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COVID-19 Has Caused a Slowdown in Many Segments, But Not in Patent Litigation

Economic slowdowns as a result of the pandemic are not news.  We all know that while certain sectors have thrived (e.g., online retailers), other segments have floundered (e.g., transportation and hospitality).  Further, the legal community has not been immune, as many law firms have implemented layoffs, pay-cuts, and greater use of external resources to respond to market uncertainty and turmoil.  Likewise, many companies have reduced their IP staffs, as they have altered research & development and other activities that impact their patent prosecution dockets.

Patent Litigation Bucking the Trend

Nonetheless, it appears that patent litigation activity has not been similarly slowed.  In fact, the first half of the year generally saw increases in patent litigation, up roughly 16% over 2019.  Further, District Court patent cases in Q2 2020, once most people were into quarantines, actually increased 27% over Q1 2020.  At the same time, IPR filings also increased 12% from Q1 to Q2.  So, while people and companies may be hunkering down, they do not appear to be slowing down their efforts to defend their patent portfolios and the intellectual property they represent.

Possible Reasons

To some, these increases seem counter-intuitive, in view of the economic slowdown and resource lockdown.  Others, though, point to several factors as possible causes for such an increase in litigation activity. Financial pressures from the pandemic have led companies to be resourceful, and the value of each asset they own actually represents more value to the company as other revenue sources deteriorate.  Further, these assets can now become new sources of revenue while others decline.  Additionally, the technology sector has generally remained strong – even grown in strength – and this tends to correlate with increased patent litigation activity.  Last, some observers point to bankruptcies and economic pressures leading to greater turnover and sale of assets, with investment companies and non-practicing entities seeing opportunity to acquire discounted assets and having the resources themselves to aggressively enforce them.  In fact, the data seems to support this and confirms that lawsuits from high-volume plaintiffs rose 33% from Q1 to Q2 2020.

Be Prepared

The underlying message remains the same: your intellectual property represents significant value to your company, and it pays to have a clear patent strategy and always be cognizant of the effective ways to put it to work for you.  Also, other companies are doing the same, and you should be aware that you may need to defend your company from patent lawsuits at any time – even during a pandemic.