Patent Litigation May Be On The Rise During Pandemic

By Elizabeth Brannen, Justin Barnes and Ariel Murphy
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Law360 (May 21, 2020, 5:14 PM EDT) --
Elizabeth Brannen
Elizabeth Brannen
Justin Barnes
Justin Barnes
Ariel Murphy
Ariel Murphy
Since the outbreak in 2020 of the novel coronavirus that causes the deadly respiratory disease COVID-19, many sectors of the economy have slowed dramatically. Litigation in general is no different: Overall in the U.S. in 2020, litigation is down.

As Law360 recently reported, "[t]he number of new legal matters that have been opened since the beginning of the year is down 30% when compared to the same time period last year, according to the report by practice management software company Clio."

Trademark and copyright filings are down.

Some intellectual property matters, such as trademark and copyright cases, comport with this trend. In the first four months of 2019 trademark litigants filed 1,195 complaints, whereas for the same period in 2020 complaints dropped to 903 (a 24% decrease):

The same comparison for copyright complaints is even more stark. The first four months of 2019 saw 1,982 copyright complaints compared with only 1,127 this year (a 43% decrease):

Patent filings in 2020 have increased.

In stark contrast, new patent cases reflect the opposite trend. Compared to the first four months of 2019, the number of patent complaints filed has increased. An advanced search of the Law360 database reveals 1,109 patent complaints filed the first four months of 2019 compared to 1,248 filed this year (a 13% increase):

Nor did the 2020 patent cases begin disproportionally in January and February, before the U.S. began to directly experience COVID-19-related disruptions. To the contrary, since March there has been a marked rise in new patent cases:

The surge is even more apparent in contrast to the average number of patent complaints filed in the first four months of the preceding two years:

This trend bears a resemblance to statistics in and around the recession of 2008-2009, during which patent (and trademark) filings were largely unaffected, while copyright filings fell precipitously:

As this data reflects, copyright cases took years to recover to pre-recession levels. In contrast, trademark and patent cases held steady, and patent complaints actually increased in 2010.

What accounts for the recent increase in patent filings?

Why are litigants filing more patent complaints this year? A number of possibilities may explain the opposing trend.

First, compared to trademark and copyright cases, and litigation generally, patent lawsuits may be particularly suitable for remote investigation and initiation. Patents and patent file histories are readily available in electronic form. An attorney with access to firm servers may review patents and product specifications, draft pleadings and correspondence to clients and opposing counsel, and serve electronic discovery requests and responses equally well from either a law firm office or a home office.

In the same vein, the initial assessment and response to a patent complaint can typically proceed with attorneys in remote locations. And much discovery in patent cases involves the exchange and review of electronic documents. Because of this, it may be comparatively easier for patent cases to proceed through the initial stages without attorneys ever having to physically enter an office. Many of the early hearings, such as scheduling conferences, have increasingly been done via teleconference even before COVID-19 altered the landscape.

To be sure, there comes a point in the life cycle of a patent case in which in-person collaboration is highly advisable, if not mandatory. But tasks such as preparing expert reports, taking depositions, attending to pretrial matters and conducting trial usually do not occur early in patent cases, and perhaps the thinking is that normal office activities will be permitted by the time cases recently filed come up on pretrial tasks.

Second, patent litigators are usually well-versed in using technology. Extensive experience working outside the office from work-related travel and familiarity with electronic discovery resources may equip them to conduct a lawsuit remotely with relative ease and efficiency.

In other kinds of cases, remote litigation may not be as economical. For cases involving extensive tangible, physical discovery, the additional cost of attempting to conduct tasks remotely may cause potential litigants to rethink the wisdom of filing a new suit. Clients in such cases may continue to wait or forgo claims rather than proceeding now at additional expense and/or concerns about increased inefficiency by their law firm of choice.

Third, as companies increasingly turn to technology during the pandemic, it may be the case that patent holders for technology related to home networking, videoconferencing and other technologies that were once less popular now see the value in filing suits. Many technological platforms and tools that were not previously commonplace are now a part of everyday life, which may be translating into suppliers and corporate customers of those platforms becoming more attractive targets.

As the recently filed cases proceed and infringement contentions are levied, it may prove easier to tell whether the recent uptick in patent cases sweeps across disperse technology fields or is focused on certain industries and technologies.

Finally, compared to the economy and stock market as a whole, technology companies have generally performed better under these trying circumstances. Plaintiffs looking for deep pockets are far more likely to decide they have found them at technology companies than traditional brick-and-mortar stores, struggling retailers and the like. Patent cases are a natural platform for lawsuits related to technology companies. In this respect, too, as time progresses, it will become clearer whether the recent increase in patent complaints is merely an aberration.

Will these trends change?

In response to the pandemic, many companies and industries began using (or increased their use of) remote technologies, such as virtual private networks and videoconferencing. As attorneys and clients who serve these industries become increasingly comfortable with such technology, the number of complaints filed in general may rise — even while stay-at-home orders and restrictions continue.

It remains to be seen whether the increase in patent complaints will continue, and whether other kinds of cases will join in the countertrend or leave patent litigation on an island. One thing remains clear: While patent cases remain ostensibly lucrative and viable to initiate and advance remotely, new filings appear to be in no danger of plummeting.

Elizabeth Brannen and Justin Barnes are partners, and Ariel Murphy is a litigation fellow, at Stris & Maher LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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