1. eBay (2006)-“Reduced (virtually eliminated) probability of getting an injunction if you win a patent litigation.” Effect—“Lowers penalty for infringing patents and thus reduces patent values.”What are we to make of Ludlow’s summary? The most notable point is the organizing principle by which these cases are aggregated, namely that all of them have the alleged effect of “driving down patent value.” At the outset, this Kat wonders whether a parallel table could be fashioned setting out some key decisions and legislation that have actually driven up patent value in the US since eBay. Either trends have been so one-sided in driving down patent values for this period that no such parallel table can be provided, or Ludlow has simply chosen to focus on only part of the picture. Either way, what seems to underlie the Table is the view that patents are in the aggregate worth less (or the rate of increase in the value of patents has declined).
2. Sandisk (from Medimunne 2007)—“Lowered the bar significant on the grounds for filing a declaratory judgment.” Effect—“Makes it more difficult to license patents”.
3. KSR v. Teleflex (2007)—“Lowered the bar for obviousness.” Effect—“Makes it easier to invalidate patents.”
4. Seagate (2007)—“Raised the bar for wilful infringement.” Effect—“Reduces prospects of treble damages.”
5. Quanta Computer v. LG (2008)—“Patent exhaustion for downstream products.” Effect—“Limits options for licensing.”
6. Cornell U v. Hewlett Packard (2009)—“Virtual elimination of entire market value (EMV) basis for damages.” Effect—“Reduces royalty base to the value of a sub-contractor.”
7. Uniloc v. Microsoft (2011)—“Elimination of 25% rule as an admissible rule of thumb to determine damages.” Effect—“Requires comparable license agreements to determine royalty rate.”
8. Laser Dynamics v. Quanta Computer (2012)—“Damages based on smallest saleable patent practicing unit.” Effect—“Damages values drop with shrinking royalty base.”
9. Motorola v. Apple (2012)—“Sufficiency of damages expert opinions.” Effect-“The risks and uncertainty of damages law for patent cases.”
10. Motorola v. Microsoft (2013)—“Standards-essential patents (SEPs).” Effect—“Value of SEP’s drops.”
11. Samsung v Apple (2013)—“ITC case looking at SEPs.” Effect—“A presidential veto was used for the first time since 1987 to deny an exclusion order based on the “anti-competitive” use of SEPs.”
12. Alice Corp v. CLS (2014)—“Software patent eligibility” [decision since rendered by the U.S. Supreme Court ruling against the clamed patentable subject matter]. Effect—“Could reduce (or even eliminate) the value of many software related patents.”
Whether this is true or not depends upon how one understands what is meant by patent value. Ludlow’s focus seems clear: it is on patent strategy, especially with respect to winning settlements and better leveraging patents to generate further value from them. Seen from this perspective, there may be merit in his position—if one is interested in using patents as a litigation sword to extract large court awards, in some ways it is more difficult than a decade ago to do so in the US (though far from impossible), whether or not the plaintiff is an NPE. Making the possibility of an oversized court award less likely might diminish the value of a given plaintiff’s particular patent, but it might be a net positive for the patent system as part of the larger innovation ecosystem. It is also the case that it might now be “more difficult” to obtain patent protection for certain subject-matters. However, the presumed improvement in the quality of patents might actually have the effect of making granted patents under the current regime “more valuable” for their owners. Moreover, people seek patent protection for a variety of reasons and depending upon one’s reason for patenting, the legal results set out in the Table may simply be irrelevant.( Indeed, for another view of what is meant by patent value, consider the book by Larry M. Goldstein, True Patent Value, here.)
The focus of patent value from solely a US perspective also warrants comment. What would a parallel table based on the European, Japanese or Chinese experience for the comparable period look like? From the point of view of the applicable case law in these jurisdictions, one wonders whether this a better or worse time from the point of view of patent litigation and monetizing patents as an asset. Or perhaps the focus on litigation awards and monetizing patents assets is a distinctively American phenomenon. If so, the question of what would constitute patent value for jurisdictions other than the US might look very different. More generally, it shows the difficulty of discussing patent value as a notion distinct and separate from the circumstances in specific jurisdictions.