“Fight Hard” as a Patent Defense Strategy

Many companies adopt ‘never settle, fight everything’ strategies when faced with NPE patent assertions. The rationale, generally borrowed from mass tort defense, is that by vigorously defending every attempted assertion via litigation, even those that could be settled for less than the cost of litigation, a company can establish a reputation as a ”hard target” and thus deter future NPE assertions.  But how effective will the fight hard strategy be when applied to NPE assertions, and is it a comprehensive strategy?

Before turning to the NPE issue, it’s worth asking how well the strategy worked against other mass torts. The most widely cited example is asbestos litigation.  While some observers argue that the fight hard approach averted a great deal of litigation, others point to the fact that asbestos litigation has bankrupted virtually every U.S. company that manufactured as evidence that the strategy may not have worked as planned.

An important factor underlying the ‘fight everything’ strategy with mass torts was the commonality of fact patterns from case to case.  Defendants believed that winning one case would mean winning the next, and when each case rides on the same basic questions this may be true. However, the unique nature of every patent case deprives defendants of this benefit. To date, there is no evidence that the wider use of the fight hard strategy has had any effect in countering the rise of NPE litigation. NPE litigation has continued to increase during the first three months of 2009 with NPE cases composing 13.3% of all patent infringement cases up from 12.8% in 2008.*  The implication may be that the fight hard strategy can be an effective tactic to deter certain plaintiffs, but should be used thoughtfully depending on the merits of the case and the nature of the specific plaintiff.  Since not every plaintiff will be deterred by this approach, companies may need to consider additional defensive tactics in their overall strategy to combat NPEs.

One such alternative strategy that can help avert NPE litigation is to proactively purchase patents that are at risk of being sold to NPEs.  Many NPEs are well-funded to acquire assets to assert, and they often find these patents on the open market, in some cases only weeks prior to asserting them.  Purchasing patents before they reach an NPE can thus be an effective tactic to reduce NPE litigation, and may be far less expensive than the cost of litigation.

*Sources: LexisNexis CourtLink 1/1/09 – YTD and Patent Freedom.