1st Half 2018: Patent Dispute Report

Overview

Patent litigation in the first half of 2018 is 16 percent lower than in the first half of 2017. However, the proportion of NPE-related filings remains high, as seen in the figures below.

For the first time in this report, we have included litigation data for small and medium sized entities or “SMEs” (Figures 10 and 11).  Almost 50% of all litigation against SMEs in High Tech was initiated by Patent Assertion Entities (i.e. entities who purchase patents for the primary purpose of monetization). This is especially troubling since SMEs lack the resources to challenge bad NPE assertions and are often forced to settle rather than risk a protracted and expensive litigation. Part of Unified’s mission is to end invalid PAE assertions against SMEs by 2020.

Figure 1: Assuming current trends continue through the next half of the year, the volume of patent litigation in 2018 is expected to be slightly below the number of new filings in 2017.

Figure 2:  Parties filed approximately 800 new patent cases in District Court during Q2 2018, just below the number of filings per Q2 2017.

Figure 3: In 2018, the PTAB remains the most common venue for patent disputes overall. As expected, Delaware continues to be the most popular venue post-TC Heartland as the proportion of new filings in ED Texas has decreased. For more on TC Heartland see below.

Figure 4: At both the PTAB and the District Court levels, the High Tech industry continues to see the largest volume of patent disputes.


District Court

Figure 5: The proportion of NPE filings decreased in 2018 compared to previous years, however NPE related filings remain high (over 50% of all district court litigation in 1H 2018).

Figure 6: Despite an overall decrease in new cases between Q1 and Q2 2018, the number of NPE-related cases increased and accounts for roughly 60% of all Q2 2018 litigation.

Figure 7: The High Tech industry continues to account for the majority of district court patent cases in 2018.

Figure 8: Through the first half of 2018 NPEs accounted for over 86% of all patent suits enforcing High Tech patents.

Figure 9: Overall, PAEs accounted for more than half of all High Tech patent litigation in 2018.

SME Defendants in District Court

Unified is committed to protecting innovators and entrepreneurs by eliminating bad patent assertions against SMEs. Studies have shown that SMEs invest in less R&D and become less innovative after being sued. As seen in the figures below, NPEs have continued to use district court as a means to extract payments from SMEs in 2018.

Figure 10: Over 650 new lawsuits were filed against Small/Medium Entities in District Court between April 1 and June 30. NPEs account for approximately 37% of these new cases.

Figure 11: In Q2 2018, NPEs accounted for 81% of new district court cases against SMEs in the High Tech industry. PersonalWeb Technologies, LLC (45), Secure Cam LLC (13) and Upaid Systems Ltd. (13) were the most active NPEs targeting SMEs.  

TC Heartland: One Year Later

Over a year has passed since the Supreme Court’s decision in TC Heartland and the decision’s impact on patent litigation filing trends is undeniable. The decision modified the existing requirements for establishing venue in patent cases that up to that point had led to a disproportionate number of filings in “patent-friendly” jurisdictions, most notably, the Eastern District of Texas.


Figure 12 & 13: In the year preceding the Court’s TC Heartland opinion, over one-third of all new patent cases were filed in the Eastern District of Texas. In the year following the decision, that number dropped to less than 15 percent. The District Court of Delaware is now the most popular patent venue at over 22 percent.


PTAB Disputes

Figure 14: The PTAB received more than 1,500 new petitions in the first half of 2018.  Detailed records for each of these cases is available on Unified’s Public Portal, along with various in-depth filtering and analytical tools.

Figure 15: Fewer IPRs were filed in Q2 2018, possibly in response to the uncertainty surrounding the Supreme Court’s decision in Oil States, which issued April 24.  

Figure 16: Nearly 60% of PTAB petitions filed in the first half of 2018 challenged High Tech patents.

Figure 17: About 62 percent of High Tech patents challenged at PTAB were owned by NPEs.

Figure 18: Inter partes reviews (IPRs) continue to dominate all PTAB proceedings.

Figure 19: Samsung and Google were the first and second most frequent IPR filers in 2018, respectively. Unified was also the 10th most frequent petitioner at PTAB in the first half of 2018.

Figure 20: 8 out of the 10 most-challenged Patent Owners at the PTAB in the first half of 2018 were NPEs. Most of these NPEs are well-known Patent Assertion Entities.


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
DED = Delaware
TXED = Eastern District of Texas
CAND = Northern District of California
CACD = Central District of California
NJD = New Jersey
NDIL = Northern District of Illinois
SDNY = Southern District of New York
TXND = Northern District of Texas


Methodology

This report includes all District Court and PTAB litigations between January 1, 2015 and June 30, 2018.

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