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Survey Report

Global Intellectual Property (IP) Litigation Risk Research Report

IP is everywhere and so is IP risk

Financial, Executive and Professional Risks (FINEX)

July 24, 2018

Willis Towers Watson recently completed research on intellectual property litigation risk

In the U.S. alone, an average of 12,000 intellectual property (IP) cases are filed in federal court each year; to put that into context, each year there are approximately 6,400 commercial cases.1 But IP litigation is not limited to the U.S. alone. For example, in China, the number of IP cases filed in the first instance courts doubled from 2013 to 2017,2 and the Global IP Project estimates 1,300 cases are filed each year in Germany.3 As individuals and organizations continue to develop intellectual property at increasingly high quantities and paces, global litigation frequency will also rise.

In fact, the number of patents granted nearly doubled from 2002 to 2016,4 as did the number of worldwide trademark registrations.5 What’s more is that the countries in which companies receive IP rights are shifting. From 2015 to 2016, the patent grant rate in the European Patent Office (EPO) increased by 40%, while the share of worldwide patent grants in Asia nearly doubled to 57%.6 These shifts will impact where future IP cases are filed.

In today’s competitive business arena, stakes are high and all property is valuable. It’s just as likely that a company could defend a patent infringement suit for a technology it uses to run its business (e.g., CRM or logistics software) as it is to be sued for a new-to-market technology or product that it develops. Not all suits are obvious, and not all are predictable. It isn’t enough to simply manage and honor originality and integrity; you must also manage your risk and exposure.

While many companies appreciate intellectual property’s value, they have not yet extended the IP management function to include IP risk management – and, as such, have not quantified their own IP risk and its costs. Risk Management, Legal, Finance and Human Resources may all touch on IP and risk in varying capacities, but they typically do not take a coordinated, comprehensive approach to fully managing IP risk itself. Instead, costs to manage that risk tend to be siloed in Legal and Research & Development departments; as a result, the full context and benchmarking data evade companies, preventing them from determining how much they truly spend managing various IP risks. This is a financially costly approach that leaves organizations vulnerable.

Case cause and severity will vary, but all cases share one commonality: costliness. In the U.S., between litigation expenses and damages or settlements, case costs can easily reach the six-figure range for smaller companies, with large organizations often facing case costs in the eight figures. These hard numbers do not factor in other indirect costs, such as lost productivity, lost customers or diminishing brand equity. Outside of the U.S., those numbers are typically lower, particularly in Europe where the threat of an injunction serves as leverage. However, IP damages awarded by Chinese courts are beginning to increase due to new IP policy initiatives.7

To better understand perceptions of IP litigation risks’ financial impact, Willis Towers Watson examined data collected through in-house surveys, in collaboration with CPA Global, and sourced data to develop our first-ever Intellectual Property Litigation Risk Report.8 The report gauges existing perceptions of IP litigation risk and encourages an enterprise-level understanding of the potential financial impact and how to manage and minimize it.

Survey data and respondent profile

The full report is based on recent in-house IP litigation cost survey results and sourced litigation frequency and severity data. Respondents represent companies of all sizes, global locations and diverse market sectors. The composite survey respondent profile is as follows:

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Over 70% generate between $100M-$10B in annual revenue

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Nearly 90% are for-profit, with 34% public companies and 55% private companies

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50% are IT/Telecom + health care + manufacturing

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Nearly half are domiciled in the U.S.

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Nearly 90% do business in the U.S.

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Over 90% describe themselves as suppliers versus users of products/technologies/services.

Perception versus reality

One of our primary goals in examining the data was to better understand IP litigation’s perceived risks and financial impacts. Our report found that, while many concerns have grounding, to better manage risk, many organizations need to consider the impact of global influences, rather than just competitors matching their own demographic profiles.

In fact, nearly half of respondents stated that they were most concerned about being sued by a competitor, but since 2008, 50-70% of defendants sued for patent infringement in the U.S. have been sued by non-competitors.9 More than half of the companies sued for patent infringement by non-competitors are smaller companies,10 and most non-competitor patent litigation in the U.S. targets the e-commerce and software, consumer electronics and PCs, consumer products, and networking technology sectors.11 Additionally, while 50% of respondents were most concerned about being sued in the U.S. for IP infringement, 40% do business in China where the number of patent cases eclipses that of the U.S.

Managing the financial impact

The best way organizations can protect themselves against IP litigation risk is to be prepared. Nearly half of respondents don’t track what IP litigation costs them on a per incident or annual basis. More than 50% of respondents agree that IP litigation costs could have a material impact on their businesses yet have not taken advantage of risk transfer options.

The costs associated with IP litigation could have a material financial impact on our company.

Chart: The costs associated with IP litigation could have a material financial impact on our company

Please use the download link below to access the full report. In addition to delving deeper into global IP trends and issues, the report provides in-depth analysis and insights into:

  • The global financial impact of IP infringement litigation, including frequency and severity trends in key geographies and valuable benchmarking information
  • Practical ways to mitigate and manage IP litigation risk, including an overview of available IP insurance offerings and case studies on how to use insurance to manage IP litigation risk
  • High-level considerations for evaluating the preparedness of your organization in managing IP infringement liability risks


  1. Lex Machina 2017 Commercial Litigation Report at 1.
  2. China handles 213,000 IPR cases in 2017
  3. Global patent lit report at S-12; see also The Patent Litigation Law Review
  4. World Intellectual Property Indicators 2017 at 37, Figure 7 (WIPO).
  5. Id. at 106-07, 111 at Figure B4.
  6. World Intellectual Property Indicators 2017 at 37-38 and 49 at Figure A13.
  7. February 27 – March 5, 2018 Developments
  8. For purposes of this report, intellectual property includes legally protected forms of IP, such as patents, trademarks/trade dress, design rights, copyrights and trade secrets. The legal protections afforded to these forms of IP vary slightly from country to country. See World Intellectual Property Indicators 2017 (WIPO 2017 Geneva) at 209-11; WIPO Lex survey conducted with the assistance of CPA Global.
  9. See 2017 in Review. These percentages vary depending on whether you add in ITC cases and IPR proceedings challenging non-competitor patents. To avoid issues with counting what amounts to the same incident or dispute multiple times, we prefer the RPX methodology, which focuses on incident by defendant rather than by case and does not separately count related ITC and IPR matters.
  10. RPX Data Update: Patent Litigation Volatility Persists as Strategies Shift
  11. RPX Data Update: Patent Litigation Volatility Persists as Strategies Shift
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