Value For Money In Global Patent Litigation: Relative Cost And Time To First Judgment In Eight Key Countries.

Relative cost and time to first instance judgment are important components of global litigation strategy. A fast decision in a key jurisdiction will create an early strategic advantage. However, expensive litigation in a market with lower returns may not be warranted without a series of wins in more ‘litigation efficient’ countries.

So, where will you get the fastest decisions?

Which countries provide the biggest markets per dollar spent on litigation?

Clearly these are only two of the many factors to be taken into account when putting together a global patent litigation strategy. However, the analysis rewards careful scrutiny.

Getting a fast result in a key jurisdiction can be of enormous strategic assistance in global litigation. Table 1 summarises the average time to first instance judgment and compares each jurisdiction to the fastest – China (in an administrative action – as little as three months).

The UK, Netherlands and Germany take approximately three times longer, while Japan, France and the USA range from 4 to 8.7 times slower than in China. While it is possible to complete a trial relatively quickly in Australia, the judiciary regularly take much longer to hand down their decisions, so that the average time taken until a first instance judgment is handed down is nearly three years – eleven times slower than using the administrative procedure in China.

To compare the relative effectiveness (in market share) of money spent in each jurisdiction, I came up with the concept of ‘litigation efficiency’. Table 1 compares the LE Index (Litigation Efficiency Index) for the eight countries reviewed. The index is obtained by dividing market size by average litigation spend and standardising so that the least efficient country (Australia) has an index of 1.0.

Readers should carefully note that the LE index is only useful as a means of comparing jurisdictions – it says nothing about a particular jurisdiction and has no unit of measurement. It says nothing about the merits of litigating in a given country in any given set of circumstances.

Of the countries reviewed, France is the most litigation efficient, with an index of up to 117.2. In other words, each Euro spent on litigation in France will return up to 117.2 times more in market size than would be returned for the same litigation in Australia.

(The market size data is based on the retail pharmaceutical market which is a reasonable approximation of relative market sizes across industries and countries.)

While you may not agree with all of the assumptions (and please let me know if you don’t), I think you will agree that the figures are a fair representation of the relative costs and times.

An important assumption is that the market for a particular product will have the same relative sizes when comparing jurisdiction ‘A’ and jurisdiction ‘B’ as the overall pharmaceutical retail market size in each of those jurisdictions.

I have made slight adjustments to market sizes and litigation costs based on the relative age of the source data.

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