Patent Litigation Continues Sharp Downturn & Grants Bounce Back

The number of patent cases filed declined to about 5,100 cases in 2016, while the number of patents granted increased by four percent in 2016.

In 2016, the number of patent cases filed continued a downward trend from the high point reached in 2013, evidence of a clear shift in direction, while the number of patents granted increased. According to PwC’s recent 2017 Patent Litigation Study, the number of patent cases filed declined to approximately 5,100 cases in 2016, down nine percent year-over-year. Meanwhile, the number of patents granted increased by four percent in 2016 after seeing a rare decline last year.  

Chris Barry, partner, Forensic Services at PwC and Ronen Arad, director, Forensic Services at PwC recently sat down with Inside Counsel to discuss why the number of patent cases filed in 2016 continued a downward trend from the high point reached in 2013.

In the 2016 fiscal year, the pleading standards for patent cases were raised, making it more difficult to file new cases. According to Barry and Arad, other factors that have contributed to the decline in patent cases since 2013 include the Alice decision in 2014, which made it much more difficult to get and assert software patents and the America Invents Act's (AIA) introduction of new post-grant opposition options, which made asserting patents more complicated and difficult.​ In addition, the Pulse v. Halo case made recovery of attorney's fees easier, sobering some plaintiffs who previously would have pursued dubious cases.

“Patent case filings were generally increasing in the years prior to and including 2013 due to several factors, such as increased NPE activity, the short-lived popularity of false marking cases (which the AIA essentially eliminated), and the AIA's modification of the joinder provision (which required separation of law suits against multiple defendants; that is, a requirement to file multiple cases as opposed to just one),” they explained.

Over the years, the number of patent applications has generally increased, which naturally translates to higher patent grants. On top of that, the USPTO has been working on clearing patent application backlogs and generally shortening the time required to issue a patent. 

“Generally, increased patenting activity is a positive for the economy, as it signals increased levels of innovation. Patents continue to be critical to enhancing business opportunities, protecting competitive advantages, and generating incremental revenues and/or profits,” said Barry and Arad. “It is therefore imperative that patentees continue to monitor ongoing changes in the patent landscape, both in the U.S. and abroad.”

As of late, the most drastic change in the patent system relates to the Supreme Court's recent TC Heartland decision, which modified the venue requirement for patent cases. Barry and Arad agree that it will be fascinating to watch how this change impacts patent case activity, patentee behavior, and the court system in the future. Not to mention, it will be interesting to see if lawmakers take​​ action to clarify the law around venue for patent infringement.

They explained, “Looking back, not many could have predicted the significant impact that various events and court decisions have had over the last five years. However, what is clear is that as the global economy continues to become more competitive, more reliant on innovation, and more dependent on the protection of competitive advantages, getting and protecting patents will continue to be an imperative to any successful business strategy.”

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Contributing Author

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Amanda Ciccatelli

Amanda G. Ciccatelli is a Freelance Journalist for InsideCounsel, where she covers intellectual property, legal technology, patent litigation, cybersecurity, innovation, and more. She earned a B.A....

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