Litigation Skyrocketing Among Tech Companies

WASHINGTON — Technology and communications companies rank third on the list of U.S. and U.K. industries with the most litigation, according a new survey of manufacturing companies.

The survey by the law firm Fulbright & Jaworski, a leading intellectual-property litigator based in New York and Houston, found that the average U.S. manufacturer currently faces 40 lawsuits. Of those, an average of 18 were initiated in the last year.

While product liability remains the largest generator of lawsuits, the survey found that intellectual property disputes are an emerging problem, especially for technology companies. IP and patent lawsuits accounted for an estimated 13 percent of U.S. corporate litigation last year and 16 percent in the U.K. Only contract disputes, labor and employment, personal injury and product liability cases ranked higher than IP lawsuits, the law firm found.

One reason litigation is soaring, the survey found, is the emergence of "electronic discovery" techniques, especially in the U.S. "Electronic discovery was the number one new litigation-related issue for companies with revenues over $100 million," the survey found. "So far, it's impact appears to have been felt far less in the U.K. than in the U.S."

An emerging and inexpensive tool for electronic legal research are search engines such as WaybackMachine that can take researchers to defunct Web sites. Many contain reams of archived material reseachers can search for evidence that can be used at trial.

"The advent of electronic discovery, coupled with more stringent record keeping requirements, has exponentially added to the burdens imposed by litigation,” Fulbright attorney Robert Owen said in a statement.

The U.S. healthcare industry has the largest number of pending lawsuits in the U.S. followed by energy companies and technology and communications companies.

The study found that nearly a quarter of U.S. companies, led by technology and communications manufacturers, are spending 2 percent or more of annual gross revenues on legal expenses. IP disputes ranked as the most expensive litigation.

Survey results were based on responses from 354 corporate counsel, including 50 in the U.K. The survey was conducted during June and July.