Lex Machina Q1 2017 Litigation Update
938 patent cases were filed in the first quarter of 2017. This was the lowest per-quarter filings of any quarter since 2011 Q3 (although just barely – there were 963 cases filed in Q1 of 2016). From last year’s average of 1130 cases per quarter, Q1 is down about 17%.
Despite the low volume, case filings rose month-by-month during the first quarter of 2017 (see Fig. 2), and remain within the pattern established in 2016. Historically, the first quarter has often been lower than the year’s final average.
The dramatic spike in 2015, apparent in Figure 2, was caused by the end of Form 18.
Fig. 1: Patent cases filed, 2011 – 2017 Q1, by quarter
Fig. 2: Patent cases filed, 2014 – 2017 Q1, by month
More patent cases (33% of those filed in 2017 Q1) were filed in the Eastern District of Texas than in any other jurisdiction. The percentage of patent litigation in the Eastern District of Texas had been increasing during the course of 2016, from 30% in the first quarter to 41% in the fourth quarter.
The District of Delaware remained the second most frequently used jurisdiction, with just over 13.8% of cases filed in 2016.
Fig. 3: Top districts by patent cases filed in 2017 Q1
Fig. 4: Top districts by patent cases filed 2011-2017 Q1
Fig. 5: Eastern District of Texas and District of Delaware, 2014-2017 Q1 by quarter
To gain more insight into patent litigation, cases can be broken down according to whether the plaintiff* has filed at least 10 other cases within a 365 day span (high volume) or not (low volume). This simple behavioral measure reveals that patent litigation in the Eastern District of Texas and in the District of Delaware differs starkly from litigation in other districts: a far higher percentage of E.D.Tex. and D.Del. litigation is from high volume plaintiffs.
Moreover, in those two districts, high volume plaintiffs drive most of the volatility in case filings, both in time (i.e. spikes and dips within Eastern Texas) and between districts (i.e. Delaware’s decline corresponds to the rise in Eastern Texas). In contrast, litigation by low volume plaintiffs is relatively consistent across time and districts.
Although high volume cases in the most recent quarter may be undercounted due to the timing of filing campaigns, there was, nonetheless, less high volume activity in 2016 than in 2015.
* or more precisely, whether a plaintiff (or declaratory judgement defendant) has filed (or been subject to a declaratory judgment case) in at least 10 other cases within 365 days. Although the values of 10 and 365 are somewhat arbitrary, the conclusions hold for a range of these values.
Fig. 6: Plaintiff volume class, 2011-2017 Q1
The Patent Trial and Appeal Board
The first quarter of 2017 saw a record number Inter Partes Review (IPR) petitions filed at PTAB (548 petitions). The number of IPRs filed has increased over each of the last four quarters. The top patent owners, by number of IPRs filed against them this quarter, are Goda Kaisha IP Bridge 1 and Rovi Guides, Inc.
There were also 11 Covered Business Method (CBM) reviews, a number consistent with previous figures.
Fig. 7: CBM and IPR petitions, 2012 – 2017 Q1, by quarter
Trademark litigation filing trends have been more predictable than patent trends (or copyright). The filing of new trademark cases has declined at a very slight rate over the last few years. The first quarter of 2017 (732 cases) represents continuation of this trend.
For the curious, the spike in trademark case filings seen below in the third quarter of 2014 was driven by a flood of cases filed in the District of Minnesota against the National Football League, generally by former players over usage of their likeness. These cases account for about 461 of the 1,425 cases filed in Q3 2014. Without these cases, Q3 2014 appears otherwise consistent with the quarters surrounding it.
Fig. 8: Trademark cases filed, 2009 – 2017 Q1, by quarter
Lex Machina divides copyright litigation in the U.S. district courts into two subtypes: file sharing cases (those having John Doe or anonymous defendants and accusations based on file sharing technology such as BitTorrent), and all of the other, more traditional cases. As explained in Lex Machina’s Copyright Litigation Report, these cases follow very different dynamics.
From its apogee in Q1 of 2015, the number of file sharing cases filed each quarter declined until reaching a low of 249 cases in Q2 of 2016. Since then the number has risen, but not nearly to the levels seen in 2015. In the first quarter of 2017, 358 file sharing cases were filed, compared to 590 other copyright cases.
File sharing cases are largely driven by Malibu Media. (See Fig. 10)
Fig. 9: Copyright cases filed, 2011 – 2017 Q1, by quarter
Fig. 10: Copyright cases filed by Malibu Media, 20011 – 2017 Q1, by quarter
More cases were filed in the first quarter of 2017 (443 cases) than in any quarter on record (going back to 2009, with the next closet being 2009 Q1 with 435 cases).
The top five districts accounted for roughly half (51%) of the cases filed in 2016. Those districts are the Southern District of New York (18.1%), the Central District of California (9.3%), the Northern District of California (8.8%), and the District of Delaware (8.1%) and the District of New Jersey (6.8%).
Fig. 11: Securities cases filed, 20011 – 2017 Q1, by quarter
Fig. 12: Top districts by securities cases filed, 2017 Q1, by quarter
The first quarter of 2017 (149 cases) represents a continuation of the previous three quarters (137, 122, and 146 cases), but is still down from the peak that occurred from the third quarter of 2015 into the first quarter of 2016.
Fig. 13: Antitrust cases filed, 2011-2017 Q1, by quarter