Recent Statistics Show PTAB Invalidation Rates Continue to Climb

“Since 2021, the invalidation rate has been increasing and is currently at 71% for the first two quarters of 2024. In 2023, all challenged claims were found invalid 68% of the time. These are daunting statistics for patent holders.”

The invalidation rate of patents in America Invents Act (AIA) proceedings, such as inter partes reviews (IPRs), has been high since the inception of the PTAB. Just one year into the AIA, Chief Judge Randall Rader famously referred to the PTAB as a “death squad” at the 2013 American Intellectual Property Law Association (AIPLA) annual meeting because the invalidation rate was so high.

This article focuses on the “total invalidation” rate where all challenged claims are found invalid such that the patent is effectively killed off. (For convenience, we refer to “invalidation” with the understanding that the PTAB adjudicates claims as “unpatentable”).

Of course, not all petitions result in institution, and the U.S. Patent and Trademark Office (USPTO) is correct when it points out that invalidation rates are lower when the rate of institution (currently about 67%) is factored in. Still, most petitions result in institution. Additionally, many patents are subjected to multiple petitions over time so they eventually will be subjected to a full AIA trial. This article focuses on what happens when AIA trials are conducted and final written decisions are issued.

Early PTAB Invalidation Rates

In the first two years of AIA proceedings, the PTAB found all challenged claims to be invalid 77% of the time. The institution rate was 84%. See Inter Partes Review: An Early Look at the Numbers, Brian J. Love and Shawn Ambwani, University of Chicago Law Review, Vol. 81, 93-107, at 94 (2017). (Note: The PTAB statistics page starts with FY2015).

In this timeframe, the conventional explanation for the high invalidation rate was that the PTAB was “weeding out” the most egregiously invalid patents that should never have issued. Many commentators postulated that over time the invalidation rate would come down and approach something of an equilibrium where the rate of invalidation would be relatively constant over time.

That hypothesis has not borne out because total invalidation rates have remained high, at least over the last several years. Additionally, the total invalidation rate has not been steady; instead, it has significantly changed over time.

PTAB Invalidation Rates Since 2015

The PTAB’s total invalidation rate has fluctuated considerably since 2015, as illustrated in the graph below:

Source: www.uspto.gov/patents/ptab/statistics (see Outcomes by Petition).

The figures are computed based on the outcome of final written decisions when there has been an institution. “Total claims invalidation rate” means the percent of final written decisions where all challenged claims are found unpatentable.

In 2015, the total invalidation rate was 72%. From 2015 to 2019, the total invalidation rate fell steadily to 55% by 2019.

However, since 2021, the invalidation rate has been increasing and is currently at 71% for the first two quarters of 2024. In 2023, all challenged claims were found invalid 68% of the time. These are daunting statistics for patent holders. They mean that if there is an institution, all challenged claims will be found invalid about 70% of the time.

The unavoidable question: Why is the rate of invalidation so high?

Most would agree that the patent examination process has improved over the last decade. Additionally, the Alice decision and its application by the examining corps has reduced the percentage of weak “business method” patents and other vague patents finding their way into the patent marketplace.

Still, we are confronted with this fundamental fact: At one end of the pipeline, we have the USPTO examining corps examining applications and issuing patents. At the other end of the pipeline, another body in the USPTO is finding all challenged claims of patents invalid over 70% of the time when the patent is reviewed. Something seems awry from a systems perspective.

The Significant Variation in Invalidation Rates Over the Years is Problematic

The invalidation rate has not settled into a steady-state average rate within some statistical bounds, as most expected. From 2019 to 2024, the invalidation rate increased from 55% to 71%–a drastic change over a relatively short period of time.

This increase cannot be explained away as a statistical anomaly, because each year well over 1,000 petitions are presented, meaning that the data set is robust. We are not witnessing statistical “noise.”

The increase cannot be explained by changes in the law. The law of obviousness today is much as it was 10 years ago. Also, the PTAB moved from a broadest reasonable construction standard to the Phillips standard in late 2018, which should have reduced the invalidation rate somewhat. It has not.

Contrast the changing rate of invalidation in PTAB proceedings with the affirmance rate of the PTAB in ex parte appeals. The affirmance rate in ex parte appeals ranged between 55.9% and 59.8% between 2019 and 2024, a spread of less than 4%, while the invalidation rate of IPRs had a spread of 16%.

The affirmance rate in ex parte appeals (blue line) is noticeably flat compared to invalidation rates for IPRs (red line):

See www.uspto.gov/patents/ptab/appeals-and-interferences-statistics-page

The fluctuation in the invalidation rate at the PTAB over time should be a concern for all stakeholders.

We again have the “why” question: Why has the total invalidation rate at the PTAB increased by 16% over the course of five years?

Closing Thoughts

When the AIA was passed, few people foresaw that the PTAB would end up invalidating all challenged claims in patents 60-70% of the time. Further, it is extremely surprising that the invalidation rate of the PTAB has varied so much over the years, increasing from 55% to 71% over the last five years.

The significant fluctuation in the PTAB’s invalidation rate over time is the most troubling statistic, and there is no ready explanation that accounts for it. But it is not a sign of health for the AIA’s post-grant review system, and it needs to be addressed, whether that comes in the form of internal USPTO policy adjustment, rulemaking, or legislative reform.

Image Source: Deposit Photos
Author: kentoh
Image ID: 35271125

Stephen Schreiner Stephen T. Schreiner is a partner in Carmichael IP. He focuses on all aspects of intellectual property law, including: patent litigation, Inter Partes Reviews and other post-grant proceedings, patent portfolio [...see more]

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

14 comments so far.

concerned
June 30, 2024 06:07 am
I had one patent application and realized the nature of the current patent environment. I feel compassion for professionals who careers are linked to operating in this environment and inventors who get destroyed by this process.

I have two things to be thankful. One: I never got the patent just to be financially destroyed later by the process. Two: My livelihood was never linked to this environment; I was just trying to help people with disabilities.
Dozens
June 29, 2024 04:58 pm
[T]he invalidation rate might correlate well with the administration or the Director of patents and their attitude toward patents. The current Director does not seem to be very patent freindly, hence the increased invalidation rate.

The rate might correlate with the Director, buy in point of fact it does not. We do not have to guess about this. The rates of invalidation over time are given in the article.

The rate of invalidation consistently declined year after year over the entire tenure of Michelle Lee. Do you recall regarding Lee as a particularly pro-patentee director? I do not.

Then the rates bump up and down during the years of Andre Iancu’s tenure. The trend of increasing invalidation rates actually begins under Iancu. Do you remember regarding Iancu as a particularly anti-patentee Director? I do not.

There was a 1.25 year hiatus between Iancu’s resignation and Kathy Vidal’s accession to the Director’s office. Rates really shot up during that interregnum. Once Vidal came into office, the upward trend that had begun under Iancu continued, but the slope lessened.

In sum, the identity of the Director seems to have very little explanatory power here. I agree that it is a worthwhile question to wonder why the rate is growing, but the Director hypothesis seems unconvincing.
David Lewis
June 27, 2024 03:52 pm
Overall the article is good.

Re

“The significant fluctuation in the PTAB’s invalidation rate over time is the most troubling statistic, and there is no ready explanation that accounts for it. ”

It would seem to me that the invalidation rate might correlate well with the administration or the Director of patents and their attitude toward patents. The current Director does not seem to be very patent freindly, hence the increased invalidation rate.

Re

“Of course, not all petitions result in institution, and the U.S. Patent and Trademark Office (USPTO) is correct when it points out that invalidation rates are lower when the rate of institution (currently about 67%) is factored in. Still, most petitions result in institution.”

Although I personally, think that the IPR process should be done away with, the above statement is incorrect. When you factor in the rate of noninstitution, most petitions do not result in invalidation. Specifically,

.67*.71=.48. In other words, using the institution rate an invalidation rate of given in the article, one arrives at only 48% of the petitions filed resulting in invalidation. Of course, even when an IPR does not result in invalidation, the results can still be catastrophic for the patent holder, depending on which claims survived and what condition they survived in and it would not take much of that to bring the % of that occurring to above 50%.

Re

“Additionally, many patents are subjected to multiple petitions over time so they eventually will be subjected to a full AIA trial.”

How often multiple petitions are filed is important to evaluating the fairness of the process. For example, if on average 2 petitions are filed before institution, then the invalidation rate of all targetted patents is .67*(1+.67)*.71=.79 or 79%.

Another issue in figuring out the fairness of the IPR system is whether the second or subsequent petitions tend to have a higher institution rate (because the second petitioner learned from the mistakes of the first petitioner) or a lower institution rate (because PTAB already determined that patent is valid and digging up more cumulative references does not really change anything. My suspicion is that second IPR petitions and subsequent IPR petitions are tend to more effective than the first IPR petition. Also, what is the likelihood of both petitions being instituted. For example, if subsequent IPR petitions have the same rate of institution as the first IPR and if on average 2 petitions are filed, then the rate of invalidation is .48(1+.48) =.71 or 71% of all targeted applications being invalidated taking into account the rate of noninstitution.
M.Thomas
June 27, 2024 11:53 am
The question is who files the IPRs?
Mostly large companies with a host of lawyers fighting against the small firms and independent inventors whose inventions are used by the big firms with impunity, without any licenses.
The PTO keeps stating that they are supportive of the small guy who has to spend $30 to 50K to get a patent while readily invalidating the examined and allowed claims of the patent when an IPR is instituted (in most cases by the big firms)
I would suggest it is time for the Commissioner of patents to have a review of this activity to identify the reason for this. – I believe that there may be some inherant influences being played out within the PTAB that needs identification and removal. Without that the small firms and individual inventors are being destroyed.
Anon
June 27, 2024 07:24 am
Fear, Uncertainty, Doubt.

A question to ask: who benefits from such?
PTO-Indentured
June 26, 2024 10:38 am
The USPTO needs a WARNING DISCLAIMER that lets its seemingly ‘all welcomed’ inventors know… who dare file for and receive a US patent, that its own ‘PTAB’ — ‘operating’ under the same roof as their presumed well-qualified patent examiners — invalidates up to 80% of their own ‘in-house product’ (thus likely YOUR patent). Particularly when: one or more US companies, often of types known by the PTO to be Efficient Infringers ‘Pay the PTAB’ to oust and/or harass any US Patent aiming for commercial value. We admit (PTO), despite our regular use of Google Scholar AI’s in-depth worldwide patent searches, and our ‘Quality Assurance’ reviews of US patents, prior to their issuance, that we can do no better than ‘find up to 80% of our own patents — not only declared invalid — but done so in a manner known to then strap patentees with ‘attorney fees’ (hundreds of thousands of dollars, or more) should he or she attempt to protect our PTO-issued-then-found-‘invalid’: 8 out of 10 patents. By way of example, an educational ‘scoring’ metric may be useful here to best appreciate what an ‘only 20% found valid’ ‘grade’ for US patents amounts to: in view of which, we fairly score our PTAB’s current — only 20% USPTO patents found valid — suitably with a solid “F”. Oh, and we plan to continue fostering and perpetuating this worst of failing / abased performance, as a best-practice, indefinitely.

As the USPTO pushes US IP value and protection into worse and worse standings, China — loving the IP suicidal practices of the PTO’s PTAB — pushes its IP value and protection into better and better standings, with a long-view strategy, outpacing a US ‘quick-win for big business’ (US patents for free!) strategy, its short-sightedness and weakening of US innovation competitiveness.

PTO: Do the morally correct thing, warn US inventors upfront, how truly vulnerable they are, and what your in-house PTAB’s still-growing US patent invalidation rates and PTO fostered practices most-often render.
Julie Burke
June 26, 2024 09:54 am
Great question, Stephen Schreiner! Why has the rate of complete, total invalidation climbed from 55% in 2019 to 71% in 2024?

See strategic, systematic, significant changes made to the quality element of the patent examiners’ performance and appraisal plan, beginning in 2010, continuing through 2015 Congressional and NAPA review and most blatantly, in the latest PAP.

The revised Quality elements of the PAP guarantee a steady stream of poorly examined applications which are ripe for IPR challenges.

At the USPTO, the patent corps and PTAB function as planned.

https://www.linkedin.com/posts/julie-burke-492264120_ptab-institution-rates-by-tc-and-settlement-activity-7211725596760920064-r3fw?utm_source=share&utm_medium=member_desktop
F22strike
June 26, 2024 09:47 am
“37 CFR § 11.701 Communications concerning a practitioner’s services.
A practitioner shall not make a false or misleading communication about the practitioner or the practitioner’s services. A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.”

Assume that a patent attorney failed to inform his or her client that any US patent they might obtain for the client will likely be unenforceable based on claim cancellation statistics in IPR proceedings. Assume further that the client spent $50K in attorney fees and costs obtaining a US patent and another $450K in attorney fees and costs in IPR proceedings, only to have all claims of the patent cancelled.

There are plenty of plaintiff’s attorneys that would love to try a malpractice case against that patent attorney before a jury based on this scenario. The disgruntled patent owner would surely testify that he/she thought that the patent would give him/her exclusive rights to the invention and that he/she was never informed that it was so easy for the US government to take his/her patent away. The plaintiff’s attorney would argue for an award of damages in the amount of $500K plus lost profits (due to copy-cat competitors) in an amount based on the testimony of a damages expert. Even if the patent attorney wins the malpractice case, that attorney will still suffer a great deal in lost time, lost billing, and emotional distress.
Schumann
June 26, 2024 05:56 am
This report totally ignores the fact that 100% of the American patents can be canceled by infringers and the big tech unions like Unified and EFF.org that repeatedly file IPRs until their targeted patents are canceled.

The only factor for canceling any patent is how much fees USPTO wants to collect for canceling any patent.
Schumann
June 26, 2024 05:46 am
This report does not address the effect of unlimited number of IPR attempts on patents.

Virtually every single patent, in another word 100% of all patents are canceled by infringers… It is just a natter of how many attempt is required depending on how much money USPTO wants to collect via crooked PTAB process!
Unhappy Female Inventor
June 25, 2024 06:14 pm
Imagine running a 4 billion dollar agency, and when you are self-audited (aka PTAB judges within the USPTO), you are wrong over 80% of the time?

The Director really needs to stand up for the patent agents who are often more experienced, technically qualified and who better understand the invention AT THE TIME the inventor thought of it, rather than be second guessed by PTAB judges years later.

Since the inventor is prohibited from speaking during their own PTAB trial, can the patent agents be expert witnesses during a PTAB trial for the inventor? Anybody know?
Anon
June 25, 2024 05:51 pm
Can this be plotted against the USPTO’s asserted examination quality for the same time frames?

Maybe reach back to ten years before the AIA to see long term trends (on at least the asserted examination quality prior to the capture presented in the AIA).
Pro Say
June 25, 2024 02:54 pm
By mine own hand do I rocketh the Death Squad invalidation cradle.
— Kathi Vidal
Josh Malone
June 25, 2024 11:05 am
That’s their job. If they don’t invalidate they don’t have a job. It pays $200K per year counting bonuses plus sweet benefits. After they invalidate a few dozen valuable patents, they are often hired by big tech at $500K or more.