2015 litigation trends highlight increased patent litigation, decreases in file sharing cases

On Thursday, January 7th, legal data analytics firm Lex Machina published a report on litigation trends through 2015 for a range of intellectual property sectors. In general, the published data indicates that patent infringement cases rose through the 2015 calendar year while trademark infringement cases remained consistent and copyright infringement suits dropped sharply compared to recent quarters.

2015 saw the second-most patent infringement cases brought to court, according to Lex Machina’s data. A total of 5,830 patent cases were filed, a 15 percent increase over the 5,070 patent cases which were filed during 2014. 2015 still trailed behind 2013 in terms of patent infringement cases; that year set the high-water mark for patent infringement cases with 6,114 cases filed in that year.

On a quarter-by-quarter basis, there’s evidence of a fair amount of volatility in the filing of patent infringement cases. 2015 was the first year since 2012 that patent infringement filings increased between the third and fourth quarters, and this year that rise was dramatic. There were 1,117 patent infringement cases filed during the 3rd quarter, which rose to 1,577 infringement cases in the fourth quarter. That 41.2 percent increase in cases filed is the largest quarter-over-quarter rise in patent infringement case filing activity during the past ten years.

We spoke with Brian Howard, a legal data scientist with Lex Machina and the author of Thursday’s blog post, who was able to help us break down this data a little further. According to Howard, part of the reason behind the large jump in patent infringement case filings during the fourth quarter could be attributable to the U.S. Supreme Court’s decision to adopt a proposal submitted by the Federal Rules Advisory Committee to abolish Form 18 for patent infringement filings. The increased filings during the fourth quarter, which is when the decision to abolish Form 18 was implemented, “suggests that perhaps plaintiffs are aware of the rule change and are trying to get cases filed under existing Form 18 standard,” Howard said. This is reasonable given the belief that the replacement form for pleading patent infringement will likely require a higher standard of reporting than Form 18, which would allow a party alleging infringement to survive a motion to dismiss without listing the patents being infringed or what products were guilty of infringement. Howard said that the one-day patent infringement cases filed on November 30th, the final day that Form 18 would be accepted, eclipsed the previous one-day high-water mark for case filings seen in April 2014, which Howard said also came at a time when rumors of patent reforms which weren’t perceived to be plaintiff-friendly were being circulated.

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2015 continued the dominance of the Eastern District of Texas as the court venue of choice for the vast majority of patent infringement cases filed in United States courts. There were 2,540 patent infringement cases filed in this district court, representing 43.6 percent of all such cases filed in 2015. Going back over the last two and a half years, there are only two quarters where a district court other than E.D. Tex. handled more patent infringement cases. However, that court, the District of Delaware, has seen its prominence dip to less than 10 percent of patent infringement cases during 2015. And yet D. Del. handled the second largest number of patent infringement filings last year, which means that E.D. Tex. handled more infringement cases than every other district court combined (without counting D. Del.). The Lex Machina report also indicates that much of the case volume at E.D. Tex. is contributed by what the report deems to be high volume plaintiffs which are filing at least 10 cases per year.

The Lex Machina report doesn’t point to a data-centric indication of why the Eastern District of Texas is so popular among patent infringement plaintiffs, but there are plenty of reasons for concern. As has been reported elsewhere on IPWatchdog, the vast majority of patent cases filed in E.D. Tex. are assigned to Judge James Rodney Gilstrap. This means that one single judge oversees as many as 20 percent of all patent infringement cases filed in the entire country, perhaps more. That seems slightly less than democratic, to put it mildly.

Activity at the Patent Trial and Appeal Board (PTAB) has been in a fairly consistent pattern of activity. Since the second quarter of 2014, inter partes review (IPR) filings at PTAB have fluctuated between about 400 filings and 460 filings per quarter. According to Howard, this up-and-down activity in IPR filings is also reflected on a month-by-month basis when looking at that data. The fourth quarter of 2015 saw 375 IPR filings, the lowest total since the first quarter of 2014. One explanation proffered by Howard is that this leveling off of IPR filings could reflect the fact that weaker patents and claims eliminated by the IPR process could be requiring fewer re-examinations, although district court actions also play a large role in IPR filing activities.

In the realm of trademarks, infringement cases have been pretty steady in the years between 2005, when 3,820 trademark infringement cases were brought to court, and 2015, which saw a total of 3,449 such cases filed. The high-water mark for trademark infringement cases this decade was set in 2014, when 4,282 trademark infringement cases were filed. According to the Lex Machina report, these 2014 totals ballooned thanks to a whopping 1,407 cases filed in the third quarter of 2014. About one-third of those cases (461) were filed in the District of Minnesota by former National Football Players suing the league for the use of their likenesses in multimedia content. Players sued the NFL for the league’s use of video recordings of former NFL players in NFL Films productions. Minus those infringement cases, 2014 falls into the same range as every other year over the past decade in terms of patent infringement cases.

A decrease in copyright infringement cases underscored a very interesting trend in that area of intellectual property enforcement. Copyright infringement cases related to file sharing technologies rose from 70 in the first quarter of 2011 up to a high point of 905 such cases filed in the first quarter of 2015, almost doubling the number of other copyright infringement cases filed in that quarter (514). However, those totals declined sharply by the end of 2015 and the 533 file sharing cases filed in that year’s fourth quarter was outstripped by the 535 other copyright infringement cases filed for the first time since the third quarter of 2014.

We were given even more insight into the unusual activity in copyright infringement cases thanks to a copyright litigation report issued by Lex Machina last August. As this report clearly indicates, the vast majority of file sharing cases have been filed by Malibu Media LLC, which has been the plaintiff in 4,332 copyright infringement cases related to file sharing since 2009; the next highest number of file sharing cases filed by one firm in that time is a paltry 274. Interesting to note is the fact that Malibu Media and other firms bringing forward file sharing cases are producers of adult media and erotic videos. This would explain why defendants are more willing to settle file sharing cases before they go to court; since 2009, file sharing cases have seen a 90.6 percent settlement rate, much higher than the 64.1 percent settlement rate seen over that time period for every other type of copyright infringement suit.