Overview

The biggest development of 2021 so far was the Supreme Court’s split decision in Arthrex, where a plurality of the Court found the Patent Trial and Appeal Board’s (PTAB) Administrative Patent Judges (APJs) were unconstitutionally appointed principal officers. Rather than create pure chaos, the Supreme Court identified a simple way to resolve the issue-- the United States Patent and Trademark Office (USPTO) Director merely needed to retain the power to review APJ’s final decisions. Even with the uncertainty looming while Arthrex was pending, it appears that it has been business as normal with a 4.3% increase in litigation and PTAB filings from the first quarter.

Highlights:

Despite Fintiv and Arthrex, overall patent disputes are up 4.3% from the first quarter of 2021.
The Western District of Texas continues to account for 25% of all patent litigation, with 64% of cases being a NPE aggregator and nearly 50% backed by third-party financing.
Cedar Lane continues to be the most litigious plaintiff with 54 cases, with 36 (67%) filed in the Western District of Texas.
Samsung, remains the most active PTAB filer with 61 thus far and continues to be named as the first-name defendant the most with 35.
Reexaminations are expected to increase 8.8%, due to the short timeline of decisions and the uncertainty surrounding the Fintiv framework.
Unified is the 6th most active PTAB filer, but continues to focus internationally with 12 Chinese oppositions, 7 EPO oppositions, 5 Japanese oppositions, and 1 UK opposition. In addition, Unified has filed 22 requests for reexamination.

Figure 1: With the first half of 2021 complete, it appears that litigations in 2021 will be slightly higher than in 2020. In contrast, the PTAB is seeing a slight dip in petitions, with the uncertainty surrounding § 314 and the Fintiv framework.

Figure 2: Despite the slight dip from the first half of 2021, both litigation and PTAB filings have increased on a quarter-by-quarter basis since Q4 of 2020.

Figure 3: Although the PTAB continues to have the most patent cases, the TXWD leads other district courts in accounting for nearly 25% of all patent cases. NPE-related litigation accounts for 82% of the patent cases in this district and almost surpasses the total number of patent cases filed in the District Court of Delaware. View all District Court and PTAB litigation on Unified’s Portal.

Figure 4: Super NPEs account for nearly 64% of all NPE cases in the Western District of Texas, as identified in Unified’s aggregation report, Top-5 Patent Litigation Venues Seen Nearly Half of the Cases Related to a Super NPE.

Figure 5: The year-by-year trend of aggregators in the Western District of Texas can be seen below.

Figure 6: The aggregators continue to find financing, with investors looking for non-traditional ways to find returns, resulting in nearly 50% of all NPE cases being backed

Figure 7: The year-by-year growth in the Western District of Texas can be seen below. To see other districts including, the Eastern District of Texas, the Northern District of California, the Central District of California, and the District of Delaware as identified in Unified’s aggregation report, Top-5 Patent Litigation Venues Seen Nearly Half of the Cases Related to a Super NPE.

Figure 8: High-Tech litigation continues to dominate both district courts and the PTAB, comprising 70% (1,363 out of 1,942 cases) and 66% (446 out of 674 filings), respectively.

District Court

Figure 9: NPE-related litigations are projected to out-pace last year’s numbers by 6.6%, while operating companies have shifted focus on post-pandemic recovery

Figure 10: Looking quarter-by-quarter NPE-related litigation continues to remain at its 5-year average of 59%. Litigation in the second quarter increased 6.8% overall versus the first quarter of 2021.

Figure 11: Cedar Lane Technologies is the highest asserting entity in 2021. Following previous trends, 9 of the top-10 named asserting entities in 2021, were NPEs. View District Court litigation on Unified’s Portal.

Figure 12: Samsung entities were the most targeted first-name defendants in 2021. Litigation seems to be centered on network, computer, wireless, and cellular manufacturers. View District Court litigation on Unified’s Portal.

Figure 13: In the first half of 2021, 70% of all new US district court patent cases involve High-Tech companies. This is up 5% from last year.

Figure 14: NPE activity in the High-Tech sector alone continues to contribute more 2021 patent infringement cases than all non-NPE patent litigation combined. NPEs target the High-Tech sector 95% of the time. View High-Tech litigation on Unified’s Portal.

Figure 15: NPEs accounted for 85.8% of assertions in High-Tech Litigation in 2021. View all 2021 District Court litigation on Unified’s Portal.

PTAB Disputes

Figure 16: Based on the second quarter of 2021, PTAB filings are projected to decrease by 11.3% this year. This is most likely due to the combination of companies turning to re-examinations and the uncertainty of discretionary denials. The Board’s institution rate in inter partes reviews has increased and is now at 58.8%. More details for these PTAB proceedings are available on Unified’s Portal.

Figure 17: This quarter, the PTAB received a total of 345 requests for inter partes reviews, up 5.5% from the first quarter of 2021. NPE related-filings accounted for 43% of all filings, which increased 2% from the 5-year average of 41%.

Figure 18: Consistent with district court proceedings, approximately 66.2% of petitions filed in 2021 involved High-Tech companies.

Figure 19: Approximately 54% of all AIA challenges filed in 2021 that involved High-Tech companies related to NPE-controlled patents. Explore this data further on Unified’s Portal.

Figure 20: IPRs remained the most popular post-grant proceeding at the PTAB. However, reexaminations account for 14.6% of all patent challenges at the PTAB. Explore this data further on Unified’s Portal.

Figure 21: The use of § 314(a) is projected to be similar to last year's use. It will be interesting to watch what the Supreme Court decision does in terms of APJs elected use of discretionary denials.

Figure 22: The NHK Spring/Fintiv framework continues to be the primary source of denials under §314(a). It is projected to grow by nearly 40% this year alone. More details will follow in the Unified quarterly report on discretionary denials.

Figure 23: The first half saw Samsung as the most frequent petitioner with 61. Unified, is the 6th overall filer with 231. This year alone Unified has filed 22 reexaminations and 12 Chinese oppositions, in addition to the 7 EPO oppositions, 1 UK opposition and 5 Japanese Oppositions from last year. View all of Unified’s cases on Unified’s Portal.

Figure 24: Interestingly there is now a focus on challenging operating companies, rather than NPEs at the PTAB, as only 4 of the top 10 Patent Owners are NPEs. View all PTAB cases on the Portal.

Reexaminations

Figure 25: Coming soon to Portal, will be the world’s first comprehensive database on reexaminations. It appears that due to the average decision time being around 5.2 months for both 2020 and 2021 combined, more entities are turning to this mechanism. 2021 is projected to see an increase of 8.8% from 2020.

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, 2021.

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.