Mid-February means Lex Machina Patent Report time. I covered the release of the report last year, in 2022, as well as in 2021. As always, I highly recommend that readers register for the report and give it a read, as there may be more relevant information in the report than what follows for any given reader.
As I did in prior years, what follows are three idiosyncratic takeaways based on my review of the report. First, the report’s information on the number of patent case filings deserves further consideration. Second, a discussion of why times to trial varied so widely for the more than 200 patent cases that were tried between 2021 and 2023. Third, a check-in on happenings in the PTAB, which remains as relevant as ever.
Let me start with a look at what the report says about the number of total patent case filings nationwide, at least based on the 2021-2023 timeframe. Strikingly, the number of cases filed in 2023 (3,111) represented a nearly 20% drop from cases filed in 2022. Even more striking, that number of filings represents nearly a 50% drop in cases from the 2015 high. While you might imagine that such a precipitous drop over the course of a decade would be an indicator that patent litigation is in an unhealthy place, the report takes pains to note that much of the decrease is actually attributable to a decline in what the report calls cases filed by high-volume plaintiffs (HVPs). We can debate which plaintiffs fit within the definition of HVP, but that debate will take place on the margins. What is clear, however, is that if we presume that most HVP-brought patent cases are “quick hitter” attempts at driving low-value or nuisance settlements, then the impact on career prospects for most patent litigators due to the overall decline in number of cases filed is mitigated by the fact that the number of contested patent cases is remaining pretty steady.
At the same time, the data does suggest that even the HVP cases being brought nowadays may be of a more selective breed than what defendants may have been confronted with even five or so years ago. It does seem like the pedigree of the patents used in HVP cases may have improved in recent years, even if their overall strength from a merits perspective remains tenuous. My thought is that the rise in the willingness of defendants to seek attorney’s fees against HVPs may have pushed such plaintiffs to source their patents from what may be considered more respectable sources as a defense to such claims. It just sounds better for a losing plaintiff to hide behind the fact that the patent came from a large company with a reputation for innovation — even as it lost on the merits — rather than from a garage inventor with no name recognition. It will be interesting to see whether HVPs continue to adapt their strategies going forward, or whether the story of 2024 is a continuing decline in HVP cases, coupled with a steady amount or even increase in patent cases brought by non-HVP plaintiffs.
Second, the report’s insights into times for trial across the spectrum of jurisdictions trying patent cases is of interest. As a caution when considering national statistics in this regard, the report notes “the range of time it takes to get to trial is particularly wide” and that “[p]ractitioners should consider other information, such as case claims and the assigned judge, in order to obtain additional insights on timing.” Still, the data presented is compelling enough to allow us to draw out some conclusions. To start, consider the median time to trial for the 200 or so cases that went to trial in 2021-2023. As the report indicates, the median number of days to trial was 1,031 — close to three years from filing. Helping bring that median down, however, is the fact that a little over a quarter of the cases that went to trial were ANDA cases — and they got to trial much quicker, with a median time to trial of 844 days. For non-ANDA cases, therefore, it seems like plaintiffs choosing not to file in districts like Texas or one of the rocket dockets, it can take well over three years to get their patent cases to trial.
That length of time is not surprising, considering factors like court congestion and defendant delay tactics like seeking stays based on IPR filings. But it also illustrates a major challenge patent plaintiffs often face in terms of making sure they are properly financed (and patient enough) to get to trial: A lot of the larger costs in a patent case accrue as the case gets deeper into fact and expert discovery, with another spike in costs in the pretrial phase. As a result, even plaintiffs that have immediate access to capital today must be careful that they don’t find themselves in a more difficult financial position as the case drags on. And plaintiffs that are relying on third-party funding, a prevalent situation as more and more of the patent cases that have the potential of going to trial are financed, should be mindful of the time it might take until they see resolution of their claims. For some, knowing how long a horizon needs to be budgeted for trial and the inevitable appeal may be a spur to pursue or at least consider early settlement. For all funded clients, these timing considerations make it necessary to consider whether the capital source has the staying power to see things through to the end, as part of the patentee’s diligence of the funder they are taking money from in today’s competitive market.
Lastly, the statistics for patent owners out of the PTAB continue to illustrate the challenges posed by the IPR regime on their prospects of recovery. While 2023 saw a drop in the number of IPR filings (1,157) from the 1,300-plus filings in both 2021 and 2022, the number of appeals to the federal circuit from PTAB proceedings saw a measurable increase, from 334 in 2021 to 433 in 2023. Considering those statistics in concert with what is known about the profile of the most frequent PTAB customers — typically big technology companies and frequent patent defendants — the increase in CAFC appeals from PTAB proceedings may indicate that both plaintiffs and defendants are having a tougher time reaching mutual settlements before the validity of asserted patents is fully adjudicated. Moreover, the increase in appeals from PTAB proceedings expanded even though appellants had less than a 1 in 4 chance of getting a CAFC reversal.
If the trend of more IPR decisions ending up in the CAFC continues, we should expect to see even more decisions from the CAFC rendered without opinion pursuant to Rule 36, as well as increased delays in district court cases getting to trial as defendants pursue stays pending IPR as a matter of course. Some of these effects are already readily discerned in the current state of play in the patent litigation market. Still, it is interesting to consider how even with a drop in IPR filings over the past few years there is also increasing interest in having the CAFC provide the final word on whether the patent at issue is valid.
Ultimately, we once again can see from the report’s presentation of data that modern patent litigation remains a vibrant and challenging pursuit for both plaintiffs and defendants. As always, I consider myself blessed to have found a career in such an interesting and ever-changing area of practice. I am sure that many in this readership feel the same way. Thanks once again to Lex Machina for pulling together and presenting the data in a way that highlights how well our little area of law has rebounded from the global pandemic.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.