Open to Close: An Empirical Study of Patent Case Termination Times
Over the past decade, both Congress and the Supreme Court have instigated a series of substantial changes to the United States patent system. For instance, Congress passed the America Invents Act (“AIA”) in 2011, and the Supreme Court revitalized the patentable subject matter requirement of Section 101 and altered the indefiniteness standard of Section 112 in its 2014 Alice vs. CLS Bank1 and Nautilus v. Biosig Instruments2 decisions. Furthermore, 2017 saw a shift in the previously established jurisdictional distribution of patent cases with the TC Heartland v. Kraft Food Group Brands3 decision. These catalysts have combined to alter a variety of aspects of patent litigation. In light of this, the ability to better understand certain aspects of the current landscape — such as the potential length of a case — may facilitate informed strategic decision making and more cost-effective case management by counsel. This article examines patent case termination and time-to-milestone data collected from Lex Machina and Docket Navigator to provide a recent picture of the progression of patent cases. Not only does the data suggest that patent case milestone times have decreased during the last decade, several factors have also been found to affect case duration, such as the jurisdiction in which suit is brought, the industry involved, and the number of patents-at-issue.
The median time to milestones for patent cases has decreased since 2007 across all district courts.
Data collected from Docket Navigator, as shown in Figure 1 below, demonstrates a general downward trend in the time taken for patent cases to reach critical milestones.4
Figure 1
This decrease in time-to-milestone appears despite an appreciable increase in the number of cases filed in 2012 and 2013. This jump in the number of patent cases corresponds to the enactment of the AIA, which imposed new anti-joinder rules that curtailed the practice of naming multiple defendants in a single infringement suit. Most apparent is the 6.42% decrease in the time to trial and 6.75% decrease in the time to a defendant’s motion for summary judgment.5 A number of factors could have impacted the timing of these milestones, such as the 2012 and 2014 Mayo and Alice decisions, which contributed to an increase in the early invalidation of patents on Section 101 grounds.6
A decrease in median time to milestones for patent cases corresponds with Supreme Court decisions in 2014.
Figure 2 shows the breakdown of Post-Nautilus and Alice milestone data. These cases were selected as benchmarks because they impacted how patents were litigated, compared to the 2017 case TC Heartland, which affected where patents were litigated.
Figure 2
Here, the data demonstrates that the time needed to reach critical case milestones decreased across the board7 in the three years following the month that the Supreme Court decided Nautilus8 and Alice (June 2, 2014 and June 19, 2014, respectively). Again, the time to a defendant’s motion for summary judgment decreased by a noticeable amount — 7.56% — that could likely be attributed to the increased Section 112(b) and Section 101 patent invalidations occurring in the wake of Nautilus and Alice.9
The most active patent courts also demonstrate a decrease in time to milestones over time.
For the past decade, patent litigation has become increasingly concentrated in a small number of jurisdictions, most notably the District of Delaware, the Eastern District of Texas, and lately the Western District of Texas (Waco Division). The median times to milestones from Delaware and Eastern District of Texas, as shown in Figures 3 and 4, further illustrate the consistent downward trend described in the data from Figures 1 and 2 above.10
Figure 3
The noticeable spike in the District of Delaware patent case volume in 2013 is possibly due to the introduction of the AIA joinder rules, noted above in reference to Figure 1, combined with the fact that Delaware is a popular district for ANDA litigation. Furthermore, the District of Delaware held a Patent Study Group in 2014, which prompted individual judges to adopt procedures designed to more efficiently resolve patent cases.11 The adoption of these procedures likely contributed to the noticeable decline in median milestone times seen from 2013 to 2014.
Figure 4
In the Eastern District of Texas, the increase in both patent case volume and median milestone times in 2011-12 likely occurred due a combination of the enactment of provisions of the AIA in 2012 and the retirement of Judge Ward and Judge Everingham in 2011 and Chief Judge Folsom in 2012. This left a reduced number of judges to handle an increased patent caseload.
Ultimately, in the aftermath of the 2014 Supreme Court decisions, the median times to case milestones appear to be stabilizing — in the case of the District of Delaware — and converging — in the case of the Eastern District of Texas. This likely reflects the continued institution of procedures12 and local rules13 to control court efficiency and the fact that patent invalidity precedent for both summary judgment and early dispositive motion decisions applying the respective Supreme Court tests has been established within the respective jurisdictions since 2014.14
Patent litigation activity in the five district courts with the highest volume of patent cases demonstrates that the jurisdiction, industry, and number of patents-in-suit involved could affect case duration.
The remaining figures represent empirical analysis of Lex Machina data on 775 individual patent cases collected from the top five patent courts between June of 2014 and March of 2020.15 The cases within the dataset resolved in favor of one party (i.e., not settlement, transfer, or consolidation termination events16) and have filing dates that postdate the dates of decision for the Nautilus and Alice cases. These final graphs help illustrate several defining characteristics of resolved cases in order to provide a picture of recent patent adjudication in the most active patent courts.
The reference point for the following graphs is the median time to case termination for the entire 775-case dataset: 402 days, or approximately 13.4 months. The resulting data examines whether specific case characteristics occur with more or less frequency above this reference point.
As expected, the data in Figure 5 suggests that jurisdiction impacts the time in which a case reaches termination.
Figure 5
The above results correspond with the reported median termination time for each court, as provided by Lex Machina.17 The District of Delaware and the District of New Jersey are listed as having the highest median termination times (276 and 263 days, respectively), the Northern District of California straddles the middle (222 days), and the Central District of California and the Eastern District of Texas follow with the lowest median days to termination (186 and 182 days, respectively).
Figure 6 shows the number of Section 101 and Section 112 invalidity decisions within the dataset.
Figure 6
Of the 775-case sample, 133 cases, or 17.16%, were resolved based (at least in part) on invalidity grounds. As anticipated, patents are more commonly invalidated on Section 101 grounds at earlier stages of litigation (e.g., at the pleadings stage). Of the 24 cases over the median in which one or more of the patents-in-suit were invalidated, 15 of these cases involved over 3 patents-in-suit, indicating that these were likely more complex suits taking longer to resolve (as explained in reference to Figure 9 below). Additionally, the data bears out that it is more difficult to have a case resolved on definiteness grounds. In fact, only 20 cases of the total 775-case sample were listed as being resolved in favor of the defendant on this ground.
Figure 7 indicates the breakdown of the dataset by general industry.
Figure 7
As illustrated, a larger portion of cases involving life sciences occur above the median termination time for the dataset, while technology and non-life sciences cases occur with more frequency below the median.18 This result is unsurprising because more technology cases are filed in jurisdictions with shorter median times to termination, such as the Eastern District of Texas, while life sciences cases occur with more frequency in jurisdictions like the District of Delaware and the District of New Jersey that have longer median times to termination.
Figure 8 demonstrates the potential effect that party outcome may have on a case’s overall termination time.
Figure 8
Interestingly, a larger portion of the cases with resolutions that favored the defendant appeared above the median termination time for the dataset, while a larger portion of cases with resolutions that favored the plaintiff appeared below this median.
As expected, Figure 9 indicates that cases with a higher number of patents are more likely to last longer.
Figure 9
These results lend support to a finding that the probability of a longer time to case resolution increases as a case’s complexity increases.19
Conclusion
Ultimately, the above data reflects the consequences, intended or otherwise, brought about by the substantive and procedural changes to patent law that have occurred over the past decade. It is important to know how exactly patent cases are resolved — and accordingly how long this process takes. These findings indicate that the probability of a patent being involved in longer litigation is related to various factors, such as the jurisdiction of the lawsuit, the product industry involved, and the number of patents-in-suit. Having a better understanding of current patent litigation trends, and the forces influencing and creating these trends, can further facilitate effective management and decision making throughout the lifecycle of a patent suit — from its inception to its termination.
1 573 U.S. 208 (2014).
2 134 S. Ct. 2120 (2014).
3 137 S. Ct. 1514 (2017).
4 This data reflects cases with filing dates from 2007 to 2017 that reached critical milestones, even if those milestones were reached in subsequent years. Cases with filing dates from 2018 and 2019 were excluded from the sample to avoid skew: any terminated cases filed in 2018 and 2019 would be limited to a case duration of approximately 28 months.
5 It is possible that the increase in time-to-milestone from 2014 to 2015 across the milestone categories reflects a rush of plaintiffs to file cases under the then-existing Form 18 standard in the wake of the Supreme Court’s decision to abolish Form 18 for patent infringement filings. See Steve Brachmann, 2015 Litigation Trends Highlight Increased Patent Litigation, Decreases in File Sharing Cases, IP Watchdog (Jan. 8, 2016), https://www.ipwatchdog.com/2016/01/08/2015-patent-litigation-trends/id=64774/.
6 In Alice, the Supreme Court ruled that patent-eligible subject matter is determined based on a two-step test. First, a court should determine whether a claim is directed to a “judicial exception” to Section 101 — specifically a law of nature, an abstract idea or a natural phenomenon. If the answer to the first step is “yes,” then a court will examine whether there is “something more,” or an “inventive concept,” that transforms the otherwise ineligible claim into a patent eligible application.
7 The median time to jury trial decreased by only 1.5 months, however, which is not a substantial change. It is not likely that Nautilus and Alice would have resulted in shorter times to jury trial, so this result is expected. It is also possible that the time to claim construction decreased because of the introduction of IPRs by the Patent Office in 2012. This alternative way to challenge patent validity could have siphoned cases off from district courts and lowered the time to claim construction for remaining cases.
8 In Nautilus, the Supreme Court replaced the Federal Circuit’s test, which found claims indefinite under 35 U.S.C. § 112(b) only if they were “insolubly ambiguous,” with an arguably stricter standard that requires claims to “inform, with reasonable certainty, those skilled in the art about the scope of invention.” See Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120, 2125 (2014).
9David A. Kelly and Bradley T. Lennie, Less than a Year Later, Nautilus’s Impact on Claim Definiteness is Already Being Felt, 89 BNA Patent, Trademark & Copyright J. 1390 (2015) (finding that in the eight months since Nautilus, “the Federal Circuit and district courts [] applied the Supreme Court’s new test for definiteness to invalidate patent claims that might have survived under the previous regime” and that claims with terms of degree were “receiving particularly close scrutiny”); Robert Sachs, Alice: Benevolent Despot or Tyrant? Analyzing Five Years of Case Law Since Alice v. CLS Bank: Part I, IP Watchdog (Aug. 29, 2019), https://www.ipwatchdog.com/2019/08/29/alice-benevolent-despot-or-tyrant-analyzing-five-years-of-case-law-since-alice-v-cls-bank-part-i/id=112722/ (finding that between July 2014 and June 2019, there was a 1056% increase in the number of decisions finding ineligible claims and a 914% increase in the number of invalidated patents under Section 101).
10 There have not been any patent jury trials in the Western District of Texas, Waco Division in the last several years, which is why this venue is not included in Figures 3 and 4.
11 See Chad Stover, Another Delaware Judge Outlines New Patent Case Practices, Law360 (May 19, 2014), https://www.law360.com/articles/539183/another-delaware-judge-outlines-new-patent-case-practices.
12 Id.; see also Jeff Castellano, The Latest Pretrial Procedures in the District of Delaware, Law360 (Mar. 25, 2019), https://www.law360.com/articles/1142297/the-latest-pretrial-procedures-in-the-district-of-delaware (noting that “the saying goes that ‘the District of Delaware does not have patent local rules,’” but explaining that the district’s “Default Standard for Discovery, Including Discovery of Electronically Stored Information” provides for “a set of staged, alternating disclosures of contentions in patent cases”).
13 See Andrei Iancu et al., Real Reasons the Eastern District of Texas Draws Patent Cases – Beyond Lore and Anecdote, 14 SMU Sci. & Tech. L. Rev. 299, 309 (2011) (explaining how the Eastern District of Texas was a “trailblazer in setting out and implementing local patent rules” beginning in 2005, which both “promote the certainty of process and effective management of patent disputes” and “improve the structure and predictability of patent litigation”). For instance, the Eastern District of Texas adopted a “Model Order Focusing Patent Claims and Prior Art to Reduce Costs” as an appendix to its Local Rules in order to reduce the burden on the court and reduce patent litigation costs by focusing patent cases to the issues at the core of the dispute.
14 See, e.g., Smartflash LLC v. Apple, Inc., No. 6:13-cv-447, 2015 WL 661174 (E.D. Tex. Feb. 13, 2015); Tenon & Groove, LLC v. Plusgrade L.P., No. 12-1118, 2015 WL 82531 (D. Del. Jan. 6, 2015); Helios Software, LLC v. SpectorSoft Corp., No. 12-081, 2014 WL 4796111 (D. Del. Sep. 18, 2014); Loyalty Conversion Sys. Corp. v. Am. Airlines, Inc., No. 2:13-cv-655, 2014 WL 4364848 (E.D. Tex. Sep. 3, 2014).
15 Lex Machina lists the top five patent courts as the Eastern District of Texas, the District of Delaware, the Central District of California, the Northern District of California, and the District of New Jersey. The Western District of Texas is upcoming as a top patent court, but this district does not currently have sufficient termination data to draw meaningful comparisons to the other top courts.
16 Of the 6,351 cases filed and terminated in the Eastern District of Texas between June 2, 2014 and March 37, 2020, 129 cases terminated in favor of one party. In the District of Delaware, 260 cases terminated in favor of one party out of 4,106 cases filed and terminated during the aforementioned period. In the Central District of California, 110 cases terminated out of 1,666 cases filed. In the Northern District of California, 1,188 cases were filed during this period, with 67 reaching termination in favor of one party. Lastly, the District of New Jersey had 1,137 cases filed and 209 resolved in favor of one party during this time. The cases included in the 775-case dataset exclude cases involving antitrust, trademark, copyright, and other legal issues unrelated to patent law.
17 These dates are based on cases that terminated between April 7, 2015 and April 5, 2020.
18 Interestingly, in the cases filed in the top five courts between 2016 and March 27, 2020, fourteen of the top twenty longest-lasting cases were technology cases, while six were life sciences cases. This represents a 70% / 30% split between non-life science and life-sciences cases in the top twenty cases, compared to a 52% / 48% split in the entre 446-case sample for this period. This could indicate a developing trend. The 446-case sample size was too small to accurately conclude this, however, considering that the termination times for cases filed in 2018 and 2019 have to be shorter than 3 years (as explained above in note 1).
19 Case complexity likely further increases when the various patents do not disclose derivatives of the same concept. The effect of having multiple different subject matters disclosed by the patents-in-suit on patent case termination time was not examined for this data set.
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