By Brian Howard, Legal Data Scientist & Director of Analytics Services
This blog post takes a deeper dive into some of the data and conclusions published in Lex Machina’s 2013 Patent Litigation: Year in Review, more closely examining the increase in patent cases filed in 2013 and investigating the roles played by the passage of the America Invents Act (the AIA), by patent monetization entity plaintiffs (PMEs), and by design patents in this rise.
This post also analyzes a few of the surprising findings from the Year in Review Report regarding Judge Gilstrap in the Eastern District of Texas.
The 2012-2013 rise and the America Invents Act (AIA)
Figure 2 of the Year in Review Report graphs the filing of new patent cases from 2005-2013, showing a dramatic increase in the number of cases filed per month after 2011:
Viewed coarsely by year, 2013 represents an all-time high for the number of patent cases filed:
Between 2012 and 2013, the number of patent cases filed per year increased by about 670 cases – a 12.4% rise.
The America Invents Act (AIA) , key portions of which became effective in September, 2011, changed the procedural rules regarding joinder, or the number of defendants a plaintiff could sue in a single case. Before the AIA became effective, a plaintiff could sue four or five defendants in a single case. But after September, 2011, when the change became effective, the plaintiff would have to bring a separate case against each defendant.
These changes to the joinder rules are responsible for much of the rise in the number of patent cases since 2011.
The graph below counts each case multiple times, once for each defendant.  Thus, a pre-AIA plaintiff suing four defendants yields the same four records as a post-AIA plaintiff bringing four separate cases.
Viewed this way, 2013 still represents an increase in case filings over 2012, albeit a much less dramatic one (approximately 1.6%).
Examining this same data (counting a case multiple times, once for each defendant) on a month-by-month basis shows that, in the peak year of 2011, most of the activity occurred in the month of the implementation of the AIA (September 2011). In contrast to the charts above simple counting cases that suggest litigation is on the rise, the recent years of 2012 and 2013 are relatively consistent with the the earlier years of 2010 and 2011 when counting cases by defendants to neutralize the effects of the AIA, with the exception of September 2011.
In fact, looking at August, September, and October of 2011, the spike in case filings occurred during the two weeks immediately preceding effective date of the AIA’s joinder provisions.
Patent Monetization Entities (PMEs)
Many have asked about the role of PMEs in the trends identified in Lex Machina’s 2013 Year in Review. Although we do not classify litigants by their business model, we can estimate the role of PMEs by partitioning our data into two sets – one where the plaintiff filed at least 10 cases (counting by defendants) per year, and those where the plaintiff filed fewer.
Litigation by low-volume, infrequent plaintiffs has remained remarkably consistent over the past nine years, averaging approximately 6% change from year to year. In contrast, “Frequent filers” are responsible for an generally increasing number of disputes, peaking in 2011 at 11,617 – an increase of just under 50% from the year before.
Most patents are utility patents, which protect a novel arrangement of components in an apparatus, a composition of chemicals in a compound, or a series of steps in a method, to perform some useful, function or purpose. In contrast, other patents (design patents) protect non-functional aspects – the novel ornamental or decorative features of a product.
Design patents have recently received press attention in cases such as Apple v. Samsung (in which multiple design patents were asserted), and many have asked about relative significance of these patents.
Since 2005, there have been, on average, about cases 56 per quarter (or about 225 per year) in which at least one design patent has been asserted.
So cases involving design patents constitute a small percentage of patent litigation compared to the number of cases involving only utility patents (historically, just under 10% and declining to less than 5% in 2012 and 2013).
The Central District of California is the most popular venue for cases involving design patents.
In the 2013 Year in Review, Lex Machina highlighted the fact that Judge Rodney Gilstrap of the Eastern District of Texas had been assigned an astonishing 941 patent cases in 2013, more than twice as many cases as the next busiest U.S. District Court Judge (Leonard Stark of Delaware, 399 cases), and more than triple the number of cases assigned to his next closest Eastern Texas colleague (Leonard Davis, 263 cases).
Here in an analysis of Judge Gilstrap’s case-load by classifying each case according to the number of total cases that plaintiff filed in 2013.
Nearly one third of Judge Gilstrap’s 2013 cases were brought by relatively infrequent plaintiffs who filed fewer than 10 cases in 2013, as shown in the lightest three bands (twelve to four o’clock on the pie chart). Just under a third of the cases were filed by plaintiffs filing 10-19 cases (shown in the bottom most slice of the pie chart). The remaining approximate third of cases were filed by only 13 plaintiffs:
1. Long Corner Security LLC (53 cases)
2. Innovative Wireless Solutions LLC (41 cases)
3. Lodys Group, LLC (37 cases)
4. Lakshmi Arunachalam (31 cases)
5. Harcol Research, LLC (31 cases)
6. Pi-Net Int’l, Inc. (30 cases)
7. Vantage Point Tech., Inc. (27 cases)
8. NovelPoint Security, LLC (26 cases)
9. Eclipse IP LLC (23 cases)
10. Penovia LLC (22 cases)
11. LPL Licensing, LLC (21 cases)
12. Phoenix Licensing, LLC (21 cases)
13. eDekka LLC (20 cases)
Compared to 2012, Judge Gilstrap’s caseload in 2013 increased almost across the board, (most dramatically increased in cases where the plaintiff filed between 10 and 19 other cases) but actually declined with respect to the most litigious plaintiffs.
Postscript: A Strange PACER Story
In Figure 20 (Plaintiffs with Most Patents Asserted in Cases Open during 2013) of the 2013 Year in Review, many were surprised by the number 1 plaintiff, Telefonaktiebolaget LM Ericsson (“LM Ericsson”). In response to queries, Lex Machina investigated the 103 patents: In 2013, LM Ericsson was erroneously added in PACER as a plaintiff to the Apple-Samsung case (N.D. Cal, 5:11-cv-1846), in which it was actually participating as a third party. At the time the data for the 2013 Year in Review was compiled, this PACER record caused the false attribution of the patents at issue in that case to LM Ericsson, leading Lex Machina to mistakenly report LM Ericsson as the plaintiff with the most patents asserted in cases open during 2013.