Tag Archives: damages

Gov’t study of economic impact of patent infringement is needed ASAP, experts say

There are abundant statistics on the cost of counterfeit goods, copyright infringement and even the negative impact of patent “trolls,” but nothing on the estimated extent of U.S. patent infringement and the cost in lost jobs, failed businesses and unpaid taxes. 

Global trade in counterfeits or fake goods, such as fashion, automobile parts and pharmaceuticals, has reached $600 billion annually, or about 5%-7% of GDP.  

The U.S. economy alone loses $58 billion each year to copyright infringement (2011 estimate) — crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue.

The Recording Industry Association of America (RIAA) reports that the U.S. economy loses $12.5 billion in total output annually as a consequence of music theft and that sound recording piracy leads to the loss of 71,060 U.S. jobs, as well as losses in tax income.

Statistics on the cost of counterfeits and copyright infringement are conducted fairly regularly. There is even biased research on the cost of non-practicing entities. (Claims of $29 billion in damage from “trolls” are wildly inflammatory, says a former USPTO commissioner, which despite having been debunked are still cited by academics and reporters.)

Surprisingly, there are no estimates of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses, unpaid taxes and other economic impact.

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“There have been no studies that I am aware of devoted to quantifying the amount of patent infringement in the United States,” said Gene Quinn, patent attorney and publisher of IP Watchdog told IP CloseUp.

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“”It would be extremely helpful to get some kind of quantification of the amount of harm that befalls innovators through the concerted and calculated ‘efficient’ infrdataingement business practices of those who use technology and simply refuse to pay for their ongoing, and frequently willful, patent infringement.”

Tip of the Iceberg?

Patent damages paid may be the tip of the infringement iceberg. The real damage may be below the waterline.

To provide some context, 15 leading technology companies paid patent litigation damages of more than $4 billion over as 12-year period from 1996-2008.

That’s just a little over a dozen companies who had to pay damages. The figure presumably does not include settlements, licenses, and all of the times they and thousands of other businesses paid nothing for the inventions that they used.

The Impact of Undetected Infringement 

  • Today, with more issued U.S. patents, and much greater difficulty securing a license or winning a patent law suit, the amount of patent infringement that actually takes place but remains unidentified could exceed a trillion dollars.
  • There is no known government, academic or privately commissioned study of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses and economic loss.

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“It is not enough just to be aware that there is harm caused by undetected patent infringement,” said Paul R. Michel, Chief Judge of the Court of Appeals for the Federal Circuit (ret.). “The government needs to conduct a proper empirical study ASAP to determine its scope and impact.”

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Image source: ltrdigitalgroup.com

 

 

Jury awards Merck $200M in patent damages, 10% of what it had sought

A California jury has awarded pharmaceutical drug company Merck $200 million, a fraction of what it had sought, for infringement of two of its patents by Gilead Sciences, which based in the San Francisco area.

The jury based the $200 million award on a royalty rate of 4 percent on $5 billion in sales, compared with the 10 percent royalty on Gilead’s past sales of more than $20 billion sought by Merck. This is as reported in Law 360.

In calculating damages, jurors said they sought a middle ground. “We worked to get to something we could all agree so we weren’t hurting one side or the other,” juror Cody Shump, a 20-year-old San Jose resident, told Reuters.

The judge has yet to rule on future royalties.

Validated Merck patents could mean a $3B+ windfall, after appeals

While many high-tech patents are suffering from devaluation the value of some pharmaceutical patents is soaring.  

Merck & Co. won a legal victory over rival Gilead Sciences Inc. on Tuesday when a California jury upheld the validity of two patents it has been attempting to enforce. Merck believes that its upheld patents should entitle it to a portion of the $19.1 billion annual global sales of Gilead’s blockbuster hepatitis C drugs.

MRK-GIL-3B-2016The patent trial began earlier this month in federal court in San Jose, Calif., where Gilead argued that it shouldn’t have to share any of the sales of its hepatitis C drugs Sovaldi and Harvoni with Merck, reports The Wall Street Journal. Last year, combined U.S. sales of the two drugs were $12.5 billion.

Havoni costs $1,125 per pill before discounts, or $94,000 for a 12-week regimen.

In 2013, Merck proposed to license its patents to Gilead in exchange for a royalty of 10% of U.S. sales of products containing Sofosbuvir, according to Gilead’s lawsuit against Merck. Gilead countered in a court document that a 10% royalty is a “prohibitive demand.”

Gilead Acquisition

Pharmasset Inc., the company that developed Sofosbuvir and was acquired by Gilead in 2011 for more than $11 billion.

A jury has yet to rule on past damages award for Merck and its co-owner of the patents, Ionis Pharmaceuticals Inc.  A judge will rule separately on future royalties. 

Merck has demanded more than $2 billion in damages and 10% of Gilead’s sales of the products going forward.

Should the jury rule in favor of Merck and agree to a $2 billion in damages, Gilead would not have to pay this amount until multiple likely appellate options are exercised. There is also a possibility that the companies may choose to settle the dispute before the jury decides damages and the judge rules.

Image source: shearlingsplowed.blogspot.com


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