raised expectations
for profits from patent litigation, and this rise in value is up to 1-2% of the
enterprise value in the market. In the end, the marginal cost of patents
remains the same, while the marginal profit increases and the overall value of
patents is increased. This is the reason for increasing patent activities.
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| 🔺statistics by judgement after CAFC established |
Also, whether the court's favorability is a factor can change the value of the patent right to the company. According to the results of a study on the favorability of the trial in the patent litigation, it was found that the value of the patents for the company increased by 0.3-0.7% when the favorability was increased by 10% compared with the others.
In
fact, the Eastern District Court of Texas in the United States is one of the
courts in which many patentees sued. According to the Texas Judicial Decision
Statistics, the percentage of judgments favorable to patent holders is very
high. At one point, the Eastern Texas Federal District Court has nearly 90% of
patent holders. This high rate can be attributed to the high profitability of
many patentees, so that the value of patents in the enterprise can be valued
higher than other local courts.
Continued...>>
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