Over the last few years, some of the largest damage awards for patent infringement has been for medical devices. Dr. Saffran's drug-eluting stent patent garnered awards of $432M against Boston Scientific and $593M against J&J.
A 2013 PricewaterhouseCoopers survey indicates that for about the last dozen years the medical device industry represents 9% of all patent infringement cases. This puts the medical device industry in the top 10% of all industries for patent infringement cases, and with a ranking of 5th out of a total of 20 ranked industries. In that same period, the median damages award in the medical device industry was $53M.
We often hear that the vast majority of patent infringement cases settle. But what we usually do not hear is why they settled and on what terms did they settled.
Strengthening your patent portfolio has the obvious benefit of strengthening your ability to assert patent infringement claims. But it can also minimize the potential of being the recipient of patent infringement claims. Here's how.
Frequently, patent infringement lawsuits follow a cease and desist letter. What follows a cease and desist letter but before the filing of suit can be lengthy discussions about the infringement and invalidity of the patent at issue. What may also be the subject of these pre-lawsuit discussions is potential counterclaims of patent infringement – infringement claims being made against the party who sent the initial cease and desist letter.
The reason for making these counterclaims of infringement can be many – but it is likely for negotiation. The party making the counterclaims may itself have a portfolio of patents that includes one or more patents that the other party potentially infringes. Having the ability to assert counterclaims can offset the original claims of patent infringement. This offset may be partial, whole, or even put the counterclaiming party in a “net positive” position whereby the counterclaiming party is claiming damages in excess of what the original asserting party claimed.
What this tells a medical device company is that there is value in strengthening its patent portfolio, even if the company has no intention of asserting its patents. The 2013 PricewaterhouseCoopers survey above demonstrates that medical device companies have a high incidence of patent infringement lawsuits and that the median damages are high. It therefore behooves a medical device company to at least minimize the potential possibility of being involved in a patent infringement lawsuit by having the tools – more patents - to negotiate itself out of a lawsuit.
But it's not just about the numbers. It's also about having the right strategic patents. Having strategic patents means anticipating the direction of your competitors' patent development. It means creating roadblocks to your competitors' innovation. It means having patents in strategic countries, among a host of other issues.