As a number of sources – such as
Lex Machina and
Unified Patents – have reported, patent litigation
fell in the third quarter of this year.
|Source: Docket Navigator
We conducted in-depth data analysis to look beyond the
headline figures to assess how non-practicing entities (NPEs)
are being affected, and which companies have reduced their
activity the most. Yesterday we revealed
how individual NPEs are changing their patent lawsuit
activity, and today we have followed this up by analysing
how a sample of high-profile defendants have benefited and how
law firms are being affected (this data is available to
subscribers and triallists only – sign up for a free trial
if you don’t have access already).
Although the data varies between the different companies,
our analysis on a broad level confirms that overall patent
litigation is down. Figures taken from Docket Navigator reveal
that patent case filing was down 11% in July, 25% in August,
42% in September and 34% in October, when compared with the
same months in 2013.
This drop in litigation has led some to claim that the
Alice v CLS Bank decision released on June 19 has
caused NPEs to scale back their litigation. However, while the
Alice decision certainly has important ramifications
for NPEs – and for patent litigation in general
– our analysis of individual NPEs activities reveals
that litigation among those NPEs that were most active in 2013
has been down all year, not just after June 19.
"The PTAB has served to shift the balance
of power between plaintiffs and defendants in patent
litigation. Plaintiffs are now wary that the patents they are
asserting may be challenged at the PTAB."
This suggests that other influences may be at play. One big
factor on NPEs’ decisions to file or not file
lawsuits is the
surprising popularity of the Patent Trial and Appeal Board
(PTAB). This has served to shift the balance of power between
plaintiffs and defendants in patent litigation. Plaintiffs are
now wary that the patents they are asserting may be challenged
at the PTAB. This not only makes litigation a potentially much
longer process – with a PTAB trial meaning cases could
be stayed for up to 18 months – but NPEs could end up
losing their patents altogether.
All of this means that the data for the two remaining months
of the year will be keenly watched to determine whether the
decline in litigation we are seeing is a long-term trend or a
blip while companies pause to take stock of what Alice
means to them and how they need to change strategy.
It is not only the patent community that will be taking
note. Lawmakers will also be following how the figures are
changing. The decline in litigation has come at an interesting
time because the push for patent reform looks likely to resume
following the Republicans seizing the Senate earlier this
With Alice and PTAB proceedings possibly leading to
a reduction in litigation it could be
argued that patent reform is now less urgent than when it
was being debated last year. If the decline is a long-term
trend it becomes harder to claim that NPEs – or patent
trolls if you prefer – need to be tackled urgently
through legislation now. Conversely, it could be argued that
2013 was a peak year because plaintiffs were waiting to see how
the America Invents Act reforms panned out and then filed
litigation once there was more clarity.
What do you all think? Is the fall in litigation a long-term
trend? What is driving it? And how will NPEs respond? Let us
know by posting comments at the bottom of this blog or joining
the discussion in our LinkedIn group.