This recent RPX report tells retailers what you likely already knew anecdotally – NPE cases are back. Patent litigation filings in the first half of 2015 are close to 2013 levels. As you are likely aware, this is in stark contrast to the large drops in 2014 filings.
The 2014 drop was largely explained by the Alice decision and the large success rate of Alice motions – particularly at the Rule 12 stage. And of course, the high win rates in Patent Office post-issuance proceedings.
But nothing has changed on those fronts, so why are the NPE’s back? Here are several explanations that, taken together, answer the question fairly definitively:
- E.D. Texas. The E.D. Texas has nullified some of the power of both Alice and Patent Office proceedings. E.D. Texas judges have been suspect of Alice motions at the Rule 12 stage, removing much of their strategic power. In fact, Judge Gilstrap is requiring defendants to file a letter brief requesting a Rule 12 Alice motion before filing one.
E.D. Texas judges are also generally not staying cases pending Patent Office proceedings absent agreement amongst defendants and acceptance of a broader post-proceeding estoppel.
Most surprisingly, E.D. Texas is requiring its spot as the favorite NPR court while Delaware (which is much more amenable to early Alice motions and stays) is seeking a reduction in filings.
- Alice Win Rates. Alice win rates were very high in the months immediately after the June 2014 decision. That was partly because a number of cases with significant Alice issues were waiting for the Alice decision to be decided. It also may be because seeing the win rates, more defendants filed Alice motions on more tenuous grounds. Alice win rates remain high – about 60% – but NPE’s are beginning to understand the bounds of Alice. And as they understand the terrain, they can better choose which patents to assert and where to assert them.
- Patent Reform. With patent reform, at least at those looking likely to succeed, no doubt some NPEs chose to file ahead of new legislation that would likely require detailed pleadings, limit discovery, and increase the risk of fee awards. Of course, it remains unclear whether patent reform will get floor votes in this Congress, but the possibility could jump up filings at least until there is definitive action by Congress.
 In the interest of full disclosure, I have been selected as a lead trial counsel for RPX Insurance Services defense counsel panel, as part of its NPE defense insurance offering.