Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 1 of 26 PageID #: 1016
`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 1 of 26 PageID #: 1016
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`EXHIBIT E
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`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 2 of 26 PageID #: 1017
`www.pwc.com/us/forensics
`
`2016 Patent
`Litigation Study
`Are we at an
`inflection point?
`
`May 2016
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 3 of 26 PageID #: 1018
`
`General trends
`
`General Patent Litigation trends
`
`• Patents granted decline for first time
`since 2008
`• Median damages surged to $7.3M
`in last 5 years
`• Patentee success rate stands at 33%
`• Median jury award was over 16x
`greater than median bench award in
`last 5 years
`
`• Time to trial edged up to 2.5 years
`• Increased likelihood of fee shifting
`following two 2014 Supreme Court
`decisions
`
`Patents granted
`decline for
`first time
`
`since 2008
`
`Contents
`
`1 Overview
`
` 4
`
` 7
`
` Damages trends
`
` Fee shifting in patent cases
`
`8 Success rates
`
`10 Practicing entities and NPEs
`
`12 Industry analysis
`
`15 Judge and district comparisons
`
`18 A look at appeals
`
`21 Methodology and authors
`
`Median damages award bounces
`back in ’15
`
`Nonpracticing Entities (NPEs)
`still carry a big stick
`
`• 2015 annual damages award ($10.2M)
`at highest point in 10 years
`• One mega verdict in 2015, for $533M
`Median damages
`award at highest
`point in
`
` 10 years
`
`Industry and district view
`
`• Consumer products still leads in
`number of cases; biotech/pharma has
`highest median damages awards
`• Forum shopping matters: Top 5
`most favorable districts with patent
`holders remain the same (DE;
`TX Eastern; VA Eastern; WI Western;
`FL Middle)
`
`Biotech/
`pharma
`highest median
`damages awards
`
`• Damages awards for NPEs almost 3x
`greater than practicing entities over
`the last 5 years
`• NPE cases concentrated: 5 district
`courts (of 94) account for 45% of all
`identified NPE decisions
`Damages awards
`are almost
`
` 3x greater for NPEs
`
`It’s not over ’til it’s over:
`Appeals rule
`
`• 80% of district court decisions are
`appealed
`• 53% of appealed decisions are
`modified in some regard
`• Three patent cases escalated to
`Supreme Court in 2015
`
`53%
`
`of appealed
`cases are
`modified in some regard
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 4 of 26 PageID #: 1019
`
`Overview
`
`First decline in
`patents granted
`since
`
` 2008
`
`Patent litigation and
`grants decrease modestly
`
`The number of patent cases filed
`declined again in 2015, continuing
`a downward trend from the high
`point reached in 2013. Approximately
`5,600 cases were filed in 2015—
`representing a modest year-over-
`year drop of 2%. The decline in
`the number of cases over the last
`two years stands in contrast to the
`compound annual growth rate
`(CAGR) since 1991 of 6.7%.
`
`2015 also showed a 2% decrease
`in patents granted by the United
`States Patent and Trademark
`Office, the first decline in grants
`since 2008.
`
`The decline in the number of patent
`cases filed and patents granted is
`likely driven by various factors—
`one being the Supreme Court’s
`2014 decision in Alice Corp. v. CLS
`Bank, which significantly impacted
`the ability to obtain and assert
`software patents.
`
`Patents granted
`
`350,000
`
`300,000
`
`250,000
`
`200,000
`
`150,000
`
`100,000
`
`CAGR = 4.9%
`
`CAGR = 6.7%
`
`Fig 1: Patent case filings and grants
`
`7,000
`
`6,000
`
`5,000
`
`4,000
`
`3,000
`
`2,000
`
`Patent cases filed
`
`1,000
`
`’91 ’92
`
`’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15
`Year
`
`Patent cases
`
`Patents granted
`
`Years are based on September year-end.
`Sources: Performance & Accountability Report (USPTO) and Judicial Facts and Figures (US Courts)
`
`2016 Patent litigation study PwC | 1
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 5 of 26 PageID #: 1020
`
`Fig 3: Percent of cases decided
`by juries (excluding ANDA cases)
`
`75%
`
`68%
`
`62%
`
`settled while pending appeal, or are
`still under appeal. In some cases, the
`settlement value exceeded the original
`trial verdict.
`
`Trier of fact
`
`The turn of the century brought a sea
`change in the trier of fact in patent
`cases. Previously, jury trials were the
`exception. However, since 2000, jury
`trials have predominated. In the last five
`years, the percentage of cases decided
`by a jury reached 75%, excluding
`Abbreviated New Drug Application
`(ANDA)-related litigation.1
`
`27%
`
`2011−2015
`
`2006 −2010
`
`2001−2005
`
`1996 −2000
`
`Top damages awarded
`
`Large damages awards grab headlines.
`Since 2012—when three awards of $1
`billion or more broke into the top ten
`list—no award has even come close.
`2015 did see one case, Smartflash LLC
`v. Apple Inc., land in the top 10 list with
`a $533 million award related to media
`storage technology.
`
`In another notable case, Apple v. Samsung,
`the parties agreed to settle for $548
`million, despite ongoing appeals and
`patent office actions on certain Apple
`patents. In early 2016, the Supreme
`Court granted certiorari on the issue of
`whether design patents should be entitled
`to disgorgement of a defendant’s profits
`without apportionment.
`
`The table below displays the top ten
`initial damages awards since 1996. It
`is important to note that the awards
`reflected in this table are those identified
`during initial trial—all have since been
`vacated, remanded or reduced, were
`
`Fig 2: Top ten largest initial adjudicated damages awards: 1996 –2015
`
`Year
`
`Plaintiff
`
`Defendant
`
`Technology
`
`Centocor Ortho Biotech Inc.
`2009
`Lucent Technologies Inc.
`2007
`Carnegie Mellon University
`2012
`Apple Inc.
`2012
`2012 Monsanto Company
`2005
`Cordis Corp.
`2015
`Smartflash LLC
`2004
`Eolas Technologies Inc.
`2011
`Bruce N. Saffran, M.D.
`2014 Masimo Corporation
`
`Abbott Laboratories
`Microsoft Corp.
`Marvell Technology Group
`Samsung Electronics Co.
`E. I. du Pont de Nemours and Co.
`Medtronic Vascular, Inc.
`Apple Inc.
`Microsoft Corp.
`Johnson & Johnson
`Philips Electronics N. America Corp.
`
`Arthritis drugs
`MP3 technology
`Noise reduction on circuits for disk drives
`Smartphone software
`Genetically modified soybean seeds
`Vascular stents
`Media storage
`Internet browser
`Drug-eluting stents
`Device measuring blood oxygen levels
`
`Award
`(in $M)
`
`$1,673
`$1,538
`$1,169
`$1,049
`$1,000
`$595
`$533
`$521
`$482
`$467
`
`1 These cases are, with rare exceptions, tried by the bench, and their increasing prevalence in recent years would otherwise skew this measure.
`
`Unless otherwise noted all charts and data come from PwC's analysis of identified summary judgement and trial decisions. See methodology section
`(pg 21) for more information.
`
`2 | PwC 2016 Patent litigation study
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 6 of 26 PageID #: 1021
`
`Find an expert
`witness
`
`No one wants to be involved in a
`dispute. But for most businesses, it is
`likely to happen at some stage, putting
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`
`Whether your case centers on complex
`accounting issues, breach of contract,
`intellectual property infringement,
`business valuation, internal arbitration
`or a range of other disputes, PwC’s
`Forensics professionals can help
`strengthen your chances of prevailing.
`We provide guidance and assistance
`on damages and value assessments
`in complex commercial litigation,
`supporting lawyers and corporate
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`(but not limited to):
`
`• Forensic technology (digital data
`collection and analysis)
`• Business analytics (quantitative
`analysis and optimization of
`operating metrics)
`• Quantification of damages
`• Business valuation
`• Expert witness testimony
`• Serving as arbitrators, mediators,
`or special masters
`• Accounting
`• Statistical analysis
`
`Our specialists can provide expert
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`2016 Patent litigation study PwC | 3
`
`General slowdown in
`time-to-trial
`
`As the number of patent cases filed
`has risen dramatically over the last 20
`years, the amount of time parties must
`wait for trial has extended to about
`2.5 years.
`
`Not surprisingly, the increase in case
`volume drove time-to-trial up. It remains
`to be seen whether the recent decline in
`litigation activity will reverse the trend.
`
`Fig 4: Median time-to-trial
`
`Median time-to-trial (in years)
`
`3.0
`
`2.5
`
`2.0
`
`1.5
`
`1.0
`
`0.5
`
`0.0
`
`60
`
`53
`
`31
`
`20
`
`1996 −2000
`
`2001−2005
`
`2006 −2010
`
`2011−2015
`
`Number of
`trials per year
`
`Median
`time-to-trial
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 7 of 26 PageID #: 1022
`
`Damages trends
`
`Median damages award
`bounces back
`
`Adjusting for inflation using the
`consumer price index (CPI), the annual
`median damages award over the years
`1996 through 2015 ranged from $2.0
`million to $17.0 million, with an overall
`median award of $5.8 million over
`the last 20 years. In 2015, the median
`damages award was $10.2 million—its
`highest point in 10 years.
`
`Excluding damages awarded before
`trial (i.e., summary judgments and
`default judgments), the overall median
`award jumps to $8.0 million over the
`last 20 years.
`
`Fig 5a: Median damages award
`
`Median damages awarded (in $M)
`
`$9.2
`
`$7.2
`
`50
`
`107
`
`$7.3
`
`152
`
`$3.8
`
`168
`
`1996−2000
`
`2001−2005
`
`2006−2010
`
`2011−2015
`
`The number of identified decisions is indicated within the respective column.
`
`Median damages
`award at highest
`point
`
`Fig 5b: Median damages award (excluding summary and
`default judgments)
`
`Median damages awarded (in $M)
`
`$9.8
`
`$9.2
`
`$7.2
`
`$5.5
`
`50
`
`102
`
`151
`
`132
`
`1996−2000
`
`2001−2005
`
`2006−2010
`
`2011−2015
`
`The number of identified decisions is indicated within the respective column.
`
` in
`
` 10 years
`
`4 | PwC 2016 Patent litigation study
`
`

`

`award has stayed flat.
`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 8 of 26 PageID #: 1023
`
`Median jury awards
`substantially outpace
`bench awards
`
`Since 2000, median jury awards
`have been significantly greater
`than median bench awards. This
`growing gap reflects the fact that
`large-value cases are almost always
`tried by juries.
`
`$3 million
`increase
`over the
`last
`
`10
`
`years
`
`Fig 6: Median damages award: bench vs. jury decisions
`
`Median damages awarded (in $M)
`
`$13.2
`
`$10.1
`
`$7.2
`
`$6.9
`
`$7.4
`
`Patent litigation
`activity may have
`slowed, but median
`damages are
`going up, which
`means companies
`are feeling more
`pressure than ever
`to get their litigation
`strategy right.
`
`$1.4
`
`$0.8
`
`$0.6
`
`1996 −2000
`
`2001−2005
`
`2006 −2010
`
`2011−2015
`
`Bench
`
`Jury
`
`2016 Patent litigation study PwC | 5
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 9 of 26 PageID #: 1024
`
`Reasonable royalties
`
`How are patent holders most often compensated
`for infringement?
`
`Among practicing entities, reasonable-royalty-only awards continue to be the type
`of damages most frequently awarded in patent cases—at almost triple the frequency
`of lost-profits-only awards. Hybrid awards, where both lost profits and reasonable
`royalties are awarded together, continue to be the exception. There are several reasons
`why lost profits damages are not as common as reasonable royalties:
`
`• Even patentees eligible for lost profits
`awards might eschew lost profits
`claims. Patent holders may not want to
`risk disclosing the proprietary cost and
`profit information necessary for the
`calculation of lost profits.
`
`• Lost profits entitlement can be more
`difficult to establish. The proliferation
`of competition and specialized
`distribution channels provides
`greater access to substitute products;
`therefore, even without an alleged
`infringer’s products on the market,
`consumers may not have purchased
`the patentee’s product.
`
`• Damages awards for price erosion
`claims have become almost nonexistent
`in recent years. The cost and
`complexity of price erosion analyses
`have reduced the recovery (and likely
`the pursuit) of price erosion claims.
`
`Fig 7: Composition of damages
`awards (practicing entities only)
`
`25%
`59%
`16%
`
`1996 −2005
`
`21%
`61%
`18%
`
`2006 −2015
`
`Lost profits only
`
`Reasonable royalties only
`
`Lost profits and reasonable royalties
`
`6 | PwC 2016 Patent litigation study
`
`Apportionment: A
`challenge for over
`125 years
`
`What portion of a multi-faceted
`accused product’s sales are attributable
`to the accused patent-infringing
`components? Apportionment is a
`question parties have had to consider
`since the Supreme Court’s ruling in
`Garretson v. Clark in 1884. Recently,
`the courts have refocused their
`attention on how damages expert
`opinions consider apportionment
`of value between patented and
`unpatented elements of the complex
`products that are typically central to
`many patent infringement disputes.
`The Federal Circuit has specifically
`cited “market studies” and “consumer
`surveys” as potential methods to
`empirically determine whether—and
`to what extent—a patented feature
`is driving consumer demand for an
`end product.
`
`Conjoint analysis involves the
`application of statistical analysis to
`consumer survey evidence to glean
`consumers’ willingness to pay for
`individual product features. Expert
`opinions based on conjoint analysis
`have been used in several recent
`large patent disputes—including for
`instance Apple v. Samsung; Oracle
`v. Google; and Microsoft v. Motorola.
`However, its importance to such
`high-profile, large-stakes cases draws
`heavy scrutiny, and will usually face a
`challenge on admissibility.
`
`Conjoint analysis can meet the
`standards for admissibility under
`Federal Rules of Evidence 702,
`provided the expert is careful to gather
`sufficient data in an unbiased manner
`and to apply it reliably to the facts and
`circumstances of the case at hand.
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 10 of 26 PageID #: 1025
`
`Fee shifting in patent cases: How has the
`landscape evolved?
`
`An area that has attracted significant
`attention in recent years is the
`application of 35 U.S.C. 285, which
`allows the court to award reasonable
`attorneys’ fees and costs to the prevailing
`party in patent litigation. The discussion
`has focused on the merits of “fee
`shifting”—making the loser pay the legal
`costs of litigation. The general consensus
`is that the Supreme Court’s 2014
`decisions in Octane Fitness v. ICON Health
`& Fitness and Highmark v. Allcare Health
`Mgmt. Sys. made fee shifting in patent
`litigation easier.
`
`To study trends in the awarding of
`attorneys’ fees, and the impact of these
`decisions, PwC analyzed patent decisions
`
`between January 1, 2013 and December
`31, 2015 that reference 35 U.S.C. 285 (as
`reported by LexisNexis). This provided
`a relatively balanced data set prior to
`(about 16 months) and after (about
`20 months) the Octane and Highmark
`decisions. We focused solely on those
`cases where a decision on the merits
`of awarding attorneys’ fees was made
`(as opposed to analyzing all requests,
`including open and dismissed claims).
`
`Since April 29, 2014 (the date of these
`twin Supreme Court decisions), there
`has been a significant rise in both the
`percentage of attorneys’ fees awards
`granted under 35 U.S.C. 285, and the
`total number of times attorneys' fees
`
`are awarded. As indicated by the charts,
`the percentage of attorneys’ fees awards
`granted in the 16 months prior to Octane
`and Highmark was 26%, which jumped
`significantly in the subsequent 20 months
`to 41%. The average number of fees
`award decisions also increased from
`about 4 per month to 7 per month.
`
`Our data indicates that the median
`attorneys’ fees awarded was
`approximately $0.3 million post-Octane
`and Highmark while the maximum
`amount awarded in fees during this time
`frame was $12.5 million. Furthermore,
`post-Octane and Highmark, the median
`attorneys’ fees awarded represented 82%
`of the median amount requested.
`
`Fig 8: Attorneys’ fees awards pre- and post-Octane
`
`January 1, 2013 –April 29, 2014
`26%
`
`Yes
`
`Pre-
`Octane
`
`74%
`
`No
`
`69 total requests
`
`41%
`
`Yes
`
`April 30, 2014 –December 31, 2015
`
`59%
`
`No
`
`Post-
`Octane
`
`144 total requests
`
`Median fees awarded post-Octane.......................$0.3M
`Median % of fee request awarded post-Octane......82%
`
`2016 Patent litigation study PwC | 7
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 11 of 26 PageID #: 1026
`
`Although patentees’
`success rates with
`juries has declined
`over the last 15
`years, they are
`still substantially
`higher than with
`the bench. This
`success gap is even
`more pronounced
`for NPEs.
`
`Success rates
`
`Jury vs. bench success
`gap narrows
`
`Over the last 20 years, patent holders
`have experienced higher trial success
`rates with juries than with the bench.
`However, the margin between bench
`and jury success rates has narrowed
`slightly over time, mainly due to the
`ongoing decline in jury success rates,
`whereas the bench success rate has
`remained steady.
`
`Fig 9: Trial success rates: bench vs. jury
`
`82%
`
`77%
`
`75%
`
`73%
`
`54%
`
`54%
`
`53%
`
`45%
`
`1996 −2000
`
`2001−2005
`
`2006 −2010
`
`2011−2015
`
`Bench
`
`Jury
`
`8 | PwC 2016 Patent litigation study
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 12 of 26 PageID #: 1027
`
`Success rates vary by type of
`entity and stage of decision
`
`Practicing entities are much
`more successful with judges
`
`Over the last 20 years, the overall success
`rate for practicing entities remains about
`10% higher than that for NPEs, although
`the gap in success rates narrows at trial as
`compared to summary judgment.
`
`
`Fig 10: Patent holder success
`rates: 1996 –2015
`
`66%
`
`61%
`
`35%
`
`25%
`
`13%
`
`5%
`
`Practicing entities find greater success
`in bench decisions than NPEs, but both
`practicing entities and NPEs have been
`significantly more successful when juries
`decide their cases. The 16% premium
`in bench decisions success rates for
`practicing entities over NPEs shrinks with
`jury decisions, to 6%.
`
`Fig 11: Patent holder success
`rates at trial: 1996 –2015
`
`77%
`
`71%
`
`54%
`
`38%
`
`Overall
`
`Pretrial
`
`Trial
`
`Bench
`decisions
`
`Jury
`decisions
`
`NPEs
`
`Practicing entities
`
`NPEs
`
`Practicing entities
`
`2016 Patent litigation study PwC | 9
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 13 of 26 PageID #: 1028
`
`Practicing entities and NPEs
`
`Disparity between NPE and
`practicing entity damages
`continues to grow
`
`Our analysis shows the continuation of a
`trend that began in the early 2000s: much
`higher damages awarded to NPEs relative
`to practicing entities. The NPE median
`damages award has grown to almost 3x
`the median for practicing entities in the
`most current five-year period.
`
`Damages awards
`are almost
`
`3x
`
`greater for NPEs
`
`Fig 12: Median damages award: NPEs vs. practicing entities
`
`Median damages awarded (in $M)
`
`$9.9
`
`$5.8
`
`$11.2
`
`$7.5
`
`$7.3
`
`$3.7
`
`$13.3
`
`$4.9
`
`1996 −2000
`
`2001−2005
`
`2006 −2010
`
`2011−2015
`
`NPEs
`
`Practicing entities
`
`10 | PwC 2016 Patent litigation study
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 14 of 26 PageID #: 1029
`
`Fig 13: Patent holder median damages award by NPE type:
`1996 –2015
`
`Median damages awarded (in $M)
`
`$13.2
`
`$16.3
`
`71
`
`Company
`
`9
`
`University/non-profits
`
`37
`
`Individual
`
`$3.3
`
`The number of cases is indicated within the respective row.
`
`The median damages award for
`NPEs was significantly higher, while
`practicing entities enjoyed higher
`success rates and slightly shorter
`median time-to-trial.
`
`We further analyzed NPE litigation
`by NPE type:
`
` Companies/for-profit
`organizations
`
`
`
` Universities/non-profit
`organizations
`
`
`
`Individuals/inventors
`
`1 32
`
`
`
`
`
`
`
`
`We found that universities/non-profits
`lead in both median damages award
`and overall success rates, although they
`comprise a minority of NPE cases.
`
`Universities/non-profits do not litigate as often as other
`NPE types; however, when they do, they have both
`higher success rates and median damages.
`
`Fig 15: Key statistics for
`practicing entities and NPEs:
`1996 –2015
`
`Fig 14: Patent holder success
`rates by NPE type: 1996 –2015
`
`29%
`
`Company success rate falls in
`the middle, but still below overall
`25% success rate for NPEs
`
`47%
`
`Universities/non-profits lead the
`pack in overall success rate
`
`17%
`
`Individual NPEs lag far behind
`in success rate
`
`71/245
`
`9/19
`
`37/213
`
`The number of cases is indicated below each graphic.
`
`Median
`time-to-
`trial (in
`years)
`
`Overall
`success
`rate
`
`Median
`damages
`award
`
`NPEs
`
`Practicing
`entities
`
`2.6
`
`2.3
`
`25% $10,278,804
`
`35% $4,951,934
`
`2016 Patent litigation study PwC | 11
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 15 of 26 PageID #: 1030
`
`Industry analysis
`
`Since 1996, consumer
`products represented
`17%
`of all
`identified
`patent cases
`
`Our research shows that the ten
`most active industry classifications
`(out of 20) collectively account for
`almost 90% of identified decisions.
`Patent cases associated with the
`consumer products industry were
`most prevalent, relating to products
`such as:
`• diapers
`• infant carriers
`• cosmetic palettes
`• coffee cartridges
`
`Fig 16: Distribution of cases: top ten industries: 1996 –2015
`
`Consumer products
`
`Biotech/pharma
`
`Computer hardware/
`electronics
`
`2%
`
`3%
`
`2%
`
`Industrial/
`construction
`
`2%
`
`15%
`
`11%
`
`8%
`
`8%
`
`Software
`
`3%
`
`6%
`
`Medical devices
`
`2%
`
`6%
`
`Telecommunications
`
`2%
`
`4%
`
`Business/
`consumer services
`
`Automotive
`
`Chemicals
`
`1%
`
`1%
`
`0%
`
`4%
`
`3%
`
`4%
`
`NPEs
`
`Practicing entities
`
`Over our years of
`tracking industry
`statistics, biotech/
`pharma and software
`industries have
`risen in prevalence,
`whereas industrial/
`construction, medical
`devices and business
`services have declined.
`
`12 | PwC 2016 Patent litigation study
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 16 of 26 PageID #: 1031
`
`Biotech/
`pharma
`
`
`highest median
`damages awards
`
`While patents associated with
`the consumer products industry
`represented the largest percentage
`of identified decisions, their median
`damages award was relatively low
`compared to those of the nine other
`most active industries.
`
`Patented technology associated
`with the biotech/pharma, medical
`devices and telecommunications
`industries experienced a significantly
`higher median damages award than
`other industries.
`
`Fig 17: Median damages award: top ten industries: 1996 –2015
`
`Consumer products
`
`Biotech/pharma
`
`Computer hardware/
`electronics
`
`Industrial/
`construction
`
`Software
`
`Medical devices
`
`Telecommunications
`
`Business/
`consumer services
`
`Automotive
`
`Chemicals
`
`83
`
`25
`
`73
`
`51
`
`37
`
`56
`
`34
`
`20
`
`19
`
`18
`
`Overall median damages award
`for all industries is about $5.8M
`
`$0
`
`$15
`$10
`$5
`Median damages awarded (in $M)
`
`$20
`
`The number of identified decisions is indicated within the respective row.
`
`Intellectual property
`disputes and
`Daubert standards
`
`Expert witnesses are critical to
`many types of litigation matters—
`but particularly so in intellectual
`property disputes, where technical
`and financial experts play an essential
`role. A successful challenge to your
`expert’s opinion under the Daubert
`standards can result in partial or
`total exclusion of the opinion—
`jeopardizing or, at worst, completely
`derailing your litigation. PwC’s
`Daubert Study focuses on trends and
`outcomes in Daubert challenges to
`financial experts between 2000 and
`2015, and provides insight into why
`experts were excluded. The Daubert
`Study found that in 2015, intellectual
`property disputes resulted in the
`greatest number of challenges to
`financial experts. Further ringing the
`alarm bells, over the last 16 years, the
`exclusion rates of financial experts
`have been highest in intellectual
`property matters, as well as in product
`liability cases. "Lack of reliability",
`either on its own or in combination
`with other factors, has consistently
`been the main reason for financial
`expert witness exclusions since 2000.
`
`These insights underscore the
`importance of identifying and working
`with the right financial expert—
`particularly as litigants and federal
`courts grapple with the complicated
`financial and damages issues that
`are so prevalent in intellectual
`property disputes.
`
`Find out more by scanning (or clicking
`on) this code:
`
`2016 Patent litigation study PwC | 13
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 17 of 26 PageID #: 1032
`The growing threat of trade secret theft
`
`Damages could extend to the billions of
`dollars, and include the destruction of an
`entire line of business, a company, or even
`a larger economic ecosystem.
`
`they work with to do the same. Protecting
`trade secrets and IP is paramount to an
`organization’s success—and its very
`survival. See related insights here:
`
`PwC and the Center for Responsible
`Enterprise and Trade (CREATe)3
`collaborated to develop a multilevel
`framework for private sector organizations
`to analyze their trade secret portfolios.
`
`It is in every company’s self-interest to
`improve trade secret protection and to use
`their leverage to encourage the companies
`
`PwC's Global Economic
`Crime Survey 2016—
`US Results:
`
`Economic Impact of Trade
`Secret Theft:
`
`1
`Identify and
`categorize
`trade
`secrets
`
`2
`Threat
`actor and
`vulnerability
`assessment
`
`3
`Relative
`value
`ranking
`
`4
`Economic
`impact
`analysis of
`threat event
`
`5
`Secure trade
`secret
`portfolio
`
`Fig 18: Patent holder success rates: top ten industries: 1996 –2015
`
`Overall success rate
`
`0%
`
`5%
`
`10% 15% 20%
`
`25% 30% 35% 40%
`
`Consumer products
`
`Biotech/pharma
`
`Computer hardware/
`electronics
`
`Industrial/
`construction
`
`Software
`
`Medical devices
`
`Telecommunications
`
`Business/
`consumer services
`
`Automotive
`
`Chemicals
`
`PwC’s Global Economic Crime Survey2
`analyzed the economic crime
`experiences and feedback from more
`than 6,000 respondents across the globe,
`and found that theft of trade secrets
`and intellectual property (IP) still runs
`rampant. In the US, of those that have
`experienced economic crime in the
`past two years, 15% have suffered IP
`infringement. These rates are double
`those of global experiences of IP theft
`(7% in 2016).
`
`Undoubtedly, transfer-of-wealth/
`intellectual property attacks are one of
`the most lethal economic crimes that
`can befall an organization. The theft
`of critical IP—trade secrets, product
`information, negotiating strategies
`and the like—can be called “extinction-
`level events.”
`
`Success rates fairly consistent
`across industries
`
`While the overall success rate (trial
`and summary judgment combined) for
`all industries during the 20-year study
`period was approximately 33%, holders
`of patents related to the consumer
`products, biotech/pharma, computer
`hardware/electronics and medical
`devices industries achieved success rates
`higher than the overall median.
`
`
`2 PwC's Global Economic Crime Survey 2016.
`PwC, 2016.
`3 Economic Impact of Trade Secret Theft.
`CREATe.org and PwC, 2014.
`
`14 | PwC 2016 Patent litigation study
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 18 of 26 PageID #: 1033
`
`Judge and district comparisons
`
`Across districts: results
`may vary
`
`Certain jurisdictions (particularly
`Delaware, Texas Eastern, Virginia
`Eastern, and Wisconsin Western)
`continue to be more favorable venues for
`patent holders, with shorter time-to-trial,
`higher success rates and greater median
`damages awards.
`
`The table below presents the 15 most
`active districts and their categorical
`rankings for each of these metrics, with
`the overall ranking based on a simple
`average of the three scores.
`
`The overall ranking of the districts
`remained relatively stable, with the top
`five districts in terms of favorability
`to patent holders staying the same.
`Delaware overtook Virginia Eastern this
`year to claim the #1 spot.
`
`Fig 19: District court rankings: 1996 –2015
`
`Overall
`rank
`
`District
`
`Rank
`
`Median
`time-to-
`trial (in
`years)
`
`Overall
`success
`rate
`
`Rank
`
`Median damages award
`
`Rank
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`
`Delaware
`Texas Eastern
`Virginia Eastern
`Wisconsin Western
`Florida Middle
`Texas Southern
`New Jersey
`Texas Northern
`California Central
`New York Southern
`Massachusetts
`California Northern
`Florida Southern
`Minnesota
`Illinois Northern
`Overall (all decisions
`identified)
`
`2.0
`2.3
`1.0
`1.1
`1.9
`2.0
`2.7
`2.4
`2.3
`2.5
`3.6
`2.8
`2.4
`2.9
`3.7
`2.4
`
`4
`6
`1
`2
`3
`5
`11
`9
`7
`10
`14
`12
`8
`13
`15
`
`40%
`54%
`28%
`37%
`52%
`21%
`36%
`47%
`27%
`31%
`30%
`26%
`24%
`30%
`23%
`33%
`
`4
`1
`10
`5
`2
`15
`6
`3
`11
`7
`8
`12
`13
`9
`14
`
`$17,000,000
`$9,402,274
`$32,651,682
`$7,997,380
`$226,503
`$58,017,546
`$16,507,459
`$4,788,595
`$3,322,719
`$2,580,864
`$6,152,537
`$5,157,682
`$386,519
`$2,498,695
`$6,080,118
`$5,779,003
`
`3
`5
`2
`6
`15
`1
`4
`10
`11
`12
`7
`9
`14
`13
`8
`
`The overall ranking for these courts are based on their relative ranking for each of the three statistical measures, equally weighted.
`
`2016 Patent litigation study PwC | 15
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 19 of 26 PageID #: 1034
`
`NPE decisions relatively
`concentrated in a handful
`of districts
`
`Cases with NPEs as patent holders were
`concentrated in a few districts. The
`top five districts (out of 94 total) with
`the most identified decisions involving
`NPEs accounted for 45% of all such
`decisions—and the top ten districts
`accounted for 60%. The percentage of
`NPE decisions in the most active NPE
`districts continues to increase, indicating
`continued concentration of NPE cases
`in certain courts. The districts with the
`most identified NPE decisions, however,
`present a mixed message in relative NPE
`success rates.
`
`Texas Eastern, with the most identified
`NPE cases by far, also has one of the
`highest success rates, almost double the
`NPE average. However, the next two
`districts in NPE case counts yielded
`significantly lower success rates than the
`overall NPE average.
`
`While NPE litigation has become widespread,
`our data shows that NPEs continue to target a
`very small and select group of districts, with
`mixed success.
`
`Fig 20: District courts with most identified decisions with NPE as
`patent holder: 1996 –2015
`
`District
`
`Decisions
`involving
`NPEs
`
`Total
`identified
`decisions
`
`NPE %
`of total
`decisions
`
`NPE
`success
`rate
`
`Texas Eastern
`Illinois Northern
`California Northern
`Delaware
`New York Southern
`California Central
`Massachusetts
`Florida Southern
`Virginia Eastern
`Texas Southern
`Texas Northern
`Pennsylvania Eastern
`Florida Middle
`All identified decisions
`
`66
`39
`39
`37
`32
`21
`15
`12
`12
`11
`11
`10
`10
`477
`
`165
`151
`196
`248
`137
`103
`80
`41
`61
`53
`38
`32
`42
`2,281
`
`40%
`26%
`20%
`15%
`23%
`20%
`19%
`29%
`20%
`21%
`29%
`31%
`24%
`21%
`
`48%
`13%
`13%
`27%
`16%
`33%
`27%
`17%
`17%
`9%
`64%
`20%
`50%
`25%
`
`Includes districts with 10 or more identified decisions involving an NPE as the
`patent holder.
`
`16 | PwC 2016 Patent litigation study
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 20 of 26 PageID #: 1035
`
`Interestingly, patent holder success
`rates for seven of these judges also
`exceeds the overall 33% success
`rate, particularly in the Eastern
`District of Texas, whose judges’
`overall success rates are roughly
`twice the national average.
`
`Statistics by judge
`
`We also captured information on
`the active presiding judges in identified
`patent litigation disputes.
`
`The median damages award in
`cases presided over by seven of
`these judges significantly exceeds
`the overall median damages award,
`possibly indicating that larger
`disputes tend to be handled by more
`experienced judges.
`
`Fig 21: Most active district court judges: 1996 –2015
`
`Rank
`
`Judge last
`name
`
`Judge first
`name
`
`District
`
`Identified
`decisions
`
`Identified
`trial
`decisions
`
`Median
`damages
`award
`
`Overall
`success
`rate
`
`Median
`time-to-
`trial (in
`years)
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`
`Robinson
`Sleet
`Stark
`Gilstrap
`Clark
`Huff
`Montgomery
`Young
`Darrah
`Alsup
`
`Sue
`Gregory
`Leonard
`Rodney
`Ron
`Marilyn
`Ann
`William
`John
`William
`
`Delaware
`Delaware
`Delaware
`Texas Eastern
`Texas Eastern
`California Southern
`Minnesota
`Massachusetts
`Illinois Northern
`California Northern
`
`79
`38
`29
`20
`15
`12
`12
`11
`11
`11
`
`42
`30
`16
`15
`13
`6
`2
`3
`3
`4
`
`$21,922,403
`$34,120,392
`$16,017,824
`$15,000,000
`$6,957,610
`$42,897,464
`$2,644,176
`$237,127
`$10,312,017
`$19,414,174
`
`34%
`50%
`52%
`55%
`73%
`42%
`42%
`18%
`9%
`9%
`
`1.9
`1.9
`3.1
`2.6
`1.8
`2.1
`2.9
`1.7
`3.5
`1.6
`
`2016 Patent litigation study PwC | 17
`
`

`

`Case 1:16-cv-00290-MN Document 23-5 Filed 08/10/16 Page 21 of 26 PageID #: 1036
`
`A look at appeals
`
`Summary appellate statistics
`
`Our analysis of appellate outcomes in
`patent litigations from the Federal Cir