Overview

The apparent shutdown has not deterred a significant rise in Aggregators and Finance-backed entities along with increasing litigation being filed in the Western District of Texas. This has driven cases in Q2 to the highest since Q4 of 2016. Several NPEs have shown new strategies, such as WSOU Investments who has focused on filing a large number of single patent cases against tech companies. It is not surprising though, once one realizes that the CEO was previously heading Uniloc, a well-known NPE who was a profligate filer. In addition, the PTAB saw a modest increase compared to previous quarters and Unified Patents was #3 filer overall.

Highlights:

Litigation reached an all-time high since Q4 of 2016 with 1,069 new patent cases, 66% of cases being asserted by NPEs
The Western District of Texas has now become the leading venue for patent litigation, with a 6-time increase in NPE Aggregators and a 7-time increase in finance-backed litigation
PTAB filings are up 12% from Q1 of 2020, also reaching an all-time high since Q4 of 2018
NPEs continue to dominate High-Tech patent assertions with 88%; however, NPEs only accounted for 60% of High-Tech AIA challenges, an 8% decrease from Q1 of 2020

Figure 1: Assuming current trends continue, 2020 litigation is expected to be the highest since 2016 and the PTAB will continue to remain steady. View all District Court and PTAB litigation on Unified’s Portal.

Figure 2: The quarter-by-quarter analysis shows an increase this quarter in both the PTAB and District Court filings. As mentioned above, the Q2 saw 1,069 District Court filings and 367 PTAB filings compared to 843 District Courting filings and 329 PTAB filings in Q1 of 2020. This quarter amounts to the highest volume of litigation since Q4 of 2016 where there were 1,113. View all District Court and PTAB litigation on Unified’s Portal.

Figure 3: Although the PTAB remains the most popular venue for patent disputes overall, the TXWD has become the most popular venue for NPEs in 2020. This district has also become the new Rocket Docket for both NPEs and Non-NPEs. View all District Court litigation on Unified’s Portal.

Figure 4: Over the past five years, the TXED has seen a 89% decrease in litigation, losing its top spot in the Rocket Docket. View all District Court litigation on Unified’s Portal.

Figure 5: As the TXED litigation continues to decline, the amount of NPE Aggregator litigation in the TXWD has increased nearly 6-times from 2015 to 2020. Aggregators were defined as entities that have more than one affiliated subsidiary. View all District Court litigation on Unified’s Portal.

Figure 6: At the same time there was an increase in NPE Aggregators, 3rd-party financed back entities all increased by 7-times from 2015 to 2020 in the TXWD. View all District Court litigation on Unified’s Portal.

Figure 7: The majority of new patent cases continue to involve the High Tech industry. View High-Tech litigation on Unified’s Portal.

District Court

Figure 8: Patent litigation this quarter saw a significant increase as the economy tries to recover from the pandemic. NPEs continue to take advantage of the perfect conditions to obtain assets from distressed companies and continue their assault on companies. In the second quarter of 2020, NPEs are responsible for over 706 new patent infringement cases (over 66% of all patent litigation). This is up 8% from 58% last quarter. View District Court litigation on Unified’s Portal.

Figure 9: WSOU Investments, an NPE, was the top asserting entity in Q2 2020. NPEs accounted for 8 of the top-10 asserting entities. View District Court litigation on Unified’s Portal.

Figure 10: Microsoft was the top named defendant in Q2 2020. View District Court litigation on Unified’s Portal.

Figure 11: Nearly 67% of all new Q2 district court patent cases involve High-Tech companies.

Figure 12: NPE activity in the High-Tech sector alone contributes more new Q2 patent infringement cases than all non-NPE patent litigation combined. View High-Tech litigation on Unified’s Portal.

Figure 13: NPEs accounted for 88.4% of assertions in High-Tech Litigation in Q2. View all 2020 District Court litigation on Unified’s Portal.

PTAB Disputes

Figure 13: The PTAB received a total 367 requests for inter partes reviews, a 12% increase from last quarter. Meanwhile, the Board’s institution rate in inter partes reviews decreased to 56.6%. More details for these PTAB proceedings are available on Unified’s Portal.

Figure 14: Consistent with district court proceedings, approximately 63% of petitions filed in Q2 of 2020 involved High-Tech companies.

Figure 15: In the High-Tech sector, approximately 60% of all AIA challenges filed in Q2 of 2020 stem from NPE-controlled patents. Explore this data further on Unified’s Portal.

Figure 16: In Q2 of 2020, IPRs were the most popular post-grant proceeding at the PTAB. Explore this data further on Unified’s Portal.

Figure 17: This quarter saw Comcast as the most frequent petitioner as their war with Rovi Guides continues with 21. Unified came in third with 15. View all of Unified’s cases on Unified’s Portal.

Figure 18: As expected, Rovi Guides was the most challenged Patent Owner this quarter. View all PTAB cases on the Portal.

Definitions

Sectors

High-Tech = Technologies relating to Software, Hardware, and Networking

Medical = Technologies relating to Pharmaceuticals, Medical Devices, Health Related Technologies

Other = Technologies relating to Mechanical, Packaged Goods, Sporting Equipment and any other area outside of high-tech and medical patents.

Entities

Non Practicing Entity (NPE) = Company which derives the majority of its total revenue from Patent Licensing activities.

Operating Company or Op. Co. = Company which derives most of its total revenue from Product Sales or Services. Could be an SME or a large company.

Other Entity = Universities / Non-Profits / Government / Non-Governmental Organizations (NGOs)

NPE (Patent Assertion Entities) = Entity whose primary activity is licensing patents and acquired most of its patents from another entity

NPE (Small Company) = Entity whose original activity was providing products and services, but now is primarily focused on monetizing its own patent portfolio.

NPE (Individual) = Entity owned or controlled by an individual inventor who is primarily focused on monetizing inventions patents by that individual inventor.

Venues

CACD = Central District of California

CAND = Northern District of California

DED = Delaware

NJD = New Jersey

NDIL = Northern District of Illinois

SDNY = Southern District of New York

TXED = Eastern District of Texas

TXWD = Western District of Texas

Methodology

This report includes all District Court and PTAB litigations between January 1, 2015 and June 30, 2020.

Total number of reported cases can vary based on what is included. Unified made its best attempt to eliminate mistaken, duplicative, or changes in venue filings, hence the totals may vary slightly compared to other reporting entities. Statistics include litigations initiated by NPEs or Declaratory Judgments (DJs) initiated by operating companies against NPEs.

Unified strives to accurately identify NPEs through all available means, such as court filings, public documents, and product documentation.