Page 11 - Intellectual Property Disputes

Overview of the Economic Significance of Intellectual Property

The ability to manage, value, and exploit intellectual capital fn 1 has become a significant corporate
objective. Investors and shareholders alike are investing more in intellectual capital today than in the
past because it typically commands a higher expected return on investment than other corporate assets.
As a result, many companies are making large investments into intellectual capital, in part, as a means of
spurring innovation.

Such large investments have led to highly valued assets, which, in turn, have led to large damages
awards relating to infringement of those assets. The following examples of high-profile patent
infringement cases demonstrate how intellectual property disputes can involve millions or even billions
of dollars:

• In 2016, a Delaware jury awarded Idenix Pharmaceuticals reasonable royalty damages
approximating $2.5 billion in its patent infringement suit against Gilead Sciences. The
technology at issue related to hepatitis C drugs. fn 2

• In 2012, Pfizer, Inc. announced a $2.15 billion settlement with Teva Pharmaceuticals and Sun
® fn 3
Pharmaceutical for patent infringement of Pfizer/Wyeth’s blockbuster reflux drug Protonix .
• In Medtronic, Inc. v. Michelson, more than $1 billion changed hands when Medtronic was
required to pay Michelson $400 million in punitive damages for patent infringement and another
$159 million in unpaid royalties and other sums. fn 4

• In 2016, Carnegie Mellon University (CMU) settled with Marvell Technology Group for $750
million over CMU’s patents related to increased accuracy of reading data by hard drive circuits.
fn 5

Other, more recent settlements and judgments in the billion-dollar range have also occurred or are under
appeal. Given the magnitude of the dollars at stake, the development and protection of intellectual
property has become a high priority among analysts and business leaders.

fn 1 Intellectual capital can be distinguished from intellectual property. Intellectual capital consists of human capital (people) and
structural capital (for example, internal processes and structures, databases, customer relationships, patents, trademarks, trade secrets,
and copyrights).
fn 2 In February 2018, the District of Delaware invalidated one of Idenix Pharmaceuticals’ patents in suit. "Idenix Loses Patent on
HCV Treatment that Supported $2.54 Billion Infringement Verdict," February 25, 2018, www.ipwatchdog.com/2018/02/25/idenix-
loses-patent-hcv-treatment/id=93980/, and "Merck subsidiary Idenix wins $2.54B in HCV treatment suit against Gilead in largest U.S.
patent infringement verdict ever," January 5, 2017, accessed April 30, 2019, www.ipwatchdog.com/2017/01/05/merck-subsidiary-
idenix-wins-largest-patent-infringement-verdict/id=76243/.

fn 3 "Teva, Sun Pharma to pay $2.15 billion to settle Pfizer patent suit," June 12, 2013, accessed April 30, 2019,
www.reuters.com/article/us-pfizer-patent/teva-sun-pharma-to-pay-2-15-billion-to-settle-pfizer-patent-suit-
idUSBRE95B0HN20130612.

fn 4 Kirkland and Ellis LLP, "Deals & Suits: Michelson v. Medtronic," Jan. 1, 2005, accessed April 30, 2019,
www.kirkland.com/sitecontent.cfm?contentID=230&itemId=7222.

fn 5 "Marvell Technology to pay Carnegie Mellon $750 million over patents," February 17, 2016, accessed April 30, 2019,
www.reuters.com/article/us-marvell-technlgy-carnegiemellon-idUSKCN0VQ2YE.

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