A few weeks ago, we identified the 25 most litigated patents since 2010 and learned they were responsible for more than 6% of all patent suits in the country. As promised, we decided to look at the technologies involved in litigation in order to identify any trends that can be justified based on recent changes in the patent landscape. To start, we chose software, as it has been the subject of many debates, especially post Alice. We observed a large decline in software patent suits after the 2014 Alice decision by the Supreme Court. Our analysis shows that software patent suits have declined 36% since 2013. We looked at different types of software patents based on U.S. patent classification codes and discovered the decline was not equal across all software classification codes.

To construct the above chart, we identified all the unique patent numbers involved in suits from 2010 through the first half of 2016. Out of 33,408 cases, there were 22,791 unique patent numbers. We then extracted the main U.S. patent classification (USPC) code for each of the patents. We did not include the sub-classes in this analysis.

542 unique USPC codes were used to categorize 22,791 patents. Some of the USPC codes had been abolished over time, meaning we had to replace them with the closest currently active USPC code. For example, USPC 395 was used to describe “Information Processing System Organization,” which is some sort of software/database system. This code was abolished in 1999. We replaced this with USPC 707, which describes “Data processing: database and file management or data structures”.

Ultimately, we identified 14 different U.S. classes that described some sort of software related system or processes. We learned that these 14 classes covered more than 14% of the 22,791 unique patents involved in patent suits. Some classes, such as 706 (i.e., artificial intelligence), had rarely been the subject of a patent suit in the past six years. Some other classes, such as 705 (i.e., data processing for business practice and management), covered about 30% of all software patents involved in suits over the time period in the study.

USPC Code	Class Definition	Patents in Suits
705	Data processing: financial, business practice, management, or cost/price determination	779
707	Data processing: database and file management or data structures	427
345	Computer graphics processing and selective visual display systems	376
701	Data processing: vehicles, navigation, and relative location	220
382	Image analysis	195
704	Data processing: speech signal processing, linguistics, language translation, and audio compression/decompression	191
702	Data processing: measuring, calibrating, or testing	166
715	Data processing: presentation processing of document, operator interface processing, and screen saver display processing	143
726	Information security	115
380	Cryptography	112
700	Data processing: generic control systems or specific applications	110
717	Data processing: software development, installation, and management	56
703	Data processing: structural design, modeling, simulation, and emulation	30
706	Data processing: artificial intelligence	26

Next, we determined which of the USPC codes had been impacted the most, post the Alice decision. The top two classes, 705 and 707, had declined 40% and 50% from 2013 to 2015, respectively. The Alice decision was made on June 19, 2014.

"Patents in class 705 are generally referred to as ‘business method patents’ and many patents referred to as ‘software patents’ fall into class 707. Both ‘business method patents’ and ‘software patents’ have been the subject of quite a bit of attention in patent reform efforts, such as the Inter-Partes Review (IPR) and Covered Business Method (CBM) procedures in the patent office. This data shows that those, and other reform efforts, have had a significant impact" says Sanjay Prasad, principal of Prasad IP, PC in Los Altos, California who regularly advises patent owners as well as accused infringers in patent infringement disputes.

Our analysis of patent suits from 2010 shows that while the number of software patents involved in patent suits were relatively constant from 2010 to 2012, they rapidly declined post Alice in 2014 and 2015. This decline was exacerbated for certain US patent classes such as 705 and 707, covering business methods and database structures. We believe this decline is mainly due to Alice decision as well as availability of new methods to challenge patent validities through PTAB (e.g., IPR and CBM).

In the coming weeks, we will look at other active zones in patent litigation, identifying the top war zones between companies, the ones that are growing or declining. We will also look at IPRs, learning which types of patents have been challenged primarily through PTAB and IPR.

Another interesting study is to look at the patent filing and grant data to see if any particular US classification has been impacted post Alice. Two years after the decision, we should be able to discover invention classes that are out of favor. We will report this also in the coming weeks.