This article originally appeared on IAM, March 26, 2015.
Lex Machina’s second annual review of the patent litigation landscape in the US is out today and the IAM blog has had an exclusive preview of what is a very comprehensive piece of work.
The main headline figure for last year – that the number of new patent cases fell by more than a thousand – has been known since January. In fact, the downward trend in litigation rates in 2014 first became apparent when Lex Machina reported a big drop year-on-year for September. Recent data for the first few months of this year shows that new cases are moving up again on a monthly comparative basis, but given that there were big spikes in March and, in particular, April last year it’s unlikely we’ll get a proper sense of how this year is developing until the first trimester comes to an end.
Beyond the headlines, it is in the granularity and context of Lex Machina’s number crunching where the real interest lies. According to the report, for instance, new cases filed in Delaware dropped by 41.2% (or 390 cases) in 2014. It remains the second most popular district for filing patent suits, but the numbers show that the Eastern District of Texas (which saw a relatively small 4.9% drop in cases) has strengthened its position as plaintiffs’ court of choice. The drop in Delaware can in part be explained by a spate of NPE suits in 2013 which caused what looks like a one-off jump in cases that year. In contrast, New Jersey saw a big rise in filings, fuelled in part by ANDA and other life sciences related litigation.
One particularly eye-catching finding is detailed towards the end of the report, on page 20. Here there are some numbers on patent invalidations around section 101 of the US patent statute. Last month we ran a story showing that more patents were being found to be invalid under 101 (the part of the law that covers patent eligible subject matter) thanks to the Supreme Court’s decision in Alice Corporation v CLS Bank. Lex Machina’s numbers confirm that these invalidations rose to record numbers in 2014 – with a huge spike after the Alice judgment in June.
But what the research also shows is the big change all this represents when compared with the other sections that govern patentability. Invalidations under 101 are now at around the same level as invalidations under section 102 (governing novelty), 103 (obviousness) and 112 (specification).
That is a very significant change. Patent practitioners have long seen 101 as a fairly broad filter not designed to invalidate many patents either during the application process or in the courtroom. Alice, though, has prompted courts to view 101 as a far coarser filter and as a result many more patents are being knocked out. Even if, in a system that has several million patents in force, we’re talking about a very small number that are being caught by 101, that doesn’t diminish the importance of what has happened over the past few months – basic eligibility is now as much of a hurdle to get over for a plaintiff as novelty, obviousness and specification. In terms of planning a litigation strategy, that is big news. And all this as the USPTO considers its new guidance on patent eligible subject matter. The pace of change in the US patent system currently truly is breathtaking.