Patent litigation costs have dropped significantly over the past few years, after a steady series of increases over the previous decade. This drop has sometimes been attributed to the use of inter partes review and to the Alice decision.
The chart below, created based on data from the AIPLA Report of the Economic Survey, shows that this appears to be a reasonable explanation of what has happened.
The AIPLA data illustrates the change in median cost of various forms of IP litigation over time. The blue line, representing the cost of patent lawsuits with over $25 million at risk, shows a general increase from 2005 to 2013, and then significant declines over the next two years. While IPR became available in 2012, the first impacts of IPR on litigation tactics weren’t seen until the beginning of 2013 when merits decisions in IPRs began to issue. And Alice was handed down in 2014, with a similar lag until district courts began ruling on Alice motions. The data illustrates a slower decline from 2013-2015 after IPR became available, and then a steeper decline in the 2015-2017 period with the impact of both IPR and Alice, consistent with the decline being attributable at least in part to IPR and Alice. (As IPR cost estimates are around $350,000 median cost, the increased cost required to file an IPR is more than overcome by the reductions in litigation cost—to the tune of more than $2 billion.)
However, it’s possible that the litigation cost declines seen in patent litigation could have been due to external factors unrelated to changes in the patent landscape like IPR and Alice. In order to control for this, we can compare costs to other areas of intellectual property law that haven’t seen the same major impacts. Using copyright and trademark litigation with similar amounts at risk as a control, the data illustrates that while there have been cost reductions in the 2015-2017 time frame for all three areas of litigation, the reduction has been most pronounced in patent litigation.
This data suggests that external factors do not explain the drop in patent litigation cost; instead, IPR and Alice bear much of that responsibility.