Patent Filings Bounced Back After 5-Year Low, Here’s Why

After patent filings dropped to a five-year low at the beginning of 2016, a natural question was whether that trend would continue?

Alas, that does not appear to be the case.

In the second quarter of 2016, there were 1,282 patent infringement cases filed in the U.S., up 33 percent from the first quarter when 958 cases filed.

“It doesn’t look like this year is going to be one of smaller and fewer cases,” said Brian Howard, a data scientist at Lex Machina. “The last few months have been significantly higher than what we were seeing in January, February and March.”

Howard believes that the lull in filings at the start of the year was an anomaly. Specifically, in November 2015, patent filings spiked to their highest single monthly volume over at least the past three years, with 847 cases filed. Afterward, the pipeline of cases waiting to be filed was empty, leading to the decline at the start of 2016, he said.

The rush to file cases last November came as the Federal Judiciary Committee’s decision to change an obscure, yet significant rule related to pleading in patent cases, took effect, according to Howard.

“When you see a spike like that, it’s like a tidal wave in real life, you see a trough on either side,” he said. “It’s cases that would have been filed on a later date. It’s like after a tidal wave, the tide washes out.”

Still, the long term trend indicates patent filings have been on the decline since hitting an annual peak in 2013, when 6,128 cases were filed. In 2014, this declined to 5,087 cases filed but rebounded slightly to 5,825 cases.

This year, with only 2,240 cases filed through the first two quarters, it would hit a projected 4,480 cases.

So what exactly is driving the number of patent filings?

Howard said he doesn’t like to use the word patent troll because it’s a vague term that can be defined multiple ways. But he did a study in which he separated patent infringement plaintiffs into two groups: Those who had filed 10 or more suits in the previous year, and those who had filed less than 10.

He called the first group high-volume plaintiffs and said his study indicates that since 2011, they have been responsible for the variability in patent filings. Some of these plaintiffs are called non-practicing entities because they do not use the patents they own to produce any technology or product and it can be difficult to obtain information on them. One high volume plaintiff, eDekka, LLC, filed 101 cases in 2015 and another Data Carriers filed 85 cases according to Lex Machina.

new high low national

The orange line, which represents cases filed by low-volume plaintiffs — those who had filed less than 10 cases in the previous year — is relatively stable over time while the high volume plaintiffs have been more volatile.

Looking forward, he noted that the high-volume plaintiffs have also shifted where they file, moving into the Eastern District of Texas with much greater frequency and backing away from filing cases in Delaware.

New High Low

According to Lex Machina’s report on second quarter filings, 476 cases or 37.1 percent of all cases were filed in the Eastern District of Texas. The district with the next highest number of cases, with 134 cases, is Delaware.

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