Patent Dispute Report 2014-2019 (Photo: Unified Patents)

The first half of 2019 is in the books and Unified Patents has already crunched the numbers on patent litigation (you can view the full report here). Two notable findings: Suits by nonpracticing entities (NPEs) are on the comeback in district courts, while Patent Trial and Appeal Board filings are substantially down for the first time in years.

Some 660 administrative challenges to patent validity were filed at the U.S. Patent and Trademark Office's PTAB in the first half of the year. That puts petitions on pace for 1,320 this year, which would be a 24% drop from the 1,748 average for the last five years. (Filings had been remarkably steady up till now, numbering 1,702, 1,793, 1,732, 1,796 and 1,717 over the previous five years.)

Nate Kelley, the former PTO solicitor and acting PTAB chief judge who's now a partner at Perkins Coie, said that new rules governing institution decisions may be coming into play. He notes the board is increasingly willing to invoke its Section 325(d) discretion to deny multiple petitions raising the same prior art or arguments (even from different petitioners). “There is a perception that we are inching towards a one-and-done regime,” Kelley said. “The fact that a first petition was denied can be the very reason why a second petition will be denied. As a result, there is probably a lot more care going into each and every petition.”

Former PTAB Judge Scott Kamholz, who now practices at Covington & Burling, said the declining institution rate in general could be discouraging petitioners. PTAB decisions not to institute proceedings don't stop accused infringers from putting on the same invalidity defense in district court. But in general, “district judges don't like it if you come into court with something that couldn't pass muster at the institution stage,” Kamholz said.

Kamholz thinks a lot of other factors could be in play too. A strong economy could have business leaders more focused on building their companies rather than fighting over patents; the Supreme Court's SAS Institute decision has arguably put more teeth into the estoppel rules; and, paradoxically, the PTAB's own success at cooling off district court litigation might be catching up with it. “Dampening demand for patent litigation dampens the need for PTAB proceedings,” he theorized.

By this time next year, it will become clear if that last theory holds true, now that NPE filings are back on the upswing in district courts. (NPEs are entities that acquire patents to assert them against others. The PTAB was established in part to deal with NPEs that were perceived by some as leveraging the cost of patent litigation for nuisance value settlements.)

Unified Patents counts 1,730 new district court filings overall during the first half, including almost 900 in Q2, which it says is the most in a single quarter since 2017. That number was fueled in part by 550 NPE suits, which Unified Patents says is the most in a single quarter since 2016.

Unified Patents, whose mission is to deter abusive NPE activity, is doing its part to keep the PTAB busy. It filed 28 petitions during the first half, tied with Google for second most, behind only Apple Inc.