2015 Patent Litigation by the Numbers
2015 has been an interesting year in the IP space. Aggressive lobbying has kept patent reform in the spotlight in both Congress and the media, with the patent troll narrative adding a sensational element and keeping the story fresh. But as the end of the year approaches, it is time to take a look at the numbers behind the rhetoric.
To begin with, a look at patent litigation over the last two years:
Figure 1: US Patent Litigation Year Over Year
The America Invents Act (AIA) was designed to bring down the rate of litigation overall, and many projected that the decision in Alice vs. CLS Bank would do the same. However, looking at the data, patent litigation has remained consistently high. While the Q4 data is not complete for 2015, looking at a comparison of litigation filed in 2014 and 2015 for Q1 through Q3, 2015 has surpassed 2014 every quarter, and looks likely to do so again in Q4.
While litigation has remained high, that is not due to a lack of interest in some of the remedies provided by the AIA. The post grant review options now available before the Patent Trial and Appeal Board (PTAB), most notably inter partes reviews (IPRs), have seen growth far surpassing the USPTO’s expectations. However, many companies turn to an IPR only in response to being sued, so while weaker patents can be removed from the system potentially reducing litigation in the long run, in the short term numbers remain high.
Figure 2: Total IPRs and CBMs Filed
One of the interesting factors to take a look at is the most active parties on both sides of the PTAB. The top 10 most active IPR Petitioners of 2015 so far are:
This list shows some consistent trends when compared with 2014. Apple has remained in the top slot, and Google, Samsung and LG maintained their position among the top 5. The big change is Microsoft, which appeared in fourth place in 2014 with 40 petitions, but did not appear in the top 10 for 2015.
A look at the top 10 IPR Defendants in 2015 also yields an interesting snapshot. We see some expected names like Acacia at the top through its subsidiary Innovative Display Technologies, and Marathon Patent group via its subsidiary Signal IP. However we also see a more diversified group of companies, all but three of which did not make 2014’s list of top defendants.
What’s Next:
While the overall litigation rate might not be coming down just yet, there have been some very interesting innovations taking place around the PTAB and some of the newer mechanisms in place.
With the growth of non-practicing entities, frequently filing suits against a large number of companies based on the same patent, new models are developing around uniting companies to collaboratively test patent validity. Creating defense coalitions to share costs and bring an IPR or other post grant review petition at the PTAB is allowing defendants to take advantage of the business models of the companies suing them and turn the tables. While filing suits against many companies used to mean many settlements for the plaintiff, now it can also mean opportunities for cost sharing when filing an IPR, with the added benefit of removing a weak patent from the system, rather than postponing the threat by settling.
There have also been interesting developments in insurance models looking to capitalize on the PTAB. Several companies now provide patent quality insurance of different types aiming at entities dealing with numerous patent litigation cases. These models are predicated on the ability to challenge patents being asserted against members using AIA post-grant reviews.
It will be interesting to track both PTAB petition filings and litigation rates as these trends play out. While some stakeholders have complained about the PTAB’s high invalidation rates, the Federal circuit has overturned the PTAB twice this month, in both cases saying that more claims should have been invalidated, so unless there is major reform changing the post grant review structure, it seems reasonable to expect the PTAB to continue to play a critical role in the litigation system moving forward.