Intellectual Property

3 Takeaways From The Lex Machina 2022 Patent Report

The thoughtful use of litigation analytics can be a very effective way of making sure that we are in the best possible position as IP litigators to advise our colleagues and clients.

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intellectual-property-law-300×169In what has become an annual tradition, I was happy to hear from the good folks at Lex Machina that their 2022 Patent Litigation Report was being released. As readers of this column know, I am a firm believer that thoughtful use of litigation analytics can be a very effective way of making sure that we are in the best possible position as IP litigators to advise our colleagues and clients. In fact, we are approaching the point where my memory is starting to fade about how we practiced before the advent of companies like Lex Machina, considering how important the work that they do is in terms of presenting an accurate picture of how IP litigation is unfolding. As always, I highly recommend that readers register for the report and give it a read, as there may be more relevant information in the report than what follows for any given reader.

As is my wont, I would like to focus on three idiosyncratic takeaways based on my review of the report. In doing so, I’d like to illustrate some broader themes of what is really happening in current patent litigation, impacted as it has been by our ongoing exit from the pandemic.

First, I’d like to focus on what the report says is a trend of patent filings “consolidating more into the top three courts.” Second, I want to discuss what may be leading to the trend of “ANDA filings that continue to decline.” Third, I will investigate why Federal Circuit filings based on PTAB decisions also experienced a significant decline between 2020 and 2021.

We can start with a look at what the report says about the phenomenon of nearly 60% of patent cases being filed in the three leading districts for patent filings — the Western and Eastern districts of Texas and the District of Delaware. It is well-known by now that the “reason for this drastic shift is due to Judge Albright’s concerted efforts to attract patent cases, with the result that an increasing number of patent cases are funneled to the Western District of Texas.” At the same time, the stark decline in case filings between 2019 and 2021 in the once-second and now-fourth most-popular district — the Central District of California — is illustrative of the fact that both quick-hit and litigation-funded plaintiffs are nearly always Texas-first in terms of their venue choice. In fact, I would submit that Delaware’s continued popularity is being sustained by the venue limitations imposed on plaintiffs by TC Heartland — and that but for those limitations, Texas would be even more popular than it already is.

The report notes, however, that it remains an open question as to whether enthusiasm for the Western District of Texas will cool based on the Federal Circuit’s proclivity to transfer cases out of the district via mandamus petitions. For quick-hit plaintiffs, however, transfer is not really a part of the filing calculus. And for funded cases, as long as litigation funders maintain a Texas-or-bust mindset, we can expect to continue to see the two Texas districts among the most popular ones for patent filings for some time to come. Likewise, the report suggests that further movement in terms of venue filing popularity might be seen based on the expiration of the Patent Pilot Program in some districts as of July 2021. But it is hard for me to see that impacting much on a plaintiff’s choice of venue, especially considering how restrictive a choice most plaintiffs face in the first place.

Next, it is of interest for those with pharma patent litigation experience to consider the report’s findings with respect to ANDA cases. As would be expected, prominent generic pharmaceutical makers like Teva and Lupin are represented on the list of most frequent patent defendants. Likewise, ANDA cases would be expected to move quicker than your average patent case, whether because they are tried to the bench rather than juries or because damages (and even infringement sometimes) are not considered. Another contributing factor that the report points to is the relative sophistication of the parties involved, which helps move matters along faster. At the same time, the number of ANDA case filings has dropped steadily from 410 in 2017 to only 253 in 2021. Part of that decline may be due to the consolidation that has taken place in the generic pharmaceutical industry, as well as an increased willingness of parties to see if a prelitigation settlement can be reached — even as the report notes that once-filed “ANDA cases are less likely to settle early.” There may be other contributing factors, whether on the FDA side of things or just the general economic considerations of mounting expensive attacks on branded drugs in an uncertain commercial environment. At a minimum, it will be interesting to see if things stabilize in terms of post-pandemic ANDA case filings, or whether the decline will continue over time.

Finally, the steep decline in appeals to the Federal Circuit from PTAB decisions, from 555 in 2020 to just 334 in 2021 is worth some discussion. As the report notes, PTAB operations were “essentially uninterrupted during the pandemic” which “likely contributed to the fact that PTAB petitions increased in 2020 for the first time since 2017.” Yet, appeals to the Federal Circuit declined significantly, which the report posits is “perhaps due to the clearer standards set forth by the USPTO and the Federal Circuit Court in 2019.” While additional clarity on scope of review and appellate standards of review is a likely contributor to the decline, I would also suggest that the sub-25% reversal rate of PTAB decisions by the Federal Circuit was another major contributing factor. It will be interesting to see if the reversal rate goes up based on fewer appeals being filed, since we would perhaps expect that the parties choosing to appeal may have a stronger basis on which to do so than if appeals from the PTAB to the Federal Circuit were just something done as a matter of course.

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Ultimately, and as always, the great thing about the report is that it has useful information for anyone impacted by patent litigation. And different people reading the report are likely to focus on the takeaways that are most germane to them. At bottom, however, we should once again be grateful to have had work to do over the past year, despite the challenges that continue to present themselves worldwide. Thanks once again to Lex Machina for giving us a snapshot of what our collective efforts resulted in.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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