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?

On
average, patent litigants will obtain a first instance judgment first in
China (3-6 months for an Administrative Action, 6-12 months in Court), then
the UK, Netherlands or Germany (9-15 months), followed in decreasing order by
Japan, France, USA, and finally Australia (the slowest with 33 months on
average).

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

Due
to its relatively large market and inexpensive litigation, France ranks first then in decreasing order; Germany, USA,
the Netherlands, the UK and finally Australia.

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.

First instance decisions

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.

Average time to 1st Instance Judgment	CN Multiple (best case)
China	3-6 months (administrative) 6-12 months (court)	1.0
UK	9-15 months	3.0
Netherlands	10 months	3.3
Germany	10-15 months	3.3
Japan	12 months	4.0
France	20 months	6.7
USA	26 months	8.7
Australia	33 months	11

Table 1: comparison of time to first
instance judgment

Market size per litigation dollar
spent – ‘litigation efficiency’

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.)

Retail Market Size (Pharma.) [US $‘000,000,000]	Av. Litn spend (1st inst) [US $ ‘000,000]	Market size per Litigatn $	LE Index
France	25.6b	0.08 — 0.46	56,000-337,000	19.4 — 117.2
Japan	58.7	0.26	225,769	78.5
Germany	27.0	0.13	211,000	73.4
USA	186.0	2.70	69,074	24.0
Netherlands	5.0	0.2 — 0.30	15,600-26,000	5.4 – 9.0
UK	15.0	1.90	7,890	2.7
Australia	4.6a	1.60	2,875	1.0
China	?	0.04 (admin) 0.07 (court)	?	?

Table 2: comparison of litigation efficiency
to first instance judgment

Comment

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.

Assumptions:

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.

References:

IMS Health, IMS Retail Drug Monitor, 12 months to March 2006

Bodoni, S; Where to find value in Europe:
Managing Intellectual Property, Sept 2004

Generic Drug Entry Prior to Patent Expiration: An FTC Study. US Federal
Trade Commission, July 2002

Weatherall K, & Jensen, P; An Empirical Investigation into Patent
Enforcement in Australian Courts (2005); Federal Law Review (2005), Vol 32;
IPRIA Working Paper No. 07/05.