Patent Disputes are Rarer Than Perceived; Trials are 6/1000th of Active Patents

With the number of active U.S. patents approaching four million you would think patent suits are also up. Think again.

Litigation is more infrequent than a decade ago and flat for the past five years, in spite of the presence of volume patent suit-filers (specialized NPEs) and the difficulty holding meaningful licensing discussions without first suing.

In addition to the record number of grants, there has been increased activity from primarily three so-called volume patent suit filers, whose strategy is to darken particularly egregious infringers’ skies with multiple-suits in an effort to coax a settlement. Volume-filers are responsible for almost 40% of patent suits.

The number of patent suits filed annually in U.S. district courts, including those brought by volume-filers, has been flat since 2017 and down since the introduction of the Patent Trial and Appeal Board (PTAB) in 2012. Excluding volume-filers litigation is down even more dramatically.

Despite what the headlines might imply, patent suits are an increasingly smaller fraction of active patents.

3,800 Suits; 200 Trials

On average, 3,800 patent suits are filed each year. The number tried is only about 200, or about 5% of the litigation brought. As many as 97% of patent suits settle. Unfortunately, I am told, a potential licensor today must sue first to show it is serious. If that were not the case, there would likely be even fewer suits.

The higher cost, longer time-frame and the existence of the Patent Trial and Appeal Board also have likely contributed to the decrease in patent litigation.

Given the significant increase in active patents, the question is not “why are there so many suits?” but “why are there so few?”

In a recent Intangible Inventor column on IPWatchdog, annual patent suit filings are examined in context of the number of active patents and those that are tried. As many at 97% of suits settle. Tap here to read the full column.

Image source: CIPU

Data source (partial): Lex Machina

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