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2015 Patent Reform Update

Brian J. Love & Colleen V. ChienDecember 11, 2015 APLI

The Call for Reform

“What we need to do is pull together additional stakeholders and see if we can build some additional consensus on smarter patent laws” – Feb. 14, 2013

The Call for Reform

Executive Priorities and ActionsReduce “unnecessary costs”Fee-ShiftingComputer Enabled Patents / Functional ClaimingDemand LettersReal Party in InterestITC Reform

The Call for Reform

“And let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation.”

Reform Efforts

How well have the calls been answered?

Call: “Innovation, not… litigation”

Overall Level of Litigation

Source: Lex Machina; Unified Patents

Overall Level of Litigation

Overall Level of Litigation

Source: Lex Machina; Unified Patents

0

1000

2000

3000

4000

5000

6000

7000

8000

2010 2011 2012 2013 2014 2015 (proj)

Projection ~5900 cases

=~500 cases per month

Overall Level of Litigation

0100020003000400050006000700080009000

2010 2011 2012 2013 2014 2015(proj)

District Courts + PTAB District Courts

Percentage of NPE Suits

Source: Unified Patents

Through 3Q15: 67% NPE

Percentage of NPE Suits

Source: RPX

61% 71% 70% 69% 69% 61% 71%

0%

20%

40%

60%

80%

100%

Jan-June July-Dec2012

Jan-June July-Dec2013

Jan-June July-Dec2014

Jan-June July-Dec2015(proj)

Tota

l Num

. Sui

ts

NPEs Prod Co's

Percentage of NPE Def’s

Source: RPX

57%68% 67% 64% 62% 55%

66%

0%

20%

40%

60%

80%

100%

Jan-June July-Dec2012

Jan-June July-Dec2013

Jan-June July-Dec2014

Jan-June July-Dec2015(proj)

Tota

l Num

. Def

enda

nts

NPEs Prod Co's

Distribution of Unique NPE Defendants

Source: RPX

54%

59%

62%

58%

57%

63%

67%

13%

13%

10%

12%

14%

9%

9%

19%

17%

17%

18%

17%

16%

13%

10%

8%

8%

8%

8%

8%

7%

4%

4%

3%

4%

4%

4%

3%

1H

2H

1H

2H

1H

2H

1H

2012

2013

2014

2015

$0-100M$100M-1B$1B-10B$10B-50B$50B+

Call: “Reduc[e] unnecessary costs of patent litigation”

Litigation Costs – AIPLA

Litigation Cost – AIPLA

Litigation Cost – AIPLA

Call: “More discretion in awarding fees”

Fee Shifting Post-Octane

Fee Awards Post-Octane

Federal Circuit Bar Association

No. Granted RatePre-Octane

[May 2013-April 2014] 46 6 13%

Post-Octane[May 2014-March 2015] 85 31 36%

Motions by Accused Infringers

Total Motions 85 over 10 months, 8.5/month

Fee Awards Post-Octane

Source: Hannah Jiam, Berkeley Tech. L.J.

Call: “Computer-enabled patents”

Early Alice Motions

No. Granted Rate

Motions to Dismiss 47 35 74%

Motions JOP 42 29 69%

Motions for SJ 59 43 73%

Source: Bilski Blog (Nov. 6, 2015)

Federal Court Decisions 174 over 16 months, ~10 per month

Early Alice Motions

No. Granted Rate

D. Del. 31 28 90%

E.D. Tex. 23 8 35%

N.D. Cal. 19 15 79%

Source: Bilski Blog (Nov. 6, 2015)

Claim Clarity PTO Initiatives

Enhanced Patent Quality Initiative

Post Grant Challenges

Source: PTO

Post Grant Challenges

61%17%

22%

PTAB Filings By Industry (as of 3Q15)

High-Tech

Medical

Other

PTAB

Source: Unified Patents

Post Grant Challenges

Source: Unified Patents

Through 3Q15: 43% NPE

~150 petitions/month, ~12% of unique litigated patents has been challenged in IPR

Inter Partes Review

Petitions filed by 3/31/2015PTAB activity as of 10/19/2015 2694

SettledPre-InstitutionPost-Institution

687376311

25%55%45%

Institution DecisionsInstitutedNot Instituted (On Merits)

22611639622 (462)

84%73% (78%)27% (22%)

Adverse Judgments 96 4%

Final Written Decisions (updated to 10/31)

All claims unpatentableAll claims confirmed

63045386

24%72%14%

Call: “Demand Letter Transparency”

Demand Letter Reform

Source: Patent Progress

Venue

Concentration in E.D. Tex.

Source: Lex Machina

Concentration in E.D. Tex.

Source: RPX

Whither venue reform?

In re TC Heartland

Dir. Michelle Lee, 2015 Santa Clara Bobblehead