Pedram Sameni
Oct 26, 2016
Featured

Patexia Insight 17: Is the PTAB Covered Business Method Falling Out of Favor?

Several weeks ago we analyzed the IPR data for Q3 which has been steadily rising since September 2012. This week, our Data Science Team decided to look into Covered Business Method (CBM) Review, which is the second most popular type of Patent Office Trial after IPR. However, we learned that it has been falling out of favor in the last couple of years.

Since September 2012, there have been 476 CBM cases through Q3 2016, which is about 10 percent of the IPR total. However, unlike IPR that has been rising, CBM peaked in 2014 and has been on a decline ever since. We further investigated all CBM cases to understand the companies that have been actively leveraging this type of Patent Office Trial over the past 4 years. We learned that this tool has been very popular among only a small number of companies and in fact the top 10 petitioners account for more than 36 percent of all cases.

Similar to IPR, sometimes, one patent has been challenged multiple times through several CBM filings by multiple companies. Out of 476 cases filed through Q3 2016, there were only 323 unique patents. For example US patent 8336772 owned by Smartflash has been challenged in 10 different CBM cases by multiple companies including Apple, Google and Samsung.

While the top 10 petitioners list for CBM has some overlaps with the top 10 petitioners for IPR, it generally includes different names. Apple, Google and Samsung again made it to the top 10 but the remaining top petitioners are some insurance companies and banks. This makes sense, as CBM’s focus is mainly on business method patents. The top 10 petitioners cover more than 36% of all CBM cases. Overall, 170 unique companies have utilized CBM Review to challenge business method patents.

Top 10 patent owners are also a mixed list. There are well known non-practicing entities (NPE) such as Intellectual Ventures named in 20 cases, as well as operating companies, such as Maxim Integrated Products. The top 10 companies were named in more than 35% of all CBM cases. Interestingly, the total number of unique patent owners named in all CBM cases is 168, which is about the same as the number of unique petitioners.

In terms of the institution rate, more than 43 percent of all cases have been instituted from which 32 percent have a final decision at this point and about 11 percent are still being reviewed. Thirty-six percent of all cases were denied and terminated. And approximately 15 percent have been settled (before or after institution).

In general, it appear that CBM has mainly been utilized by a small number of companies. Since day one, there were about 170 unique companies on each side (petitioners vs. patent owners) and the top 10 cover more than a third of all cases. Considering the outcome of CBM cases and the decline in the recent years, we believe a lot of patent owners have second thoughts when it comes to enforcing business method patents due to the risk associated with the invalidation through CBM and generally the negative environment surrounding software patents post-Alice.

Do you think this has also impacted the filing rate for business method patents in the past couple of years? Do you believe we will see the same downward trends for IPR filings as patent lawsuit gradually declines?

In the coming weeks, we will review the defendants and plaintiffs in district court litigation and will compare the lists with the top petitioners in PTAB to better understand the ratio of companies that leverage PTAB as a defense mechanism.