Utility models worsen courts and exacerbate excessive litigation, especially for small innovators.

One major concern is whether the implementation of utility models might cause significant harm to US business. For example, the introduction of utility models as an unexamined right might only exacerbate the current problems related to the litigation of poor quality patents or overly broad patent claims. Many authors are in agreement that such litigation is a large burden to US business, particularly smaller businesses, which often do not have the financial resources and personnel to deal with lengthy and costly litigation. [xli] Intellectual property litigation involves significant cost and uncertainties, which make it unattractive to smaller start-ups, even though it can lead to a significant financial return and the exclusion of competitors. The costs might include the preparation of the legal case, distraction of employees, attendance of court proceedings by witnesses such as employee inventors, and document production. Furthermore, there may be considerable risks of the loss of trade secrets through the discovery process and of counterclaims of infringing the competitor-defendant's patent portfolio. [xlii] Even though most patent lawsuits settle before trial, attorneys' fees and the indirect costs of litigation are almost always still high. There are also indirect business costs associated with patent litigation, which may include strained relationships and jeopardized cooperative development. Furthermore, businesses in weak financial positions may experience dramatic increases in their credit costs due to potential bankruptcy risks created by patent litigation. Researchers report that alleged infringers lose approximately a half a percentage point of their stock market value upon being sued for patent infringement. [xliii] Furthermore, they report that this indirect cost is actually an order of magnitude larger than those of the actual legal fees of the patent litigation. This indirect cost and amounts to about nineteen percent of these same companies' R&D spending, an amount that is often greater than some estimates of the value of their granted patents. Not only have the costs of patent litigation been traditionally high, they have been increasing dramatically in recent years, as have the rates of patent litigation. [xliv] Limited available evidence and its analysis, as well as anecdotal evidence, indicate that the high costs and risks of litigation have created opportunities for abuses of the patent system in which there is the potential for larger and wealthier firms to willfully infringe the patents of individuals and small businesses or to exert clearly invalid patents against smaller firms. [xlv] Clearly it is small businesses that are most at risk in the litigation of poor quality patents. Without other additional systemic changes and reforms, the introduction of an unexamined IP right such as utility model protection would only increase the burden on small and all other businesses, as well as add additional stress to an already overloaded court system.