Published On: November 2, 2014Categories: Intellectual Property

Patent Suits Filed Against Mid-Sector Companies are Filed by Non-Practicing Entities

In 2012 alone, almost 60% of lawsuits were filed by patent holders who did not sell or market a single product or service, much less one covered by the patent they were suing under. We call these patent holding companies “non-practicing entities” (NPEs) aka “Patent Trolls.”

The rise in NPEs filing lawsuits has also coincided with more lawsuits naming mid-sector businesses. Over 90% of NPE lawsuits were filed against companies with less than $100 million in revenues, which is roughly 82% of all patent lawsuits overall. 99% of all patent suits were filed against businesses with fewer than $500 million in revenues.

You Must be Ready to Defend Aggressively and Vigorously

Businesses that settle patent suits under the wrong terms tend to suffer consequential losses that most do not factor into the cost of settlement. Often settlement is tied to a restrictive license which has statistically been shown to stifle innovation and delay new product and service development. Settlement can often require diverting resources to a lump-sum payment. Early settlement of a marginal claim will almost certainly set up a defendant to be a named in another lawsuit.

Medium-sized business that are willing to fight patent lawsuits, especially those filed by non-practicing entities, have several powerful options to defend their lawsuit that they should consider. The direct cost of a mid-sector business to defend a patent infringement lawsuit can be significant, especially when handled poorly.

  • Overall, the costs range from $120,000 on the low end, to an average of $420,000, and as up to $1.5 million on the high end (especially for the larger end of the spectrum).
  • Overall, the median settlement for a medium-sized business was $1.33 million.
  • On the other hand, early settlements ranged from several hundred thousands of dollars well into the millions.

Therefore, those businesses that mounted at least some defense before settlement tended to fare far better than those who did not. (See here).

What Should You Do If You Have Been Sued in a Patent Infringement Suit? Speak to an Expert Immediately.

Mazin Sbaiti defends medium-sized businesses and entrepreneurs in patent lawsuits including software patents, pharmaceutical patents, and telecommunications, all over the country. He has tried several matters on behalf of plaintiffs and defendants with significant results. If you would like more information about your case, please call (214) 432-2899.