PublishedFebruary 17, 2023

An Up and Down Year at the USPTO

By: Sam Baird, Director of Analytics at Unified Patents

From the confirmation of Kathi Vidal as Director of the United States Patent and Trademark Office (USPTO) to the Western District of Texas’s standing order attempting to break up Judge Alan Albright’s monopoly on patent lawsuits, and everything in between, 2022 was an immensely consequential year for our patent system. 

The Unified Patents 2022 Dispute Report details the top patent litigation trends from a momentous year. A lackluster economic environment, and the corresponding tightening of budgets resulted in a slight decrease in district court patent litigation filings and an increase in filings at the Patent Trial and Appeal Board (PTAB). Despite the decline in litigation overall, NPEs remained an active, ubiquitous presence in patent litigation.

Federal district court filings saw a decrease of 10.6% year-to-year, with operating company-based assertions declining by 8.5%. While overall NPE assertions declined, patent assertion entities (PAE) filings remained steady. In fact, the report found that nearly 60% of all patent litigation still stemmed from NPEs, in line with its 7-year average. NPE aggregators such as IP Edge and Softbank/Fortress brought nearly 40% of all cases, with IP Edge entities accounting for 45% of all NPE aggregator cases. 

In contrast to district court filings, PTAB filings increased in 2022, with an 11.4% rise in NPE-related filings. This comes after Director Vidal issued interim guidance that rolled back the issuance of discretionary denials based on the NHK-Fintiv factors imposed by the previous director. While Director Vidal’s policy changes provided innovators restored protections they need to fight back against NPEs, the growth of NPE-related fillings points to a concerning level of NPE activity in our patent system writ-large. 

Another concerning trend is the increasingly popular third-party litigation financing (TPLF) industry. Last year, about 30% of patent lawsuits were backed by some sort of third-party financing agreement, most of which were directed to NPEs. This is yet another indication that we need greater transparency measures similar to the one taken in Delaware

Despite the standing orders issued this year to break up Judge Alan Albright’s hold on patent lawsuits, NPEs are continuing to take chances in the Western District of Texas (WDTX). Following the standing order to equitably distribute patent cases in the WDTX’s docket, Judge Albright’s caseload dropped on a month-to-month basis, but 61% of all WDTX patent cases still remain his. NPEs still filed 31% of their cases in the WDTX, more than all patent-related cases in Delaware or any other venue. 

As expected, patent litigation targeting the high-tech industry continued to dominate proceedings across district courts and the PTAB. NPEs targeted high-tech companies 95% of the time, while operating companies only brought lawsuits against high-tech companies 27% of the time. This is just one more indication that operating companies tend to focus on using their patents to protect and advance their products, but NPEs are only looking for the most profitable targets.  

While 2022 brought much needed change to the patent system, it is clear that NPEs are still using frivolous litigation as a means to extract billions from American businesses and innovators. Without any larger institutional changes that will shed a light on the actions of NPEs and third-party litigation funders, NPEs, and in particular, large aggregators, will continue to target companies that have kept our country at the forefront of innovation. 

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Sam Baird

Director of Analytics, Unified Patents

Samuel Baird is an attorney and currently Director of Analytics at Unified Patents. He has been with Unified since 2020. He received his law degree from Case Western Reserve University and has a master’s degree in Intellectual Property Management and Markets from the Illinois Institute of Technology. Prior to Unified Patents, Samuel worked at RPX and a technology transfer office. Before becoming an attorney, Samuel spent nearly ten years in the sports broadcast industry as a graphics operator and producer.

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