Patent infringement suits are also on the rise, especially from so-called non-practicing entities (NPEs) a.k.a. patent trolls who now file two thirds of all cases, said Heath from RPX, which licenses defense patents to more than 150 companies.
Heath said product companies spent in 2011 nearly $30 billion on suits from NPEs, about half the costs just on legal fees. He estimated only 10 percent to 20 percent of the money spent on the cases actually went to the patent owners. "This is an horrifically inefficient mechanism for discovering value," he said.
Patent cases filed also hit an all-time high in 2012.
Nevertheless, the rise in suits is not deterring startups from entering tech markets, said Hanchuk of Cooley. "It's almost inevitable you will infringe someone's IP these days, but it's rare to see startups walk away, instead they see it as an issue of risk mitigation," he said.
Heath said RPX provides a form of insurance against patent litigation suits. Most panelists said it's rare to see such offerings, and Lutton of Nest said he would not use them, preferring to negotiate legal fees directly with law firms.
"It's still too much of a wild card for either side," agreed Van Arsdale of Intellectual Ventures.
In June, the White House issued a report on the rise of patent infringement cases, suggesting a handful of legal remedies. Sides are hotly divided over whether more reform is needed in the wake of the recent America Invents Act.
Infringement cases filed by NPEs (light blue) now make up two thirds of all cases filed, said Heath of RPX.
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