Patent Litigation and USPTO Trials: Implications for Patent Quality

Alan C. Marco, Chief Economist June 2015

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Motivation •  In a 2013 study, GAO recommended that PTO

consider investigating trends in patent infringement litigation, and whether that information could be linked to internal patent examination data to improve patent quality and examination

•  USPTO conducted a study and expanded the analysis to include IPR petitions

•  “Patent Litigation and USPTO Trials: Implications for Patent Quality” (Jan. 2015)

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Motivation •  Why focus on litigated and petitioned patents?

– Value – Uncertainty

•  Report also includes detailed analysis of the examination record of patents involved in PTAB decisions

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•  Lex Machina (GAO) data on patent litigation filings in federal district court –  Random sample of 500 lawsuits filed between 2007

and 2011 (100 per year) –  990 patents included in these lawsuits –  4% percent of all lawsuits for this period

•  We are interested in the incidence of first litigation

Data Sources Litigation

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Data Sources PTAB Data •  All completed IPR petitions filed from September 2012

through July 2014. –  Includes information on the patents being petitioned,

the numbers of claims challenged, the number of claims instituted and the final written decision of the PTAB (if any).

•  Includes 1,537 petitions covering 1,040 unique patents •  We are interested in the incidence of first petition •  Also considered the institution decision

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Are all IPRs involved in litigation? For the 12 months prior to IPR:

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Litigated Patents (Sep 2011 – Jul 2014)

N = 11,209 IPR-petitioned Patents (Sep 2012 – Jul 2014)

N = 1069 94%

6%

61%

39%

Methods Matched Control Group •  Control group of non-litigated (or non-petitioned) patents

by randomly choosing patents that match the litigated patents on several characteristics

•  Final sample is a 1-to-1 matched sample

•  Conditional logit: Are the odds of litigation (IPR petition) correlated with the explanatory variables?

Note: Odds = p/(1-p) Conducted similar analysis with control group constructed through propensity score matching 8

Variables included in the analyses

•  Matching variables: grant year, examination work group, maintenance history, forward citations

•  Application characteristics: small entity status, foreign priority & PCT, number of US parent applications, family pendency

•  Prosecution characteristics: GS-level of examiner, RCEs, appeal, examination pendency, IDSs, interviews, first-action allowance

•  Claims characteristics: independent claim count, independent claim length, functional claim language

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Main Results •  Incidence of IPRs and Litigation impacted

by characteristics of examination •  Largest impact is from non-examination

characteristics •  IPRs and Litigation “look the same” in

terms of the explanatory characteristics

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11

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Per

cent

cha

nge

in o

dds

of fi

ling

Small E

ntity

1+ App

eal

US Parent

Ct.

Family

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Functi

onal

Claim

Interv

iew C

t.

IDS C

t.

Ind. C

laim C

t.

RCE Ct.

371 C

ase

Examina

tion P

end.

GS-12 & Lo

wer

Ind. C

laim Le

ngth

GS-13

First-A

ction

Allow.

Foreign

Priority

Matching characteristics: grant year, examination work group, maintenance history, citations.Additional controls: application year.

What explains the incidence of litigation and IPR petitions?

Litigation IPR