Patent Office Litigation By the NumbersHow effective are the new procedures for resolving litigation? And how dangerous are the new procedures to your own patents?

Post-Grant Proceeding Usage

The IPR process was adopted rapidly and is being used heavily

1,742 IPR petitions filed in 23 months

3

12,874

1,919 1,742

2120

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Ex Parte Reexam (since July1981)

Inter Partes Reexam (sinceNov. 1999)

Inter Partes Review (sinceSept. 2012)

Covered Business Method(since Sept. 2012)

Petitions Filed in Post-Grant Proceedings

On an annualized basis, IPR filings exceed all other types of post-grant proceedings

4

390

150

871

106

0

100

200

300

400

500

600

700

800

900

1000

Ex Parte Reexam (since July1981)

Inter Partes Reexam (since Nov.1999)

Inter Partes Review (since Sept.2012)

Covered Business Method (sinceSept. 2012)

Petitions Filed in Post-Grant Proceedings (Annualized)

During 2013, the Patent Office became the 3rd busiest litigation venue in the country

2013 Patent Case Filings – Top Five VenuesEDTEX 1512DDEL 1337PTAB 562

CDCAL 408NDCAL 247

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IPR Usage Data

IPR snapshot… as of September 11, 2014

203settlements

37 adverse judgments (stipulated)

114 final written

decisions

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The majority of petitions (71%) focus on electrical and computer technologies

8

71%

15.10%

8.20%

5.10%

0.60%

IPR Petitions by Technology Area

Electrical/Computer

Mechanical

Chemical

Bio/Pharma

Design

IPR institution rates declined from 87% last year to 76% so far this year

9

87%

76%

70%

75%

80%

85%

90%

95%

100%

Fiscal Year 2013 Fiscal Year 2014

IPR Institution Rate by Year

Two-thirds of IPRs arise out of pre-pending district court litigation

10

892, 64%

509, 36%

IPRs With Pre‐pending Litigation

Pre‐pending Litigation No Pre‐pending Litigation

IPRs are being filed in many cases where multiple patents are asserted

11

197, 22%

149, 17%

218, 24%

328, 37%

# of Patents At Issue  

1 2 3 to 5 6+

Filing multiple IPRs is often necessary after a lawsuit is filed – because of the number of patents asserted

12

165, 35%

119, 25%

115, 24%

76, 16%

Number of IPRs Filed within 365 Days of District Court Litigation Service

1 2 3 to 5 6+

Filing more than one IPR per patent (by a company or group) is done in one-third of cases

13

282, 59%102, 21%

69, 15%

22, 5%

Max # of IPRs Filed Within 365 days post‐District Court Service Per Patent

1 2 3 to 5 6+

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Most petitions are filed about 9 months after a petitioner is sued for infringement

All IPRs

Less than half of patent owners file preliminary responses, and the number has been falling

15

10, 1%

602, 43%

788, 56%

Overall Preliminary Responses

Waived Filed Not Filed

Patent owner preliminary responses don’t have much of an impact on institution rates

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Preliminary IPR Win Rates

At the highest level of abstraction, IPR appears to be about as effective as inter partes reexam

18

41%

92%89%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

District Court (2010-2012 prior art defenses) Inter Partes Reexam (instituted petitions) Inter Partes Review (instituted petitions)

Composite (Partial + Complete) Invalidity Win Rate

But a closer look reveals that IPRs have a much higher complete invalidation rate than inter partes reexamination

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31%

61%

8%

65%

22%

13%

0%

10%

20%

30%

40%

50%

60%

70%

All Claims Canceled orDisclaimed

Some But Not All ClaimsCanceled or Amended

No Claims Canceled orAmended

Inter Partes Reexam vs. Inter Partes Review

(Excludes denials of petitions)

The average claim-based win rate for IPRs is 78% overall and 83% for instituted claims

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78%

83%

65% 67% 69% 71% 73% 75% 77% 79% 81% 83% 85%

Win Rate for Petitioned Claims

Win Rate for Instituted Claims

Average IPR Petitioner Win Rates (Only petitions with at least one claim instituted)

Win rate for litigation-related petitions is higher than petitions outside of litigation

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58%

60%

62%

64%

66%

68%

70%

72%

74%

76%

Litigation‐related No litigation

Invalidation Rates: Lit. v. Non‐litigation(# invalidated / # challenged)

Strategies for Using Post-Grant Proceedings to Resolve Litigation

Techniques for handling three common categories of cases

Case 1 – Simple Case Strong invalidity arguments on all asserted claims

Limited number of asserted patents/claims

Case 2 – Large Case Strong invalidity arguments on all asserted claims

Large number of asserted patents/claims

Case 3 – Complex Litigation Strong invalidity arguments covering only a portion of asserted claims

Large number of asserted patents/claims

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IPR Strategies for Case 1

Simple Case – Limited ClaimsStrong invalidity arguments on all asserted claims

Limited number of asserted patents/claims

If you are going to file, position yourself for success by taking action early

File immediate motion to stay litigation

File petition for inter partes review

Identify likely asserted claims

Immediately search for prior art and retain an expert

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A stay pending IPR is not guaranteed

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Contested Stay Motions (2012-2014)

Granted (136)Granted In Part (6)Denied (70)

Overall Win Rate = 65.6%

LegalMetric Nationwide Report Stay Pending Inter Partes Review (Aug 2012-June 2014)

Some top patent jurisdictions appear to disfavor a stay pending IPR

E.D.Tex. – 20.8% grant rate for contested stay motions (12 motions)

M.D.Fla. – 33.3% grant rate for contested stay motions (6 motions)

D.Mass. – 37.5% grant rate for contested stay motions (8 motions)

D.Conn. – 50.0% grant rate for contested stay motions (2 motions)

S.D.Cal. – 58.3% grant rate for contested stay motions (12 motions)

27LegalMetric Nationwide Report Stay Pending Inter Partes Review (Aug 2012-June 2014)

Results from early-filed IPRs are usable at trial in almost all venues—if necessary

28

20.8

34.6

21.4

31

30.8

33.1

17.6

37.6

32.4

18

0 5 10 15 20 25 30 35 40

TXED

DED

CACD

CAND

CASD

ILND

FLSD

NJD

NYSD

PTAB

Months

Median Time to Trial Top Ten Patent Venues

IPR filing delay can cost you a stay and render results typically unusable in expert reports or at trial

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21.4

31

33.1

20.8

32.4

34.6

37.6

17.6

30.8

12 18

0 5 10 15 20 25 30 35 40

CACD

CAND

ILND

TXED

SDNY

DED

NJD

FLSD

CASD

PTAB

Months

Median Time to TrialTop Ten Venues

IPR Strategies for Case 2

Large CaseStrong invalidity arguments on all claims

Large number of asserted patents/claims

Defining the case is critical to determine IPR strategy in large cases

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Immediately search for prior art and retain an expert

Identify likely asserted claims; or push for early infringement contentions

Limit the number of asserted claims

Cannot limit the number of asserted claims

Manage as a Category 1(simple case)

Manage as Category 3(complex case)

IPR Strategies for Case 3

Complex CaseStrong invalidity arguments covering only a portion of asserted claims

IPRs can be successful even when some asserted claims survive

• Invalidate broadest claims• Focus damages on dependent claimMinimize damages

• Invalidate broadest claims• Design product around remaining claims

Protect alternate design

• Estoppel prohibits most invalidity arguments from being used at trial

• But some arguments remain

Set up further invalidity case for trial

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