1st Half 2017: Patent Dispute Report

OVERVIEW

Total 1H 2017 patent disputes decreased 4% compared 1H 2016. District court cases decreased 12% compared to the same time last year.   At the PTAB, however, new petitions increased 16% from 1H 2016.

The TC Heartland May 22nd decision appears to have dramatically shifted cases from E.D. Texas. Delaware has become the popular district court venue post-Heartland. Despite these shifts in venue, NPE activity continues to account for nearly 90% of all new High Tech litigation.

Figure 1: Total patent disputes held relatively stable compared to 1H 2016 and 2H 2016.

 

Figure 2: The PTAB increased its lead over the E.D. Texas as the most popular patent dispute venue.  E.D. Texas was still the most popular district court venue.

Figure 3: Since TC Heartland, parties appear to be shifting away from filing in E.D. Texas and moved to DED and ND Cal.   The numbers are very similar to ones predicted by our Quantitative Assessment published immediately after the decision which was based on an academic paper.

Figures 4 & 5: 2017 share of cases filed in E.D. Texas decreased by 50% post-TC Heartland, from 34% (542/1582) to  17% (55/320).  DED share of cases almost doubled, while N.D. Ca increased as well.

*The Court’s opinion in TC Heartland issued on May 22, 2017. Although this shift in venue is consistent with predictions, some fluctuations should be anticipated due to the short time that has passed since the decision. 

Figure 6: High Tech continues to see the most patent disputes at district court and the PTAB.

 

DISTRICT COURT

Figure 7: 1H 2017 has seen approximately 12% fewer district court cases filed than 1H 2016.

Figure 8: Most district court cases focus on High Tech.

Figure 9: NPEs account for nearly 90% of all 1H 2017 High Tech patent litigation.

Figure 10:  PAEs brought two-thirds of High Tech patent litigations in 1H 2017.

 

PTAB

Figure 12: The PTAB received more new petitions in 1H 2017 than any previous 6 months. This includes 414 challenges against NPE-owned patents, a 20% increase over the 340 NPE-owned patents challenged in the first half of 2016.  For more historical data, visit our portal.

Figure 13: Over two-thirds of 1H 2017 PTAB petitions challenged High Tech patents. For more on these 1H 2017 cases, visit our portal. 

Figure 14: About half of all challenged High Tech patents were owned by PAEs. For further analysis of these High Tech cases, visit our portal. 

Figure 15: Inter partes review (IPR) remains by far the most popular type of PTAB proceeding.

Figure 16: Unified Patents was the #8 most active Petitioner at PTAB in the first half of 2017. For the complete list of top parties, visit our portal. 

Figure 17: Comcast filed 31 IPRs against Rovi Guides, a well-known NPE, making Rovi the most challenged Patent Owner in the first half of 2017 (and Comcast the most frequent Petitioner). 

 

DEFINITIONS

Sectors

High-Tech = Technologies relating to Software, Hardware, and Networking

Medical = Technologies relating to Pharmaceuticals, Medical Devices, Health Related Technologies

Other = Technologies relating to Mechanical, Packaged Goods, Sporting Equipment and any other area outside of high-tech and medical patents.

Entities

Non Practicing Entity (NPE) = Company which derives the majority of its total revenue from Patent Licensing activities.

Operating Company or Op. Co. = Company which derives most of its total revenue from Product Sales or Services. Could be an SME or a large company.

Other Entity = Universities / Non-Profits / Government / Non-Governmental Organizations (NGOs)

NPE (Patent Assertion Entities) = Entity whose primary activity is licensing patents and acquired most of its patents from another entity

NPE (small company) = Entity whose original activity was providing products and services, but now is primarily focused on monetizing its own patent portfolio.

NPE (individual) = Entity owned or controlled by an individual inventor who is primarily focused on monetizing inventions patents by that individual inventor.

Venue in Federal District Court

TXED = Eastern District of Texas

DED = Delaware

CACD = Central District of California

NJD = New Jersey

CAND = Northern District of California

METHODOLOGY

Total number of reported cases can vary based on what is included. Unified made its best attempt to eliminate mistaken, duplicative, or changes in venue filings, hence the totals may vary slightly compared to other reporting entities.

This includes all District Court and PTAB litigations between January 1, 2014 and June 30, 2017.

Statistics include litigation initiated by NPEs or Declaratory Judgments (DJs) initiated by operating companies against NPEs.

Unified strives to accurately identify NPEs through all available means, such as court filings, public documents, and product documentation.

Quantum Stream patent challenged as likely invalid

On June 23, 2017, Unified, represented by Haynes and Boone, filed a petition for inter partes review (IPR) against U.S. Patent 9,047,626 owned and asserted by Quantum Stream Inc., a subsidiary of Form Holdings Corp. (f/k/a Vringo, Inc.) and a well-known NPE. The '626 patent, directed to systems for delivering content, such as a digital video program, to a user device, has been asserted in multiple district court cases against companies such as Cablevision, Directv, and Charter Communications. 

To read the petition and view the entire case proceeding, please visit our PTAB Portal.

Rothschild Biometric Systems patent challenged as likely invalid

On June 16, 2017, Unified filed a petition for inter partes review (IPR) against U.S. Patent 8,799,088 owned and asserted by Rothschild Biometric Systems, LLC, a subsidiary of SRR Patent Holdings, LLC and a well-known NPE. The '088 patent, directed to a system and method for verifying user identity information in financial transactions, was first asserted in district court on January 19, 2017 against USAA Savings Bank. The case promptly settled.  

To read the petition and view the entire case proceeding, please visit our PTAB Portal.

Supreme Court Grants Certiorari in Oil States v. Greene's

The Supreme Court of the United States granted certiorari in Oil States Energy Servs., v. Greene's Energy Grp. on “[w]hether inter partes review, an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents, violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”  This is at least the fourth petition to present this issue; certiorari was denied on each of the prior three occasions.  See MCM Portfolio v. Hewlett-Packard; Cooper v. Lee; and Cooper v. Square.

The case raises two primary questions: whether there is a Seventh Amendment right to a jury trial for patentability post-grant, and whether patents are public rights, as courts have traditionally ruled, or instead private rights that may only be revoked by an Article III court.

The Federal Circuit voted overwhelmingly not to hear the case en banc (by a vote of 10-2), with Judge Reyna dissenting on the grounds that it would be helpful for the court to clarify the difference between "public rights" and "private rights." When asked by the Supreme Court to respond to the petition for certiorari, the USPTO, represented by the Office of the Solicitor General, argued that it should be denied, explaining that “patents are quintessential public rights.”

A recent scholarly analysis by Professor Greg Reilly agreed, concluding that “a finding that administrative patent cancellation is unconstitutional would not just undo Congress’s policy choices for the patent system but would also threaten large swaths of the administrative state.”  Other notable scholars have come to similar conclusions.  See, e.g., Mark Lemley, Why Do Juries Decide If Patents Are Valid? (demonstrating jury trials on patent validity prior to 1971 were rare and finding that, “there is in fact no solid support in modern case law for such a right.”).  Relatedly, we note that the Federal Circuit’s predecessor, the Court of Claims and Patent Appeals, was itself held by the Supreme Court in 1929 to be “a mere administrative tribunal” lacking Article III status.  See Ex Parte Bakelite, 279 U.S. 438 (1929).

As companies and clients well know, post-grant review helps improve patent quality and provides an important check against the assertion of patents erroneously issued by the USPTO.  We are encouraged that the Supreme Court granted certiorari to help clarify that the longstanding practice of post-grant review, such as ex parte reexaminations—themselves dating from 1981—, is a valid exercise of administrative authority.  Settling the issue should stem unnecessary appeals and certiorari petitions and settle once and for all the immense practical value of the USPTO’s procedures to America’s business community.