Report: Almost One-Third of IPR Proceedings are Settled

By Pedram Sameni
September 11, 2021

“With more than 10,000 IPR cases filed since the inception of IPR proceedings in September 2012, there is now enough history for both sides to predict the outcome of a case. As a result, when the patent owners feel the probability of victory is limited, they may decide to settle and cut their losses.”

Our recent IPR Intelligence report covers the inter partes review (IPR) filing activity at the Patent Trial and Appeal Board (PTAB) from July 1, 2016, through June 30, 2021.

Over the period of our study (July 1, 2016, through June 30, 2021) a total of 7,582 IPR petitions were filed, which shows a 1.6% decline compared to the five-year period we covered in our fourth annual report last year (July 1, 2015, through June 30, 2020). Nine-hundred and thirty law firms have represented patent owners and petitioners, while 5,341 attorneys worked for these firms. In the last five years, 2,658 companies have been involved in one or more IPRs, out of which 1,275 were on the petitioner’s side and 1,630 were patent owners.

IPR trends follow the district court trends, with a lag of about 12 months. Because district court activity has been gaining momentum in the last 12 months, we expected an increase in IPR filing. Year-over-year (YoY) comparison of the IPR data shows that the activity has fluctuated between 1,271 and 1,725 cases per year, reaching its maximum and minimum during 2017 and 2019, respectively. The following chart shows the IPR filing activity for the five years from 2016 to 2020, including the data for the first half of 2021:

IPR proeceedings

The most recent data shows that, in the first half of 2021, a total of 649 IPR petitions were filed, which is just 3.5% lower than the 673 petitions filed in the first half of 2020. However, during the second quarter that ended on June 30, IPR filing rose 13.5%, compared to the first quarter of 2021, which together with the increase in district court activity makes us think that this growth in filing activity will continue during the second half of 2021, and perhaps in 2022.

We also have reviewed the case-level status as reported by the U.S. Patent and Trademark Office, especially the case denial and institution rates. Our data shows that, as of August 20, 2021, for 7,582 cases filed through the end of Q2 2021, 78.1% (or 5,925 cases) have one of the following three statuses:

  • Terminated-Denied,
  • Terminated-Settled, and
  • Final Written Decision (FWD) Entered.

Not only these are the most common outcomes for IPRs, but also nearly all cases eventually will end up in one of these three categories. As analyzed in the data, about 6.0% of the cases are pending, which means they were filed within the last six months. Meanwhile, instituted cases cover about 7.6%, which eventually will settle or receive a final written decision. The remaining cases are terminated because of some procedural errors or adverse judgement. The pie chart below shows a summary of the outcomes for all cases filed from July 1, 2016 through June 30, 2021:

IPR proceedings

 

We noted that out of the 5,925 cases that had a non-pending status, 39% are denied institution. To better observe any patterns in the final outcomes, we compared case-level institution, settlement, and denial rates over the last five years. This data had to be limited at the end of 2019 in this study, as the data in the last 18 months is not complete and will change in the near future. The following chart shows the trends for non-pending cases from 2015 through 2019:

IPR proceedings

As seen in the chart above, the Final Written Decision rate has declined from 42% to 35% for the period between 2015 through 2019. At the same time, the denial rate declined from

43% to 38% during the same period. This has resulted in the increase of the settlement rate, which has risen significantly from 15% in 2015 to peaking as high as 31% in 2018; almost a third of cases have been settled.

We believe this has happened for a number of reasons. First of all, with more than 10,000 IPR cases filed since the inception of IPR proceedings in September 2012, there is now enough history for both sides to predict the outcome of a case. As a result, when the patent owners feel the probability of victory is limited, they may decide to settle and cut their losses rather than continuing the fight. On the other side, petitioners have become more careful in choosing the patent they want to challenge, as well as the prior art. This may have impacted the quality of cases that are brought before the PTAB. For the same reason, we observed a decline in the denial rate. Again, we believe petitioners choose higher quality cases and only proceed with an IPR if they find a quality piece of prior art.

The Author

Pedram Sameni

Pedram Sameni is the CEO and founder of Patexia, an online platform launched in 2010 to connect IP professionals from corporations, law firms and universities all around the world. Pedram’s goal in founding Patexia is to bring transparency and efficiency to the IP system and as a result, help companies better assess, manage and utilize their IP assets. Pedram received his PhD in Electrical Engineering from the University of British Columbia in Vancouver, Canada and worked for several high-tech companies including International Rectifier, PMC-Sierra and Foveon in different capacities before founding Patexia.

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There are currently 1 Comment comments. Join the discussion.

  1. jacek September 12, 2021 10:50 am

    This report is showing a false picture.
    No statistics show outside of the expensive IPR system “Efficient infringement.” cases not pursued by start-ups or inventors because of lack of funding.

    With the $450k reportedly needed for each IPR having this amount at disposal, I would be tomorrow on the plane to the EU or China to start my Start-up there.
    Not have to worry anymore about this convoluted, Supreme fools-infected US legal system.

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