Statistics reveal an agenda contrary with Unified Patents public persona and pronouncements
by: Patrick Anderson | June 21, 2017
With the Supreme Court seemingly very interested in continuing to have its say with respect to the patent trial regime imposed by the AIA, and emotions running high on both the Patent Owner and Petitioner sides of the arguments, we thought it would be interesting to review the available statistics to see if the “hype” was justified.
Given the concerns of patent owners that the AIA patent trials are being used by third parties to eradicate property rights, we elected to juxtapose the norms for patent trials with the success of a party committed to using the trial regime to challenge what it characterizes as “bad patents.” Upon reviewing the statistics for high-volume petitioners, it became clear that the best choice for that party was Unified Patents based upon the number of petitions filed and their self-proclaimed focus on one particular type of patent owner.
Lex Machina recently released their latest statistics on Inter Partes Review with a complete breakdown of the various possible outcomes at each stage. From this we learn that 53% of petitions are instituted, 22% of petitions are affirmatively denied, with the remainder 17% being settled, with procedurally dismissals at 8%, and disclaimed in at 1%.
From this, we can discern the true “institution rate” of 71% by excluding those cases where the petition is disposed of prior to the PTAB actually making a determination of whether the petition establishes a reasonable likelihood of prevailing. As the graphic above illustrates, the PTAB has instituted 2,847 cases (as of 5/31/2017) and affirmatively denied 1,160 petitions, resulting in a ratio of approximately 2.5:1.
In other words, the PTAB has been quite efficient, instituting 2.5 IPRs for every one that they deny.
It is against this backdrop that we examine one of the more prolific filers of IPR petitions. According to research gathered from Docket Navigator, Unified Patents has filed 75 petitions for Inter Partes Review as of June 16, 2017—enough to rank them at or near the top 10 petitioners identified by Lex Machina (which, as of May 31 showed a 2-way tie for 9th place with 75 petitions).
Of these, the PTAB has so far instituted a total of 20 (27%) with 16 still pending. In one case, the patent owner requested an adverse judgment prior to the institution decision. Excluding that case, and the 16 still awaiting an institution decision, Unified Patents successfully instituted 34% of its cases, compared to the 53% figure above for the PTAB as a whole.
The above comparison shows Unified’s denial rate to be double the overall average at the institution stage. Further, while Unified has no procedural dismissals reported, their denials still exceed average denials and procedural dismissals combined.
The PTAB as a whole institutes approximately 2.5 petitions for every one that is denied. Here again, as the chart to the right illustrates, Unified falls well below, with a ratio of 0.75:1.
Settlement rate presents another interesting point of comparison between Unified Patents and IPR petitioners as a whole. Lex Machina reports that 17% of filed petitions are settled prior to an institution decision, and 13% are settled afterward. However, post-institution settlements come from a smaller pool of overall petitions since they only involve those with a favorable institution decision. Thus, the actual settlement rate post-institution is approximately 24% (678 out of 2,847).
As the above figure illustrates, Unified’s settlement rate exceeds the average in both categories. Unified settled 20% (12 out of 59) of filed petitions prior to an institution decision, and one-third (5 out of 15) of their instituted cases.
Overall, it is clear that that Unified Patents files Inter Partes Review petitions that result in a poor institution-to-denial ratio. In addition, even though the petitioner has the upper hand in the post-institution phase of an IPR, with a distinct advantage in terms of leverage, Unified Patents settles with patent owners in this phase at a higher than average rate, indicating they are less likely than a typical petitioner to actually litigate an IPR through to a Final Written Decision.
As we continue this series, we’ll examine why, given Unified Patents’ professed business model, these statistics are intriguing and how, again given their business model, these statistics reveal an agenda not fully in keeping with Unified Patents public persona and pronouncements.