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18 “With the PTAB receiving thousands of petitions each year, one would expect that the All-Claims Invalidation Rate would be relatively constant year to year… But that hasn’t happened. The All-Claims Invalidation Rate has increased from 55% to 70% since 2019 … reflecting a U.S. patent system that is out of balance.”
The invalidation rate of patents in America Invents Act (AIA) proceedings, particularly inter partes reviews (IPRs), has been extremely high since the inception of the Patent Trial and Appeal Board (PTAB). Currently, a patent reaching a final written decision in an IPR will on average have 78% of its claims found invalid. Perhaps more surprising, when there is a final written decision, 70% of the time all challenged claims in the patent are found invalid.
Using data obtained from the PTAB statistics page, this article focuses on the “All-Claims 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.”)
The U.S. Patent and Trademark Office (USPTO) presents its statistics in a manner that highlights aggregate invalidation rates are lower when the rate of institution (currently about 68%) is factored in. Still, most petitions result in institution, and many patents are subjected to multiple petitions over time so they eventually will be subjected to a full AIA proceeding. This article focuses on what happens when an IPR proceeding takes place and a final written decision is issued.
The PTAB’s All-Claims Invalidation Rate Has Increased Significantly from 55% to 70% between 2019 and 2024
In the first several years of AIA proceedings, the PTAB found all challenged claims to be invalid at an extremely high rate. The conventional explanation for the high invalidation rate in this early period was that the PTAB was “weeding out” the most egregiously invalid patents that should never have been issued in the first place. Most expected that over time that the All-Claims Invalidation Rate would come down and approach some kind of equilibrium.
But that has not turned out to be the case. The All-Claims Invalidation Rate has remained very high, currently at 70%. Not only has it remained high, but over the last five years it has increased significantly from 55% to 70%, as illustrated below:
Source: www.uspto.gov/patents/ptab/statistics (see Outcomes by Petition).
These figures are computed based on the outcome of final written decisions when there has been an institution. As previously mentioned, the “All-Claims Invalidation Rate” means the percent of final written decisions where all of the challenged claims are found invalid.
These figures present two issues of concern. The first is that all challenged claims are being found invalid at a 70% rate. That is an extremely high number. Even the lower bound of 55% back in 2019 is a very high cancellation rate. It means that more than one out of every two patents evaluated at the PTAB will have all of its claims found invalid. How can it be that the vast majority of patents selected for litigation are invalid?
The second concern is that the All-Claims Invalidation Rate has been increasing steadily over the last five years from 55% to 70%.
On a per-claim basis, the invalidation rate has increased from 70% to 78% from 2019 to 2024, as illustrated below:
Source: www.uspto.gov/patents/ptab/statistics (see Outcomes by Claim Challenged).
Therefore, nearly 80% of challenged claims are found invalid when the PTAB issues a final written decision. If disclaimed claims are factored in, more than 80% of challenged claims were invalidated in 2024.
The Elevated All-Claims Invalidation Rate of 70% at the PTAB is Problematic
Why is the All-Claims Invalidation Rate so high? Most IPRs involve patents that are being litigated and that have been subjected to due diligence by the patent owner, the law firm, and/or a third party litigation funder before they are asserted. This due diligence typically includes an assessment of the case for infringement, and of most relevance here, an evaluation of the strength of the patent from a validity standpoint.
With that in mind, how can it be that the subset of patents selected for assertion will have all challenged claims deemed invalid 70% of the time?
Most would agree that over the last 5-10 years the quality of examination of patent applications has improved. The Alice decision alone has greatly reduced the number of weak “business method” patents issued by the examining corps. Most would agree that during the 2017-2024 timeframe Director Andrei Iancu and Director Kathi Vidal put into place additional procedures and guidance to improve the quality of examination. The USPTO reports that patent examination quality has been high in recent years based on the Office of Patent Quality Assurance (OPQA) statistical sampling program. There is no evidence that the steady increase in the All-Claims Invalidation Rate from 55% to 70% at the PTAB is attributable to a decrease in the quality of examination by the USPTO.
With the PTAB receiving thousands of petitions each year, one would expect that the All-Claims Invalidation Rate would be relatively constant year to year with some statistical variance around a mean value. But that hasn’t happened. The All-Claims Invalidation Rate has increased from 55% to 70% since 2019. This excessively high All-Claims Invalidation Rate is reflecting a U.S. patent system that is out of balance.
Ultimately, 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 Institution Rate Has Been Increasing
It is true that the All-Claims Invalidation Rate of 70% is mitigated by the fact that not all petitions result in institution. However, the institution rate, like the invalidation rate, has been steadily increasing.
In recent years, the institution rate has increased from 56% to 68%, as illustrated below.
Source: www.uspto.gov/patents/ptab/statistics (see Institution Rates by Petition).
In 2024, PTAB proceedings were instituted 68% of the time on a per-petition basis.
On a per-patent basis, the institution rate increased from 64% in 2020 to 74% in 2024, as depicted below:
Source: www.uspto.gov/patents/ptab/statistics (see Institution Rates by Patent).
Like the All-Claims Invalidation Rate, the institution rate exhibits the trend of a steady increase in recent years.
The reality is that many asserted patents will be challenged with multiple petitions. If the institution rate per petition is 68%, then in most cases there will be an institution if a patent has been targeted by multiple petitions over the course of time. There truly is no “quiet title” for the patent owner in this situation. And it is extremely difficult for a patent owner to enforce its patents under these circumstances, even if there is flagrant infringement.
The Number of Patent Litigations and the Number of Petitions Have Been Falling
It has been widely reported that the number of patent suits has dropped nearly 50% since 2015. For example, Lex Machina data indicates that the number of district court patent cases dropped 46% from 5,767 cases in 2015 to 3,113 cases in 2023.
Source: Lex Machina press releases.
During the same period, the number of PTAB petitions has been steadily falling:
Source: www.uspto.gov/patents/ptab/statistics (see Petitions filed by Trial Type)
The relationship between the decreasing number of patent suits and the decreasing number of petitions invites a few chicken-and-egg questions.
First, why has the number of patent suits decreased by nearly 50% since 2015?
Certainly, the 2014 Alice decision on patent eligibility based on the “abstract ideas” doctrine has had a dampening effect on the number of patent cases.
But it is more likely that the decrease in the number of patent suits has been driven by the very high rate of invalidation at the PTAB. Patent owners are much less likely to assert their patents when they know there is an extremely high likelihood that the patent will be invalidated at the PTAB. Law firms and third party funding entities taking a contingent interest in patent cases are less likely to support those patent suits when the PTAB invalidation rate is so high.
Another hypothesis is that there is effectively a feedback loop between the number of patent cases and the number of PTAB petitions: As the number of patent cases drops, one would expect that the number of PTAB petitions would also drop. Indeed, that is what has happened. As shown in the above figure, the number of petitions has declined as the number of patent cases has declined during the same period.
Another question is whether the PTAB’s high rate of invalidation is even sustainable from a systems perspective. The high rate of invalidation at the PTAB drives down the number of patent cases, which in turn further reduces the number of petitions filed. If the PTAB’s All-Claims Invalidation Rate remains at 70%, or gets even higher, then we can expect that the number of petitions will continue to drop. At some point, is it possible that the volume of petitions becomes so low that PTAB capacity exceeds demand? This is just one of many questions that arise when considering the potential effects of the PTAB’s high All-Claims Invalidation Rate over the course of time.
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.
The elevated invalidation rate at the PTAB is not healthy for the U.S. patent system, and it needs to be addressed, whether that comes in the form of internal USPTO policy adjustment, rulemaking, or legislative reform such as the PREVAIL Act currently under consideration by Congress.
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Join the Discussion
18 comments so far.
Michael
January 16, 2025 10:29 pmCheck out what prabhakar has done to Netlist, most. 10 years of fraudulent actions. Mostly backing big tech, Google, Samsung , Micron, infringing on small companies trying to bankrupt them.
Paul Morgan
January 14, 2025 10:21 amI unfortunately must assume the correctness of comments here that many law firm client acceptance letters do NOT indicate the high likelyhood of an IPR finding better prior art than the limited prior art search of the patent office examiner IF the patent is sued on.
But the reason so much information is in letter form is the experiences of law firms with clients later saying they were orally told the opposite or not told anything.
Philip P. Mann
January 13, 2025 07:27 pm“A good law firm sends client acceptance letters that explain that and other things to small inventors.”
And this is why the public loves lawyers as much as they do.
Why should this information be buried in a densely packed “client acceptance letter” that few will read, much less understand, rather than be stated openly, in plain English, by a decent lawyer during the initial face-to-face meeting with a naive client who, with visions of Thomas Edison dancing in his head, actually thinks a patent might do him some good?
Sometimes the truth is too painful to reveal.
Pro Say
January 13, 2025 06:44 pmPeteMoss: “it also appears that the PTAB has its thumb on the scale.”
That’s not a thumb, Pete . . . that’s a sledge hammer.
F22strike
January 13, 2025 05:44 pmPaul –
I prosecuted US patent applications and litigated patent infringement lawsuits for over 40 years.
No amount of pre-filing searching can avoid the fact that, at this time in history, with rare exceptions, any US patent that is ultimately obtained is almost impossible to enforce. Any attempt to do so will be exceedingly expensive and time consuming and will have a very low probability of success.
Few, if any, “small inventors” would proceed with the filing of a US patent application if the “client acceptance letter” from the law firm accurately quoted the IPR statistics and explained how injunctive relief from the federal courts is almost impossible to obtain.
Unless the patent system is reformed, the number of US patent applications filed annually by US individuals and companies will decline. This will result in USPTO fee increases to preserve income, which will only exacerbate the decline.
Ron Katznelson
January 13, 2025 05:25 pmA major contributor to the higher patent loss rate in IPRs and PGRs (AIA Trials) compared to district courts is the fact that patent challengers at the PTAB are allowed to assert overly broad claim construction at AIA Trials for finding claims unpatentable over prior art. But they assert the narrowest possible construction for the same claim in a federal court action for purposes of arguing non-infringement. This does not happen in federal courts where both issues of validity and infringement are decided under the identical claim construction. Therein lies an inherent unfairness of AIA trials today.
It is true that under recent PTO rule change, the PTAB must apply (if it does at all) the Phillips claim construction standard used in federal court. However, it is insufficient that the same standard applies in both tribunals –the actual claim construction arrived at under that standard must also be the same. The statute currently fails to enforce that result. To achieve that, one must amend the law to require that:
(1) The PTAB actually articulate and formally adopt a Final Written Claim Construction Determination that construes each claim term of the challenged patent claims–which the PTAB is not required to, and often does not, do under current law;
(2) The patent challenger must be estopped from asserting, either in court or at the ITC, a construction of that claim that differs from the construction the petitioner raised at the PTAB; and
(3) If a court or the ITC, in which the petitioner is or was a party, as applicable, has determined a construction of the patent claim, the petitioner may not assert at the PTAB a construction of that claim that differs from the construction for that claim the petitioner raised in court or the ITC proceeding.
See my detailed legal analysis and explanation of this solution in my article on improving the PREVAIL Act at https://ssrn.com/abstract=4962414 .
Paul Morgan
January 13, 2025 04:55 pmThe disapointments of many patent owners to find that a patent is only a ticket to file an expensive lawsuit against an infringer of its claims is understandable. A good law firm sends client acceptance letters that explain that and other things to small inventors.
What is not understandable is why any patent owner would expect that a company they are suing – demanding a large amount of money – is not going to spend a lot more time and money searching for prior art than the mere few hundred dollars search fee that was all that the patent applicant had paid for a U.S. Patent Office prior art search by a patent examiner. And, therefor, inventors or their employers should pay for a proper professional prior art search of their own before filing their patent application. If not, then definitely doing so before suing anyone and getting hit with prior art the brief and cheap Patent Office prior art search had missed.
F22strike
January 13, 2025 03:51 pm“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 and anti-patent bias at the CAFC. Assume further that the client spent $50K in attorney fees and costs obtaining and maintaining a US patent and another $450K in attorney fees and costs in IPR proceedings and an appeal at the CAFC, only to have all of the allegedly infringed 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.
Philip P. Mann
January 13, 2025 02:17 pmAfter 40+ years in the patent racket, the scam is apparent and increasingly difficult to conceal or deny.
The USPTO collectively charges millions of suckers, er “Applicants” billions of dollars selling the false promise that, in return, they will get “the right to exclude others” from using their inventions. They even get a fancy document that looks all official and stuff making that promise. Their lawyers fill them full of how valuable this right is and how, if anyone infringes, they can go to court, get justice, and set things right.
But when the time comes to enforce the patent, an IPR is instituted and, lo and behold, the USPTO discovers it made a “mistake” and the patent isn’t actually valid after all — a mistake that apparently occurs about 80% of the time a patent is issued. And even if the patent somehow manages to survive, there remains a district court to shoot it down, followed by the corrupt CAFC if the district judge somehow didn’t get the memo. And people continue to fall for this nonsense?
As a front line litigator who has often had the sad duty of telling hopeful individual and small company patent owners that their patents don’t actually cover what they were led to believe, or that their patents are no good (I’ve had this happen after successful jury verdicts), I feel a bit like an honest salesman who has spent his life promoting the benefits of some wonder drug only to discover late in life that it was only snake oil and sugar water all along.
The charade is becoming increasingly difficult to hide and it will be interesting to see if we are a serious country after all. Get the popcorn.
Clay Matthews
January 13, 2025 01:53 pmIt doesn’t seem like much of a mystery to me. The patent challenger is highly motivated and focuses for months on getting hard hitting prior art and putting that art in context to the industry, on a single patent. Examiners can’t be that motivated, and they have many different patents they are examining. The solution is already at hand, just copy the EPO and allow third-party submissions while prosecution is still being conducted. The EPO makes this super easy. You press a button on the patent application’s record at the EPO Register called “Submit observations”. The Examiner will get better art, in context, and you’ll get better patents that can survive invalidity attacks after grant. Of course, the claims will be narrower, and the patentee will likely have to submit better/additional data. But isn’t that what we all want in the first place?
PeteMoss
January 13, 2025 11:01 amIn the all claims cancelled cohort of patents, I am interested to see the percentage where previously non-cited art was cited by the challenger. This seems like a better indicator of the quality of the underlying examination. I read the claims of a patent that issued last week and am still befuddled as to how the claims were allowed over the cited art. The claims are 100% invalid over some other non-cited prior art that I found after a cursory search.
Also interested to see the percentage of IPR claims that are invalidated under 102 or 103. A heavier PTAB reliance on 103 might explain a higher invalidation rate.
Patent litigation might be decreasing, on average, because many companies are realizing that it does not make sense to make their gladiators wealthy. Litigation is a waste of both time and treasure so business solutions outside of patent litigation are being developed.
With all this said, it also appears that the PTAB has its thumb on the scale.
Paul Morgan
January 13, 2025 09:06 amNote that the IPR cancellation of all IPR-challenged claims is not nearly as important as the higher cancelation rate of only the actually infringment suit asserted claims, which are often only the broadest claims, and are more often IPR cancelled. Secondly the IPR claim cancellation rate also needs to include the many IPR petitions which are denied, usually for not even presenting an invalidity arguement that even meets the threshold test. That is a clear win for the patent owner, allowing the patent owner’s patent suit to continue, reinforced.
Nancy J Linck
January 13, 2025 08:54 amExcellent presentation of statistics, Steve! Thanks for that.
Unfortunately, the trend (one that began around the time Judge Newman was removed from the court) will continue with a now unstoppable Moore court. That court not only rubber stamps the PTAB but also reverses any wins patent owners get from it. And, unfortunately, those whose voices might be heard — particularly AIPLA, ABA, and IPO (along with major IP firms) — are sitting back in silence and not stepping up to defend the Judge. Very, very sad!
Chris
January 13, 2025 07:50 amPREVAIL needs to address this but it seams to me the SCOTUS ruling on Chevron should compel the outright end of the PTAB.
concerned
January 13, 2025 06:39 amPTAB wrote and told me that my patent claims met the law as it has been written by Congress, but my claims do not meet various courts’ case law.
Those court cases include words that are not in the statute and those same words have never been defined, my attorney asked repeatedly for a definition from the courts to no avail.
Am I the lucky one who did not get a patent and avoid even more heartache down the road?
Pro Say
January 12, 2025 06:02 pmA major (if not the only) reason for the big, innovation-crippling recent increase in Death Squad PTAB institution and invalidation rates?
Two words, one name:
Kathi Vidal.
Proving just how critical it is that the next patent director be a strong, Iancu-like supporter of patents and innovators.
Josh
January 12, 2025 02:45 pmIt’s even worse when you account for multiple petitions fled against the same claims. The survivors often continue to be targeted until the patent owner gives up or loses.
mike
January 12, 2025 12:29 pmThis article is spot on. It asks the most pressing of questions. E.g.,
“How can it be that the vast majority of patents selected for litigation are invalid?”
I want to know the answer to that question also.