On Wednesday, October 18th, legal data analytics service Lex Machina published a pair of blog posts providing an overview of litigation trends playing out in intellectual property and other areas of law. One post provides an update of litigation trends playing out through the third quarter of 2017 while the other takes a more focused look at the world of patent litigation and the effects of the U.S. Supreme Court’s decision in TC Heartland.
Although patent litigation levels through the first nine months of 2017 have largely remained consistent with patterns from recent years, it does appear that the number of patent suits filed in U.S. district courts has been on a slow decline in recent years. There were a total of 995 patent lawsuits filed in district court during 2017’s third quarter, an 8.4 percent decline when compared to totals from 2016’s third quarter. Year-over-year declines in patent suit filing were also seen in the first and second quarters of 2016 as well. As Lex Machina data scientist Brian Howard notes, 2017 continued a trend in which patent suit filings tend to drop in the first quarter of the year, rise during the second quarter and then fall again during the third quarter. “Historically, that’s a pattern that we’ve seen pretty consistently in the past few years,” Howard said.
On a monthly basis, patent filings appear to be very consistent since a spike of 849 patent cases filed during November 2015 alone; as has been reported in the past, that spike correlates with the abolition of Form 18 which had been used to plead patent infringement in district courts. Since that spike, patent suit filings have generally remained between 280 per month and 460 per month. “I think we’re in the territory of about where things were in the years leading up to the America Invents Act,” Howard said. He added that joinder provisions of the AIA which prevent plaintiffs from filing suit against multiple defendants made it difficult to make an apples-to-apples comparison of patent litigation levels before and after the AIA’s passage. This March, Lex Machina released a Patent Litigation Year in Review report with information on defendant-case pairs which shows that the AIA has not significantly altered litigation levels when looking at how many defendants are being sued.
One thing which has had a major impact on the current U.S. patent litigation landscape is SCOTUS’ decision this March in TC Heartland LLC v. Kraft Foods Group Brands LLC. “I really see it as a sea change,” Howard said, noting that the Eastern District of Texas, typically the district seeing the most patent litigation, has finally been supplanted as the top district for patent suit filings. During 2017’s third quarter, that title belonged to the District of Delaware, which saw 212 case filings during the recent quarter as opposed to the 139 cases filed in Eastern Texas. Collectively, these two districts saw 35 percent of all patent cases filed in U.S. district courts during 2017’s third quarter.
A figure showing patent suit filings in the 90 day periods both leading up to the TC Heartland decision and after is a pretty stark indicator of the effects of that case. 377 patent cases, a full 33 percent of all patent cases filed in the 90-day window before TC Heartland, were filed in Eastern Texas; 153 cases, or 13 percent, were filed in Delaware. In the 90 days after TC Heartland, 13 percent of patent cases (129 suits) were filed in Eastern Texas and 26 percent of cases (263 suits) were filed in Delaware. According to Howard, the primary driver of increased litigation levels in Delaware were high-volume plaintiffs, entities filing 10 or more patent cases within a year’s time. This same constituency had been a major contributor to Eastern Texas’ dominance in the patent litigation landscape leading up to TC Heartland. A figure published by Lex Machina shows that high-volume plaintiff filings had dipped below filings from low-volume plaintiffs for the first time since the third quarter of 2011. Conversely, high-volume plaintiffs in Delaware began closing the gap between low-volume plaintiffs through 2017’s third quarter. “Many firms will want to keep an eye on how Delaware manages to handle the increase,” Howard said. “If it clogs up, if cases get tied up in claim construction, plaintiffs may decide to go elsewhere.”
Although a good deal of media attention surrounding the post-TC Heartland patent world was piqued by In re Cray, a case in Eastern Texas in which Judge Rodney Gilstrap denied a motion to transfer venue, Eastern Texas has proven to be a venue out of which defendants are increasingly able to transfer at an even greater rate than other districts. The success rate of motions to transfer venue out of Eastern Texas in the 90-day period before TC Heartland was decided was 40 percent, but that increased to an 84 percent success rate in the 90 days after TC Heartland. In all other districts, the success rate of motions to transfer venue pre-TC Heartland was 48 percent and that percentage only rose to 70 percent post-TC Heartland. To Howard, this higher rate of successful motions out of Eastern Texas is not necessarily an indication that plaintiffs without proper venue were choosing Eastern Texas as a preferred venue anyways. “For one, you probably have better lawyers on average defending cases in Eastern Texas than you do across all other districts, there’s more money at issue in Eastern Texas cases,” Howard said. “One could imagine that better lawyers are writing more successful motions.”
The effects of the Supreme Court were also likely being felt in another area of patent litigation according to Lex Machina’s published statistics. A total of 381 petitions for inter partes review (IPR) proceedings at the Patent Trial and Appeal Board were filed during the third quarter of 2017, the lowest total for a single quarter since the first quarter of 2016. This is down from 438 IPR petitions filed in 2017’s second quarter and 548 IPR petitions filed in the first quarter; the spike in the first quarter was 80 petitions greater than IPR filings in any other quarter since the PTAB was established. Both the spike and the recent decline is due in part to the Supreme Court’s decision to grant writ to hear Oil States Energy Services, LLC v. Greene’s Energy Group, LLC later this year. Howard notes that this case, which will decide the constitutionality of IPR proceedings at the PTAB, introduces a fair amount of uncertainty. “Essentially, Oil States drove a spike, the spike being those parties who could get their petition filed to PTAB early enough that they were likely finished by the time Oil States reached a decision,” Howard said. For those cases, it’s possible that any Supreme Court decision wouldn’t retroactively change PTAB trials which had reached a conclusion. “If the Supreme Court doesn’t invalidate proceedings which invalidated a patent, then you could be on the advantageous side of that by filing really early.”
Elsewhere, both trademark and copyright litigation saw continuing trends which didn’t seem to be affected by any new developments. Trademark litigation has actually seen a slight increase through 2017, the first three quarters seeing 904 suits, 965 suits and 982 suits, respectively. However, these numbers represent another year of a slow overall decline in trademark cases filed as each of these quarters saw less activity than the corresponding periods of 2016. By contrast, copyright cases have also been declining but have done so much more dramatically, from a spike of 1,440 copyright infringement cases in 2014’s fourth quarter down to 827 cases in 2017’s third quarter. This decline is due in large part to much lower levels of file sharing cases, typically filed against John Doe defendants and involving infringement claims for peer-to-peer file sharing of adult erotic films. 902 such cases were filed in the fourth quarter of 2014 but only 140 file sharing cases were filed in the most recent quarter. File sharing litigation has been largely driven by Malibu Media, a firm which filed 589 suits in 2014’s fourth quarter but hasn’t filed a suit since the first quarter of this year.
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Night WriterOctober 23, 2017 09:58 am
Any data from Lexmachina should be taken with a grain of salt. Mark Lemley skews the data whenever there is a chance.