Patent litigation, in its most simple terms, is the legal process which is carried out when a patent owner enforces their right by suing someone else for selling or manufacturing their product without their permission.
When a patent owner is unable to agree on a royalty deal or wants to enforce their right to exclude a competitor from any potential patent infringement, patent owners can call for a patent infringement lawsuit and ask the court for damages.
Litigation itself is not deemed as part of typical transactional activity, it is for market preemption, the enforceability of a patent would be the basis for other transaction activities and the true battlefield of enforcement is in litigation. A patent will be severely challenged with its quality and value during the litigation process.
A patent can be transacted just because the buyers think it is possible to enforce this patent by somebody. So, enforcement is the basis of all of the other monetization activities.
Due to the costly nature of enforcement (especially litigation), it would generally be deemed as a backup plan for patent licensing (if the patent owner’s purpose is not for market preemption.)
There are also remedies (in particular damages) in litigation when both parties go through the mill and come to the decision of litigation. For practicing entities, when it comes to litigation, there are also patent risk issues because the defendant can also fight back.