Medical Device Industry Patent Litigation Likely to Rise?

Can patent lawsuits in the medical device industry be forecast? Recent studies suggest that certain features of patent applications themselves tend to correlate with a higher chance that some patents will end up in court. Innovation is at the heart of the medical device industry. As with many industries, if you are not constantly working to bring new products and technology to the market, there is a good chance you will not survive. Companies that are successful, and that continue to survive, invest millions of dollars in research and development every year to create new or better products. Companies that are successful, and that continue to survive, invest millions of dollars in research and development every year to create new or better products. Not only are these companies investing in the development of new technology, they are also investing in the protection of their innovations through the patent system. In fact, for fiscal year 2006 the United States Patent and Trademark Office (USPTO) reported a record of more than 440,000 patent applications filed, more than double the number of applications filed ten years ago cares product.

Of course, with the record number of patent applications being filed, and the large number of patents issued each year, it would be logical to expect that the number of patent related lawsuits would also increase. Recent statistics tend to substantiate this logic as more and more patent owners are turning to the courts to help protect their valuable intellectual property assets. For example, from 1995 to 2005, the number of patent lawsuits filed in the United States increased from approximately 1700 to more than 2700, a 58% increase in just 10 years.

However, the chances of a lawsuit remain low on a probability basis. While the number of patent suits filed has substantially increased over the past ten years, it is interesting to note that recent studies estimate that on average only roughly 1% of U.S. patents will be litigated. However, these studies also note a variety of characteristics that tend to predict whether a patent is likely to be litigated. These characteristics include: (1) the number of claims describing the invention; (2) the number and types of prior art citations; and (3) the “crowdedness” of the technological field. Each characteristic is described below, including how the characteristic relates to the medical device industry.

Number of Claims

A patent must include at least one claim that describes with particularity what the applicant regards as his invention. The claims of a patent are often analogized to the property description in a deed to real estate; both define the boundaries and extent of the property. Since the claims set the boundaries of the invention, the applicant has an incentive to define the invention through a number of broad claims. However, in some technological areas where there is a vast amount of prior art, the applicant may have to define the invention through a number of narrow claims to avoid the invalidating prior art.

So how does the number of claims appearing in a patent correlate to the likelihood that the patent will someday be litigated? Empirical studies have found that litigated patents include a larger number of claims as opposed to non-litigated patents. In fact, one study determined that litigated patents had nearly 20 claims on average, compared to only 13 claims for non-litigated patents. Researchers cite a couple of reasons that help explain their findings: the perceived value of the patent and the crowdedness of the field of technology protected by the patent.

Patent claims are easily the most important part of the patent. Therefore, it should come as no surprise that claims are expensive to draft and prosecute. Paying more money for a larger number of claims suggests that the patentee believes a patent with more claims is likely to be more valuable. However, some researchers conclude that the reason litigated patents have more claims than non-litigated patents is that the patentee knew the patent would be valuable, anticipated the prospect of litigation, and as a result drafted more claims to help the patent stand up in litigation.

The field of technology protected by the patent may also explain why patents with a large number of claims are more likely to be litigated. In a crowded technological field there will likely be more competitors who are developing similar products. Therefore, it seems to make sense that patents having a large number of claims in these crowded fields are more likely to conflict with competitors.

In order to get a general idea of how the number of claims relate to the medical device industry, 50 of the most recently issued patents for endoscopes were analyzed. The results show an average of 17 claims per patent. This number falls somewhere in the middle of the claim numbers for litigated and non-litigated patents cited above. It would seem more likely, according to the empirical studies, that these patents will have a higher chance of being litigated. In addition to having a higher chance of being litigated, these results may indicate that the crowded medical device industry values their patents and anticipates litigation, with the end result being patents having a larger number of claims.

Prior Art Citations

Under U.S. patent law, the inventor and every other person who is substantively involved in the preparation and prosecution of an application has a duty to disclose all information known to be material to the patentability of the invention. To discharge this duty, patent applicants typically file what is known as an information disclosure statement, commonly referred to as an IDS. In the IDS, the applicant lists all of the U.S. patents, foreign patents, and non-patent literature that they are aware of and that is relevant to the invention. Also, a USPTO patent examiner conducts a search of the prior art and may cite prior art against the applicant that was not previously disclosed in an IDS.

When a patent is granted, the prior art citations made of record during prosecution before the USPTO are listed in the patent. Researchers have used this citation information to conclude that the number of prior art citations appearing in a patent is a good predictor of whether a patent is likely to be litigated. One study found that litigated patents on average cited 14.2 U.S. patents, while non-litigated patents cited only 8.6 U.S. patents. The study also showed that litigated patents are more likely to be cited as prior art by other issued patents, and that litigated patents include more self-citations, that is, citations to other patents owned by the same assignee.

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