For years, Big Tech has tried to cast itself as the victim of an unfair patent system, claiming that startups and smaller competitors (derisively labeled “patent trolls”) file patent infringement lawsuits in the hopes of wringing massive, billion-dollar settlements from big companies.
That narrative doesn’t hold up to scrutiny. New data show that blockbuster patent damage awards are the exception, not the rule, and that when large awards do occur, most don’t even survive the appeals process. Far from being bled dry, tech giants benefit from a system that’s tilted in their favor, while small inventors find themselves at a steep disadvantage.
When innovators can’t protect their intellectual property, they’re less likely to pursue risky, potentially groundbreaking new ideas, and our entire economy becomes less dynamic and competitive.
Innovators rely on patents to protect their discoveries from theft and to build their businesses. The prospect of large legal damages should, in theory, deter companies from trying to steal their competitors’ intellectual property.
A recent study found that only one-third of patent damage awards remain fully intact after appeals. And the splashy verdicts that make headlines — often with billions of dollars attached — are the least likely to last. Appeals courts rarely uphold damages above $100 million, and never uphold those more than $500 million.
Instead of delivering final justice to the inventor, a verdict awarding damages usually just marks the beginning of an uphill battle.
Take the example of U.S. cybersecurity company Centripetal, an early pioneer of intelligence-based networking. A series of repeated attacks from larger competitors and breaches of non-disclosure agreements led Centripetal to sue Cisco for patent infringement in 2018. The result was a $1.9 billion verdict against Cisco. After two years of expensive appeals that included claims of conflict of interest at the U.S. Patent Office, the Court of Appeals looked past the lower court’s finding of “egregious” misconduct by Cisco and vacated the ruling.
More recently, in July, the federal Circuit Court again vacated a lower court decision that found Apple guilty of infringing standard-essential patents owned by Optis Cellular. In this case, the court wiped out a $500 million verdict against Apple for infringing on Optis’ patents.
It will be worth keeping an eye on a recent $445 million verdict against Samsung for infringing multiple patents from U.S. innovator Collision Communications. Samsung has faced several other large patent infringement verdicts and is also the subject of an infringement case at the International Trade Commission brought by U.S. semiconductor company Netlist.
Similarly, a federal jury in California found that Apple must pay $634 million for infringing the medical technology company Masimo’s patent for a “blood-oxygen reading technology.” Apple, which used the tech in its Apple Watch, has already vowed to appeal the decision.
One can only hope that the court won’t, once again, overturn large patent damage awards in this case and others like it.
In the end, most upheld patent damages awards range from $35 million to $40 million. There are, of course, outliers, but they’re still far from the billion-dollar payouts that dominate initial press coverage.
The system does not force big corporations to constantly write enormous checks to smaller competitors. If anything, it’s stacked against the small inventors it was designed to protect.
That imbalance comes down to resources. Smaller inventors often don’t have the capital to wage multi-year lawsuits, respond to appeal after appeal, or survive the endless procedural maneuvers that Big Tech companies can easily bankroll.
Tech giants often take advantage of this to engage in what’s called predatory infringement. Large companies have realized that it’s actually cheaper to infringe on patents and then drag inventors out in court, rather than license those discoveries properly. They copy technology, knowing that if they’re sued, the odds are in their favor. Maybe they can persuade appeals courts to overturn the verdict, maybe they can pay a settlement lower than a licensing fee would have been, maybe the USPTO will review the patents again and invalidate them, or maybe they can tie things up so long that the small inventor can’t afford to keep fighting.
Either way, the strategy tends to pay off for them, leaving the innovators with little to show for their efforts, innovations and investments.
This isn’t how a strong patent system ought to work. If a big company infringes on a small inventor’s patent, the innovator should be able to genuinely defend their intellectual property in practice, not just in theory.
Instead, seeking illusory damage awards has become just another step in a drawn-out fight that drains small inventors and rewards those with the deepest pockets.
Big Tech keeps crying wolf about predatory litigation while the real victims — the innovators who power America’s economy — are left unprotected. And the longer the scales remain tipped, the less reason startups and true disruptors have to keep creating innovative technologies.
