Court in Session: Intellectual Property at Risk

By Pearson, Judith; Nickson, Stephen et al. | Risk Management, February 2001 | Go to article overview

Court in Session: Intellectual Property at Risk

Pearson, Judith, Nickson, Stephen, Marvel, Sean, Risk Management

We have arrived at the intersection of a changing legal and business environment. Intellectual property (IP) exposure is at the center of the crossroads; litigation over IP rights has catastrophic potential.

Intellectual property-defined as any intangible asset that consists of human knowledge and ideas-has become a valuable and costly enterprise. The average cost to litigate a patent case today is $2.5 million, and each year that increases 10 percent to 15 percent. In light of the amounts at stake, law firms and plaintiffs treat IP litigation as a growth industry.

Why the change now? Dramatic technological developments have created new wealth for shareholders. More than ever before, sophisticated investors are placing value on intellectual property and corporate management strategies. Moreover, corporations are changing the way they manage their intellectual property portfolios. Intellectual property is now viewed as a way to strengthen earnings, shore up the value of assets and provide growth in varying economic climates. While companies cannot afford to lose their intellectual property in court, aggressive firms are poised to succeed in forcing just that.

Why Me?

Company leaders sit back in their chairs and ask: "We do not have patents, so how big can our risk be?" The answer: enormous.

While patents drive 60 percent of the current intellectual property litigation, trademarks and copyrights represent another 34 percent. More worrisome is trade secret litigation. While it currently represents just 5 percent of the cases filed, trade secret litigation will ultimately mirror both the frequency and severity of patent litigation as the importance and exposure of trade secrets expand.

Another common misconception is that the rise of intellectual property litigation is focused on hi-tech or Internet-based companies. While it is true that a significant number of cases involve these areas, much of the litigation is also challenging court positions on the patentability of software and business processes. Although litigation against companies in software, hardware, semiconductor and Internet businesses represent 39 percent of the litigation, traditional manufacturing companies are involved in more than 35 percent of the activity. Consider also the effect of globalization for any company. Intellectual property issues are a focal point in many trade negotiations. And in 1999, only 58 percent of all U.S. patents were issued to domestic companies; the remaining were registered to foreign entities-with companies in Japan, Germany and France leading the way. Corresponding statistics from other clearinghouses, such as the World Intellectual Property Organization, provide similar views of the intellectual property landscape. Industry mores are changing-and no sector is secure.

The size of a company is also not necessarily a good indicator of exposure. According to Aon, approximately 13 percent of the thirtythree court cases it tracked were filed against companies with assets of less than $100 million, while 32 percent were against companies with assets in excess of $1 billion. (Total estimated losses in these cases is estimated to be in excess of $100 million.) It does not matter if your company is large or small, public or private-all companies are exposed.

Idea Management

Because of the evolving risks to corporations, qualifying and quantifying corporate exposure are key components to risk management techniques. The evolution of intellectual property risk factors is analogous to the changes directors and officers faced in the early 1980s. Prior to the merger mania of that decade, shareholders rarely challenged the behavior of the board of directors. The extensive litigation beginning in the late 1970s and early 1980s clarified the relationship of the shareholder to the board of directors and established the foundation of best practices.

Today, through the rise in litigation, standards in intellectual property management are being forged. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)


1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

Cited article

Court in Session: Intellectual Property at Risk


Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.