Million$ of $$$$$ in IP Damage$ Award$

Fifty years ago, the practice of patent law was a sleepy cloistered legal field. Patent attorneys were all nerds (engineers or scientists who had somehow made their way to law school). The general legal population had no interest in mixing with patent lawyers. Private practice patent lawyers worked in “patent law firms” – surrounded only by other patent lawyers.

Changes in laws, treaties and courts led to a remarkable attitude adjustment. In 1978, the U.S. joined the Patent Cooperation Treaty, which simplified the process for lodging international patent applications. In 1982, the Court of Appeals for the Federal Circuit (CAFC) was created to bring uniformity to U.S. patent law – every patent appeal from federal district court decisions would be heard by this appellate court. Initially, the decisions of this court seemed to be pro-patent, particularly when the CAFC reiterated that our patent statute actually means it when it says: “A patent shall be presumed valid.” 35 U.S.C. 282(a). Congress also enacted other incremental patent law revisions, such as, for example, various ways to obtain an extension of a patent’s term, that were viewed as generally favorable to patents.

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Then, perhaps most significantly, some patent owners won infringement damage awards that were large for their time – above the million-dollar threshold! This, and the fact that patent law allowed for the recovery of attorney’s fees and up to triple damages when the infringement was found to be willful, got noticed. Trial attorneys (non-patent attorneys) realized that they could try patent cases. Sure, the case might be complicated technically but they got help with that and they got patent lawyer help sorting out applicable patent law principles.

Soon, “large” general law firms (like, at the time, those with 75 or more attorneys) started creating patent law departments to support and attract clients who might have lucrative patent litigation cases. Of course, patent lawyers were still considered kind of geeky, and the process of blending them into the general population of such firms didn’t always work out. But the motivation – Large Litigation Legal Fees – was too tempting to ignore. Once this was all sorted out, and the multimillion-dollar patent infringement verdicts and settlements started happening with some regularity, it became quite fashionable to be a patent lawyer. Others actually envied us.

Some patent infringement verdicts and settlements around the turn of the century became huge – into the multi-hundreds of millions of dollars. Patent litigation now presents huge upsides for patent owners – and for their lawyers via massive legal fees (and for the defense lawyers as well, for the same reason).

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Recently, there’s been a similar evolution in another area of intellectual property – trade secrets. The escalation of damages awarded in trade secrets misappropriation cases has been staggering, with several recent awards in the multi-hundreds of millions of dollars. In our view, there are several factors that contribute to this enhanced emphasis on the value of trade secrets.

First, while most states had trade secrets protection statutes, in 2016 Congress enacted the Defend Trade Secrets Act (DTSA), creating a federal cause of action for trade secrets misappropriation. While not too much different from state trade secrets laws, the DTSA also applies to conduct occurring outside the U.S. if an act in furtherance of the offense was committed in the U.S. – allowing the potential for larger damages awards.

Second, on the patent side, recent Supreme Court rulings held that some concepts do not qualify as “patent-eligible subject matter.” Information about such concepts (like business methods and gene isolation techniques) while now not patentable, may still be quite valuable, and protectable as trade secrets.

Finally, the current trends toward workforce mobility and remote work make it quite a bit more challenging for an organization to safeguard its trade secrets. Many trade secret misappropriation issues arise in the context of that information being pilfered by one or more former employees.

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Bottom Line Here: “Information” (whether patent-eligible or not) may still be very valuable.

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