Mar 2, 2023Legal
Patexia Insight 170: Impact of IPR Proceedings on Late Settlements in Patent Cases

Our third Patent Litigation Intelligence Report was released in late January. The report examines patent litigation activity over five years, from July 1, 2017, to June 30, 2022. It presents comprehensive statistics for 18,493 district court patent cases filed during this period, including rankings for all involved parties, their counsel, and judges.

In our previous insights, we covered litigation trends over the past five years, as well as how Judge Albright has become the go-to patent judge and the events that affected his caseload. This week, we focus on the speed of patent litigation in district courts and the outcomes of the longest-running cases. 

As of December 31, 2022, the Public Access to Court Electronic Records (PACER) system indicated that 15,939 out of 18,493 patent cases filed between July 1, 2017, and June 30, 2022, had concluded. PACER's decision classifications for the remaining 2,554 cases from this period were pending.

Patexia has implemented an automated method for identifying case milestones by grouping different types of documents submitted by all parties. This approach allows for a clear understanding of the timing and trends for each milestone. Our Litigation Analyzer offers extensive insights into various milestones such as filing and conclusion, which can reveal litigation patterns and trends. This helps to provide a more comprehensive understanding of the typical termination time for patent cases, which is valuable for parties involved in patent litigation. Utilizing this information can benefit parties involved in patent litigation by enhancing their litigation strategy and allowing for more effective planning of the litigation process duration. The chart below is a visual representation of our analysis of the typical termination time for patent cases:

The chart demonstrates that the majority of patent cases are generally resolved within the first year. Specifically, 78.85% of cases conclude within one year, with the remaining 21.15% taking longer. Further examination reveals that over half of the cases are resolved in the first six months, and 11.31% of cases require more than 18 months to reach a conclusion. While the average termination time is 249 days, there is a significant variation in the termination time for individual cases, with some resolved more quickly and others taking much longer. Factors such as case complexity, Inter Partes Reviews initiated, the number of parties involved, the jurisdiction where it is filed, and the availability of resources and judges can all impact the length of time it takes to resolve a patent case.

We have already covered the cases with early resolutions in Patexia 124, showing that 83% of patent cases that are terminated within the first six months, were dismissed for various reasons. Transfers were the second most common outcome, accounting for 8.6%, while judgment decisions only represented 3.2% of these cases. This is not surprising, as trials cannot be expedited and take considerable time to occur.

To better understand the reasons behind the late terminations, we decided to further focus on those terminated in more than 12 months and study their termination status:

As seen above, judgment conclusions now occupy a much bigger part than in cases terminated within the first six months, at 17.5%. Overall, dismissal statuses account for 79.7% of terminated cases, so it is not surprising that even in cases that are terminated after one year, these statuses are prevalent. What is unusual is the high number of settlements, which are usually perceived as a quick and common resolution for patent cases and they are expected to be the most common termination in cases that are resolved within a year.

Overall, many plaintiffs see the settlement as a more practical and cost-effective way to resolve a patent infringement lawsuit, rather than pursuing a trial. Settling the case allows the plaintiff to obtain a guaranteed outcome, rather than risking an uncertain result at trial, leaving the decision in the hands of a judge or jury. Litigating a patent case can be expensive, with costs often reaching millions of dollars. Settling the case can avoid these costs and allow the plaintiff to recover damages or license fees.

The settlements mentioned above, which require more than a year to be achieved, were most likely not initiated with the aim of reaching a settlement. Instead, they are the ultimate outcome of a long-fought battle that involves also other venues such as the Patent Trial and Appeal Board (PTAB) and Inter Partes Reviews (IPR) proceedings. Invalidation of a patent through the PTAB is a popular defense strategy in patent litigation. During an IPR, a petitioner (who is typically the accused infringer) can request that the PTAB review the patent's validity based on prior art or other grounds.

To better understand the reasons behind the late settlements, we decided to investigate the IPRs filed after the patent litigation was initiated in district courts, trying to invalidate the same patent. The ultimate outcomes of these IPR proceedings are displayed in the chart below:

As seen above, half of the IPR decisions (51%) match the outcome of the patent litigation cases by reaching a settlement. Meanwhile, the other half of IPR cases either entered a decision 19.6% of the time or were denied institution by the PTAB on 29.4% of occasions. It’s understandable that these decisions have been leveraged by either the plaintiff or the defendant in the district court patent litigation case to reach more favorable settlement terms. Furthermore, the average termination time for the above IPR cases from filing to termination was 313 days, which seems to be the reason why patent litigation cases in district courts have been reaching their settlement conclusions after one year.

Judgment conclusions can be either decided by the judge or jury, depending on the type of trial.     In either case, the judgment conclusion is the final outcome of the case, and it will determine whether the defendant is found liable for patent infringement or not. The judgment conclusion will also typically determine the amount of damages, if any, that the defendant is required to pay to the plaintiff, as well as any other remedies that may be awarded. Reaching a judgment conclusion in a patent infringement case can take time due to various factors. The case's complexity, legal arguments, and court scheduling can all contribute to a delay in reaching a decision. Patent cases involve technical and legal issues that require careful consideration, and the judge or jury may need to review a significant amount of evidence before making a decision.

The complete Patent Litigation Report includes further analysis of high-level statistics, as well as complete rankings for all entities involved in patent litigation cases filed in district court. We have analyzed and ranked them not only by activity, judging by the number of cases and patents involved, but also by performance. We closely examined the case statuses and judgment conclusions to determine how successful the entities were when the litigation was terminated. This information provides valuable insights for entities involved in patent litigation, as it can inform their litigation strategy and help them better understand the potential outcomes of their cases.

We plan to follow up on this article by analyzing the patent litigation cases in district courts and see how their outcome is impacted by the decisions in the IPR proceedings filed in parallel with the case. Also, stay tuned as in the next several weeks we will cover some of the top-performing companies, law firms, and attorneys mentioned in our Patent Litigation Report 2023. We have already published some of the most active companies in patent litigation, as well as the top 50 most active attorneys.

Be the first to comment.