Economic PTAB Analysis Demonstrates Post-Grant Challenges Save Litigation Costs Regardless of Stay

Leading Economic Expert finds that PTAB challenges lower total costs and benefit the US Economy almost $2 billion regardless of whether litigation stays are granted

The Perryman Group, in a recent economic study commissioned by Unified, found substantial cost savings in district court cases when there is a copending IPR proceeding regardless of whether a stay is granted or not. 

The study found either outcome resulted in substantial benefits to the U.S. economy by improving business activity $1.87 billion and saving 8,530 job years.  That included where an IPR was conducted parallel to an ongoing district court proceeding, where the Perryman Group estimated the economic benefits of cost savings over the 2014-19 period of $135.4 million in US gross product and 617 person-years of employment. The study also found these benefits are primarily concentrated in the manufacturing sector.

Source: The Perryman Group

The full study is available here, and complements Perryman Group’s earlier work demonstrating the quantifiable economic benefits of the Leahy-Smith America Invents Act’s post-grant proceedings in the years following their implementation.

Source: The Perryman Group

The Perryman Report is part of Unified Patents’ Patent Quality Initiative (PQI), an effort to gather and provide objective data and research demonstrating how lowering patent quality will inevitably lead to even higher cost and risk for U.S. SMEs, inventors, and manufacturers, and can lead to less innovation, fewer U.S. jobs, and a drain on the U.S. economy. Our PQI aims to provide data, studies, and testimonials to give policymakers and practitioners a clear picture of the state of the patent system. More information about our PQI efforts can be found here.

For far greater detail, read the entire report HERE.

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PTAB/District Court Trial Date Denials Spiraling Upward: PTAB Discretionary Denials Third-Quarter Report

Key Takeaways: After returning to the data, breaking down all discretionary denials by category, and updating the data for the past three months, it is clear that the PTAB now prefers denying more petitions under their recent NHK Spring/Fintiv “parallel district court” practice than any other means; discretionary denials as a percentage of overall denials have risen and will almost certainly exceed last year’s denials, both in terms of raw numbers (in a down year) and by overall percentage (by a substantial margin). 

Following Unified’s Quarter 1 and Quarter 2 reports on PTAB procedural denials, we went back to further analyze and categorize all Board decisions to date to understand the impact of new decisions, including the NHK Spring/Fintiv and General Plastic/NVIDIA line of decisions. This year, the number of non-merits or “procedural” denials by the Board has dramatically increased overall; for example, through the first nine months of 2020, 151 denials (16% of all decisions) have been issued, nearly tying 2019’s 162 denials for the entire year. 

With total number of institution decisions by the Board somewhat depressed overall this year, we now see that the amount of discretionary denials as a percentage of total denials has risen dramatically, representing more than a third of all institution denials in 2020–or put another way, 38% of all denials in 2020 to date are cases where the Board did not consider the merits of the petition.

In the 151 denials to date in 2020, 314(a) has been the predominant means of procedural denial, used by the PTAB 73% of time (110 total decisions). Meanwhile, 325(d) denials are at their lowest since 2017, with only 27 denials this year. This year has also not seen any “combination” denials under both 314(a) and 325(d).

The reduction in 325(d) denials makes sense on some level, given the overlap between the various 314 analyses (which include analyses of other petitions or forums and the grounds they raised), and with the overlap of the “same or substantially same” grounds already raised by the parties in other IPR proceedings. In those overlapping instances, 314 may be an easier form of denial, whereas application of 325 may be less straightforward, requiring a more prior art-heavy analysis to justify denial. 

Looking at the last five years, 314(a) denials are now used by the Board 9.5% of time, up 2.5% from the last quarter.

On the other hand, while § 325(d) denials are at their lowest overall number since 2017 (so far),  they have decreased just .3% from the last quarter, to 5.4% total over the past five years as a percentage of all denials.

In 2020 to date, 83% of all procedural denials are denied due to either a parallel petition, the NHK Spring/Fintiv framework, or the General Plastic/NVIDIA framework. Parallel petitions accounted for 40% of (or 44) denials of the 110. NHK Spring/Fintiv framework was used 43% of the time to deny petitions (or 47 denials of the 110 total). Interestingly given that it was the genesis of “discretionary denials” under 314, the General Plastic/NVIDIA framework was used just 13% of the time (or in 14 denials of the 110).

One of the more interesting developments in the analysis used in NHK Spring/Fintiv denials has been the denial of institution based on the Board “estimating” when a trial will be held, even when a trial date has not been scheduled in the District Court. In two recent cases, the Board refused to consider the merits of challenges based on their own estimates of when a trial date was likely to occur, and rejected arguments and speculations to the contrary. 

There has also been a notable reliance on the “cost” and “investment” of the PTAB, the parties, and the Court in their respective proceedings, or the cost or benefit of such respective proceedings, without any substantive economic analysis of actual economic cost to any party or institution, or a reliance on any data whatsoever to support a cost (or benefit) to the parties or decision makers. The lack of any economic support for economic assumptions made by the agency is notable, given that economic efficiency is one of the primary grounds advanced by the agency on which such denials are based.  

For questions, comments, or inquiries, please contact info@unifiedpatents.com

Click to download the full report.

Footnotes

1. PTAB/District Court Trial Date Denials Spiraling Upward: Discretionary PTAB Denials Third-Quarter Report by Unified Patents, LLC is licensed under a Creative Commons Attribution 4.0 International License.  Sharing, reproduction, and adaptation are permitted in commercial contexts with proper attribution.

2. Unified Patents, PTAB Procedural Denials and the Rise of § 314 (May 13, 2020), https://www.unifiedpatents.com/insights/2020/5/13/ptab-procedural-denial-and-the-rise-of-314.

3. Unified Patents, PTAB Discretionary Denials: In the First Half of 2020, Denials Already Exceed All of 2019 (July 27, 2020), https://www.unifiedpatents.com/insights/2020/7/27/ptab-discretionary-denials-in-the-first-half-of-2020-denials-already-exceed-all-of-2019.

4. We refer to “procedural denials” as any denial of institution where the substantive merits of the petition were not considered in light of policy-based decision making or “discretion.” Some discretion is directly spelled out in the statute–for instance, 35 U.S.C. 325(d) tightly circumscribes and explicitly grants the Director the ability to “determine the manner in which the post-grant review or other proceeding or matter may proceed, including providing for the stay, transfer, consolidation, or termination of any such matter or proceeding.”  Joinder discretion is made explicit under 35 U.S.C. 315(c): “the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition ... that the Director ... determines warrants the institution of an inter partes review under section 314.”  Meanwhile, 35 U.S.C. 314(a) contains no such express grant or outline.

5. NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential); Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential).

6. General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017) (precedential); NVIDIA Corp. v. Samsung Elec. Co., IPR2016-00134, Paper 9 (PTAB May 4, 2016).

7. For the sake of simplicity and because it was more difficult to code for and not explicitly tied to a particular precedential decision, we placed the July 2019 Trial Practice Guide Update line of cases (i.e., the “parallel petition” denials based on ranking of petitions) with the General Plastics/NVIDIA line of cases.  We will continue to refine the data to provide the most accurate picture possible as we produce future reports.  If you have inquiries about methodology or the data or reports themselves, please contact PatentQualityInitative@unifiedpatents.com.

8. The remaining 5 denials amounted to another 4.5% of all denials, for various reasons.

9. Intel Corp. v. VLSI Technology, LLC, IPR2020-00583, Paper 22 (PTAB Oct. 5, 2020); Supercell Oy v. GREE, Inc., PGR2020-00053, Paper 12 (PTAB Oct. 9, 2020).

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PTAB Discretionary Denials: In the First Half of 2020, Denials Already Exceed All of 2019

Following on Unified’s previous study, the PTAB continues their steady uptick in procedural denials under § 314 through the first half of 2020, and on procedural, non-merits-based denials in general. These § 314 denials have tied 2019’s annual total—and total denials are just 13 denials shy of 2018’s total, with just half the year reported. Projections show procedural denials will most likely greatly exceed those in 2019 by the end of Q3. Most significantly, though, the General Plastic/NHK framework is being used to procedurally deny petitions more than ever—projecting more than double the number of denials in 2019, they are set to make up roughly 30% of all denials this calendar year.

Thus far, 2020 has seen seventy-five § 314(a) denials, which accounts for roughly 30% of the all denials to date (268). This already ties the previous year total, which only saw 75 § 314(a) discretionary denials total. 2018 saw 45, while 2017 and 2016 saw 15 and 5, respectively.

Indeed, § 314(a) now accounts for the majority of procedural denials (including denials under § 325 and those related to joinder). The ratio of § 314(a) procedural denials has grown this year, as you can see below. 2019 saw 49% of all procedural denials be § 314(a) (75 out of 154); in 2020, more than 74% of procedural denials have been under § 314(a) (75 out of 102). This means that the PTAB is expected to issue 162 § 314(a) denials by the end of the year, a 116% increase from last year.

This is a dramatic increase over the life of the Board, where it has denied institution on 7.0% of all petitions to date for purely procedural reasons—including denials of joinder, § 314, § 325, and other requirements. This is an increase of the previous study, based on the rapid rise of the use of such denials over the past six months.

Of all denials to date, roughly a quarter have not been on the merits; indeed, in total 7.0% of all denials have been over § 314(a) (nearly all from the past two years); and 5.7% have been over § 325(d). Note that § 314(a) denials have exploded since 2018, particularly as a percentage of the (falling) filing numbers and institution rates. Both have increased since the last study.

Parallel District Court Cases Affected by Denials: Early Numbers

When looking at the petitioners that are denied on 314(a) with related parallel district court litigation, the California Northern District Court comprises 45% of the cases related to denials, with 208 cases being cited. (It should be noted that often with denials multiple cases are cited for the denial, and these numbers don’t yet distinguish between “multiple petition” denials under General Plastic, “parallel petition” denials under the July 2019 Trial Practice Guide Update, or “trial date” denials under NHK Spring and Aptiv. A large number of these suits are related to sprawling ongoing litigations, like the yearslong Finjan or Rovi v. Comcast disputes.) These numbers encompass the Board’s entire history, and are a lagging indicator of where cases were being filed years ago. 

The Texas Eastern District has 80 cases cited, comprising 17% of all 314(a) denials. The Delaware District Court had 67 cases cited, comprising 15% of all 314(a) denials. The Texas Western District Court has seen 1 case cited in 2019, and this year that number has risen to 4, accounting for 1% of all 314(a) denials to date; as that docket balloons to more than 20% of the US patent docket, that number is set to rise dramatically.

Looking at the jurisdictions breakdown of § 314(a) denials, the venues as a whole average around 457 days. The top five range from 812 days (California Southern) to 435 days (Florida Southern). Interestingly, Texas Western is below the average by only 5 days, 452 respectively. 

Note that many of the cases denied under § 314(a) due to the advanced stages of a district court proceeding are litigations that were filed more than a two years ago, which is the average time of a district court in the United States to get to trial, suggesting this breakdown is a lagging indicator of where trials were filed more than two years ago. Given that the Western District of Texas has recently adopted aggressive local rules establishing early aspirational trial dates and the docket has ballooned, we have begun to see the Western District of Texas account for more cases related to denials under § 314(a). Of the recent denials of the past few months, nearly all have been due to trial dates in either the Eastern or Western Districts of Texas.

Copyright © 2020, Unified Patents, LLC. All rights reserved.

2020 First-Half Transport Zone Update: Litigation Doubles

Overview

As patent litigation continues to rise, the Transport Zone is expected to see an 105% increase by the end of 2020. At the halfway point of the year (78 cases), litigation has already reached last year high (76 cases). This means that based on current numbers litigation is expected to hit  150+ cases reaching near all-time highs in this zone.

Transport manufacturers continue to be the main targets of litigation. These manufacturers comprise 89% of all first-named defendants. Manufacturers are defined as companies such as Toyota, Honda, Ford, and Tesla. Dealerships are defined as a company that primarily sells for the manufacturer. These would include Kinsel Ford and Zimbrick Honda. Suppliers are companies such as Bosch Automotive, ABB, and even Uber that provide components or services.

NPEs continue to bring the majority of the lawsuits against Transport manufacturers and suppliers. NPEs are responsible for almost 77% of all transport litigation.

Looking at the year-by-year trends, NPE litigation has doubled in the first half of the year since last year in the Transport Zone.

The top-five plaintiffs in 2020, four are prolific NPEs, continually attack this zone. Those four NPEs account for 37% (29 cases out of 78) of litigation brought this year alone. The top-five plaintiffs are:

1. JG Technologies (NPE): 11

2. Display Technologies (NPE): 9

3. Noco Company (Operating Company): 6

4. Omnitek Partners (NPE): 5

5. 2BCOM (NPE): 4

The top-five defendants in 2020, all manufacturers account for 25% of first-named defendants. The manufacturers are:

1. Tesla: 5

2. Ford: 5

3. BMW: 4

4. Hyundai: 3

5. Jaguar Land Rover: 2

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METHODOLOGY

Unified looked at all major Transport manufacturers and the top 10 Transport suppliers by revenue since 2012.

Total number of reported cases can vary. Unified made its best attempt to eliminate mistaken or duplicative filings.

Statistics include litigations initiated by NPEs or Declaratory Judgments (DJs) initiated by operating companies against NPEs.

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

LEGEND

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.

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.

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Q2 2020 Developer Updates

New Portal Product and Features

View All PTAB Exhibits

Unified’s Portal PTAB docket now includes access to all the exhibits for the entire case. To view the exhibit simply click on the paper number. Users can browse through the exhibits and download them for their own use.

Download Entire PTAB Docket

In addition to viewing all the exhibits, users are now able to download the entire PTAB docket for cases. 

Track PTAB Procedural Denials

In monitoring trends at the PTAB, Unified’s Portal now tracks specific procedural denials including 314(a) and 325(d).

PTAB Petitioner Entity

Unified’s Portal also now tracks the petitioner entity type at the PTAB.

Improved HEVC and AVC Analytics

OPEN HEVC and AVC now includes improved analytics to understand the HEVC/H.265 & AVC/H.264 landscape.

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