Patexia Insight 150: IPR Denials Continue to Fall While Settlement Outcomes Increase
Tomorrow we will be releasing our sixth annual IPR Intelligence report, where we covered the IPR filing activity from July 1, 2017, through June 30, 2022. This report is our effort to fully cover the IPR landscape by analyzing data at a high level and providing various statistics related to filing trends, claims challenged and invalidated, most litigated IPCs, and going deeper with outcome analysis.
Similarly to the previous year, we continue to improve our data extraction methods using Artificial Intelligence (AI) and natural language processing. We are now able to read tens of thousands of documents and automatically extract the names of attorneys as well as the law firms that represent the petitioners and patent owners. This helps us detect attorneys linked to the IPR cases that previously were not known. In parallel, we are also able to extract the data for all the testifying expert witnesses classifying and ranking them by different technologies which are then used internally by Patexia’s Expert Search Team and our clients in need of an expert for their IP matters. Finally, we have an additional stage of human verification that covers undetected cases as well as affirms those reported directly from attorneys.
In order to have more significant data, our report focuses on the last five years’ data, from July 1, 2017, through June 30, 2022, finding out a total of 7,030 IPR petitions that were filed. This marks a 7.3% decline over the 7,582 cases filed in the previous period (July 1, 2016, through June 30, 2021) that we considered in IPR Intelligence Report 2021. During the period of our study, 2,471 companies were involved in one or more of these IPR petitions, with 1,156 representing the petitioners and 1,541 on the patent owner side. A total of 5,626 attorneys coming from 905 law firms, represented these petitioners and patent owners.
The IPR filing trend has been previously covered in our Patexia Insight articles, along with the district court patent litigation. In Patexia 44, we have concluded that 80% of the IPR cases are filed as a defense strategy from the defendant’s side on ongoing litigation in another venue. Therefore, there is a direct link between a high number of cases in district courts and a higher number of IPR filings, with a 6-12 month delay. As analyzed in Patexia 144, patent litigation in district courts has increased by 15% in Q2 of 2022 compared to Q1. This suggests a possible increase in IPR petitions in the near future. Below is a chart that shows the IPR filing activity for the full five years from 2017 to 2021, including the data for the first half of 2022:
As you can see, the yearly IPR petitions have fluctuated between 1,725 and reached a minimum in 2019 with 1,271 filings. After a 13.5% increase in 2020, there is a decrease of 9.7% in 2021. For the first half of 2022, there were a total of 669 petitions filed which is 3.1% higher than the 649 petitions filed in the first half of 2021.
Diving deeper into the data of our IPR Intelligence Report 2022, we reviewed the outcome of all cases as reported by the US Patent Office to better understand and analyze the trends over the last five years. Our data shows that as of Aug. 25, 2022, out of the 7,030 total petitions filed, 76.7% or 5,392 cases have one of the following three statuses: Terminated-Denied, Terminated-Settled, and Final Written Decision (FWD) Entered. These are the most common outcomes for IPRs, with nearly all cases ending up in one of these three categories. Additionally, about 7.0% of the cases have the “Notice of Filing Date Accorded “ or “PO Response Filed”, both pending statuses, which means they were filed within the last six months. Instituted cases also cover about 8.8%, but they eventually will settle or receive the final written decision. The remaining cases are terminated because of some procedural errors or adverse judgment. The following pie chart shows a summary of the outcomes for all cases filed from July 1, 2017, through June 30, 2022:
When considering the 5,392 cases out of the total 7,030 petitions filed during the past five years, we see that close to 38.5% of the terminated cases are denied. But as you can see below, this hasn't always been the case. In order to better understand and discover patterns in the final outcomes of IPR petitions, we did a comparative analysis of institution, settlement, and denial rates over five years. We had to limit the data at the end of 2020 since the data for the last 18 months is related to cases that are not yet terminated, so it will change in the near future. The following chart shows the trends for non-pending cases from 2016 through 2020:
In 2016, the settlement rate was only 21%, while the petitions that were denied institution accounted for 37%. The cases that entered a decision were as high as 42%. In the following years, the cases that got a decision or were denied institution fell gradually, while the settlements increased to 32% in 2020. From these results, we can draw two conclusions:
Patent owners seem to be more able to predict the outcome of the cases. With more than 10,000 petitions already filed, there is enough history for both sides to feel the probability of victory now than in 2016. When the chances of victory are low, the logical strategy is to settle and cut the losses by fighting expensive litigation and risking losing the case.
Petitioners, on the other hand, are more careful when choosing patents and claims when filing the IPRs. The lower denial rate indicates that the quality of cases brought before the PTAB is greater. Furthermore, finding quality pieces of prior art before filing the IPR seems to be another factor that impacts the strength of the case, causing fewer denials.
The full IPR Intelligence Report 2022 continues to further analyze the outcomes by finding out the IPC codes that get the most settlements, decisions, ands denials. In addition, by analyzing the data of the petition filings as well as the outcomes, we have assigned activity and performance scores to all entities in order to provide rankings of law firms, attorneys, companies, and APJs under different categories (Petitioner, Patent Owner, and Overall). The full report is accompanied by the Excel sheet that covers up to the first 1,000 most active law firms, attorneys, and companies, as well as the section for lateral moves that covers the attorneys changing law firms during the past year, all made possible by the improvement of our data extraction methods.
Stay tuned because, in the following weeks, we will be covering more statistics related to this report as well as uncover some of the best performing and most active attorneys, law firms as well as companies.