Patexia Insight 182: Downward Trends in Patent Litigation for the First Half of 2023
The landscape of patent litigation is ever-evolving, and the first half of 2023 has been no exception. The dynamics of patent litigation are complex, and its trends can be influenced by various elements that interact with each other. Factors such as changes in patent laws, rulings by patent offices, technological advancements, market competition, economic conditions, and intellectual property strategies of companies all play a role in shaping patent litigation trends. Additionally, specific events, such as landmark court decisions or major industry developments, can have a profound and immediate effect on the volume and nature of patent disputes. It is essential to consider both the collective impact of multiple factors and the potential influence of singular events when analyzing the dynamics of patent litigation.
In this article, we present an analysis of patent litigation trends during the first half of 2023, encompassing district court patent litigation, PTAB challenges (Patent Trial and Appeal Board), ITC (International Trade Commission) Section 337 investigations, and ANDA (Abbreviated New Drug Application) litigation.
As shown above, the numbers in district court patent litigation cases during the first half of 2023 reflect a noticeable decrease compared to previous years. In 2018, there were 3,420 cases filed, which remained relatively consistent in 2019 with 3,405 cases. However, there was a significant increase in 2020, reaching 3,938 cases, followed by a slight uptick in 2021 with 3,953 cases. The trend reversed in 2022, showing a slight decline with 3,766 cases filed. In contrast to the first half of 2022, which saw 1,907 cases filed, the first half of 2023 experienced a decrease in district court patent litigation numbers, with 1,440 cases filed. This decline in district court patent litigation raises questions about the factors contributing to this downward trend in patent litigation activity which as of now, belong to the realm of speculation.
It’s worth mentioning that litigation funding is a significant factor that influences patent litigation trends. It provides financial resources to parties involved in litigation, allowing them to pursue their cases without the burden of upfront costs. Since March 2022, there has been a notable change in the finance landscape due to the increase in interest rates. From 0.25%, the rates have risen to currently 5.25% and this can be attributed to factors such as inflation and market conditions. The impact of higher interest rates on litigation funding is significant as funders become more selective in their approach to patent litigation, seeking more lucrative deals. This ultimately may affect the availability and terms of funding options, potentially influencing the strategies and decisions of litigants in patent disputes.
The patent challenges conducted by the PTAB, provide an alternative avenue for resolving patent disputes outside of traditional litigation and their availability has significantly impacted the patent litigation landscape. These challenges include IPR (Inter Partes Reviews), PGR (Post Grant Reviews), CBM (Covered Business Methods), and DER (Derivation) proceedings, with IPRs comprising over 95% of the total, and allow parties to challenge the validity of a patent by presenting prior art and arguments to the PTAB. IPRs have a narrower scope of patent invalidation compared to district court litigation. The primary purpose of IPRs is to reassess the validity of patents based on prior art, focusing on questions of novelty and obviousness. Despite their limited scope, IPRs have become a popular tool for defendants in district court patent litigation cases to challenge the validity of asserted patents, providing an additional avenue for dispute resolution and potentially influencing the outcome of the overall litigation. As we have established in several Patexia Insights such as Patexia 44, there is a direct link between district court patent litigation and IPR numbers with a 6-12 month delay.
The numbers of PTAB proceedings filed during the first half of 2023 reveal a slight decline compared to previous years. In 2018, there were 1,719 proceedings, which decreased to 1,339 in 2019. While there was an increase in 2020 with 1,546 proceedings, subsequent years witnessed a downward trend. In 2021, there were 1,387 proceedings, and in 2022, the number slightly increased to 1,361. The first half of 2023 saw a further decrease, with 645 proceedings filed, compared to 688 proceedings during the same period in 2022. This decline in IPR proceedings and the patent litigation trend suggest a potential shift in the landscape of patent disputes, however, a further and deeper analysis is needed to check the contributing factors to this downward trend in IPR activity.
The numbers of Section 337 investigations filed with the ITC present a fluctuating pattern over the years. In 2018 and 2019, there were 59 cases filed, maintaining consistent levels. The year 2020 witnessed an increase, with 70 cases filed, followed by further rises in 2021 with 74 cases and in 2022 when the number of Section 337 cases rose to 78. However, during the first half of 2023, there was a notable decrease with only 24 cases filed, while the first half of 2022 saw 33 investigations initiated. Section 337 investigations before the ITC involve allegations of unfair trade practices, including patent infringement, and can result in excluding infringing products from importation into the United States. The variations in the number of Section 337 cases reflect the dynamics of international trade disputes and the evolving nature of patent infringement claims and their impact on cross-border trade.
An ANDA case is typically filed when a generic drug manufacturer intends to seek approval from the U.S. Food and Drug Administration (FDA) to market and sell a generic version of a brand-name drug. The generic company asserts that its proposed generic drug does not infringe valid patents or that the existing patents are invalid and seeks a court judgment on the patent rights, which can determine whether the generic drug can enter the market. Historically, Hatch-Waxman cases have exhibited a distinct trend compared to overall intellectual property (IP) litigation.
The number of ANDA litigation cases has shown a declining trend before 2022. In 2018, there were 372 cases filed, which decreased to 318 in 2019 and further decreased to 276 in 2020. The downward trend observed in ANDA litigation continued in 2021 with 246 cases. However, there was a shift with a slight increase in 2022, with the number of cases rising to 263. Furthermore, during the first half of 2023, there were 147 cases filed, while 1H 2022 saw 129 ANDA filings. The latest fluctuations in the data suggest a potential shift in the landscape of ANDA disputes and it will be interesting to observe how the stakeholders of IP litigation will position themselves to benefit from it.
In seven weeks, we will be releasing our fourth annual ANDA Litigation Report 2023. This comprehensive report will provide valuable insights and statistics in the world of Hatch-Waxman litigation as well as the activity and performance rankings of all stakeholders involved. For the first time in our reports, ANDA Litigation 2023 will feature a new chapter that includes qualitative content derived from comments and reviews provided by in-house attorneys and attorneys actively involved in ANDA litigation. We are excited to present this valuable contribution, showcasing the firsthand experiences and opinions of those who navigate the intricacies of ANDA litigation. Designed to be a game-changer in recognizing top attorneys, law firms and companies in ANDA litigation, this report is set to reshape perspectives and empower stakeholders with valuable data-driven information. The report will also feature separate sections and rankings for the local counsel firms and attorneys who are very active in the New Jersey and Delaware district courts. You can preorder this report here.
In addition to the rich content offered in the ANDA Report, Patexia provides it’s exclusive platform for ANDA attorneys to claim their attorney profiles and access a wide array of insightful features. This fosters a culture of transparency and professional feedback, empowering the pharma companies to make informed decisions when forming partnerships or seeking referrals.
The first half of the year has witnessed diverse trends in the world of patent litigation. While patent litigation in district court, PTAB proceedings, and ITC investigations appear to be declining, there is a notable increase in ANDA litigation. These fluctuations in activity highlight the dynamic nature of the legal landscape and the ongoing shifts in the industry. It is important to note that these figures represent only the first half of the year, and the second half may bring further insights and developments. As we continue to monitor the progress of patent litigation, PTAB cases, and ITC investigations, we eagerly anticipate the complete data set that will provide a comprehensive picture of the entire year's trends. Stay tuned for our future updates and analysis on the evolving world of patent litigation.