About 5,100 patent infringement cases were filed in the U.S. during 2016, according to the PwC litigation study. This represents a 9 percent drop in lawsuits from 2015’s totals and the third straight year of decline since 2013, when more than 6,000 patent suits were filed. As the PwC study notes, this decline stands in stark contrast to the 6 percent compound annual growth rate (CAGR) for patent case filings since 1991. It’s also the largest deviation between the rate of case filings and the rate of U.S. patent grants since that time. The PwC report suggests that this lower rate of case filing may be due in large part to the abolition of Form 18 used to plead patent infringement in U.S. district courts, requiring patent counsel to rely on the higher pleading standards upheld by the U.S. Supreme Court in decisions such as 2007’s Bell Atlantic Corp. v. Twombly and 2009’s Ashcroft v. Iqbal.
Interestingly, these recent patent litigation numbers reported by PwC differ from litigation totals we’ve gathered from studies released by legal data analytics firm Lex Machina. The most recent annual IP litigation report released by that company pegged the year-over-year drop in patent infringement cases at 22 percent, down from 5,823 cases in 2015 down to 4,520 cases in 2016. However, the Lex Machina patent litigation study doesn’t include infringement cases arising from generic drugmakers filing abbreviated new drug applications (ANDAs) with the U.S. Food and Drug Administration; the legal analytics firm has issued a separate report on ANDA cases as several trends are unique to those lawsuits
2016 saw the largest damages award for a single patent infringement case in U.S. history when Merck pharmaceutical subsidiary Idenix was awarded $2.54 billion against Gilead in a case over treatments for the hepatitis C virus. Despite these case, median damages in patent infringement cases fell year-over-year from $10.2 million in 2015 down to $6.1 million in 2016, according to the PwC study.
The PwC study notes that each of the top ten damages awards were either vacated, remanded or reduced on appeal. Indeed, 75 percent of all patent infringement cases reaching a decision in district court are appealed, and more than half of those appeals lead to the Federal Circuit (Fed. Cir.) overturning some aspect of the lower court’s decision. Alleged infringers were more likely to appeal cases than patent owners but slightly more than one-quarter of all patent infringement case decisions are appealed by both parties according to PwC.
Another point of comparison between the PwC study and patent litigation surveys published by Lex Machina is the contrast in viewpoints on important district court venues. Despite the high concentration of patent caseloads in the Eastern District of Texas (E.D. Tex.), PwC ranks the District of Delaware (D. Del.) as the number one venue for patent infringement cases in the U.S. when looking at the number of decisions, success rates, median awards and median time-to-trial. PwC identified 285 D.
The PwC litigation study also looks at patent cases brought by non-practicing entities (NPEs) to identify trends specific to those firms. Although the study found that cases brought by NPEs are concentrated in fewer districts, there was no clear correlation which PwC drew between the number of identified NPE decisions and the relative success rates for NPEs. E.D. Tex. was was the top venue in terms of both number of decisions involving NPEs (74 decisions) and success rates for NPEs (49 percent).
Increased case volumes and time added to cases through Patent Trial and Appeal Board (PTAB) review proceedings are cited as reasons for this slowdown. Also, the consumer products industry has accounted for 16 percent of all patent infringement decisions since 1997 although median damages award levels are much lower in that industry than the medical device, biotech/pharmaceutical and telecommunications industries.
