SAN FRANCISCO (Legal Newsline) - The amount of patent-infringement litigation took a noticeable dip in the first quarter of this year compared to the same time period in previous years, but whether the numbers reflect a true downturn rather than a temporary hiccup remains to be seen - especially considering prospective plaintiffs are still amassing patents at their normal rate.
That’s the conclusion of an analysis of patent litigation volume reported by RPX Corp., a patent aggregator that helps clients manage and mitigate risks associated with patent-infringement lawsuits.
The company tracks litigation by non-practicing entities, or NPEs – those who hold patents and launch patent-infringement lawsuits against people or companies for allegedly using or profiting from an element of the patents the NPE holds. As a rule, NPEs obtain patents for products but don’t develop or market them.
Some refer to NPEs as "patent trolls." RPX has spent more than $2 billion to acquire more than 15,000 patents in order to help companies avoid litigation.
Emily Hostage, RPX’s director of corporate development, said that during a 13-week period encompassing the first quarter of this year, the number of defendants added to NPE litigation campaigns stood at 496. The numbers during comparable time periods in 2014 and 2015 are significantly larger.
“During 13 weeks in 2015, the total is 1,091 defendants,” Hostage said. “That is 2.2 times what we saw in the beginning of this year.”
Similarly, in 2014, the number of new defendants during the same time period stood at 910, or about 1.8 times the number in the first quarter of 2016, she said.
RPX considers one explanation to be the "aftereffect of an event-driven spike in activity."
On Dec. 1, new amendments to the Federal Rules of Civil Procedure went into effect to help reduce court costs and improve efficiency. The amendments relate in part to pleading requirements and discovery issues and have been seen by some observers as making NPE litigation more difficult to bring.
The RPX data shows that in the week prior to the amendments taking effect, more than 450 defendants were added to NPE campaigns. The term “NPE campaign” is a metric developed by the company that refers to all cases filed by the same plaintiff that involve the same patent or related patents.
This spike in the number of defendants may have led to the current lull in litigation, which could be temporary, RPX says.
Similar spikes followed by temporary dips in litigation volume have been seen when laws or rules took effect in past years.
Hostage also noted that the NPE litigation volume decline so far this year parallels declines in the backlog of active cases in recent years. Declines in backlogs of active defendants have been seen at the beginning of each year since 2013, she said.
Of course, those numbers are simply one way to gauge what’s happening in patent litigation. Hostage said that patents are still transacting at a steady rate, meaning that market activity has not slowed much despite the drop in the litigation level.
“We are seeing patents change hands to NPEs at the same rate as we have been seeing in previous years,” she said.
Unified Patents' 2015 Year End Report, released earlier this year, noted the following:
-2015 saw the highest number ever of patent disputes in the U.S., both in courts and those referred to the Patent Trial and Appeal Board (PTAB);
-The same year saw the second-highest number ever of federal court patent lawsuits, a 14 increase compared to 2014;
-More than 60 percent of the year's patent litigation involved NPEs in high-tech patents asserted against both high-tech and non-tech companies;
-More than 90 percent of all high-tech product disputes involved NPEs; and
-Almost 95 percent of all NPE high-tech products disputes involved Patent Assertion Entities (PAEs).