As Q2 2021 comes to a close, year-to-date NPE litigation is up by 7% compared to the first half of 2020. Excluding certain file-and-settle activity, NPE assertions remain fairly stable compared to last year, while operating company litigation decreased. The first half of the year saw a particular upswing in NPE activity hitting certain market sectors, including Financial Services, Media Content and Distribution, and E-Commerce and Software.
Moreover, the quarter ended with big news for the Patent Trial and Appeal Board (PTAB), which the US Supreme Court left largely intact in its June Arthrex decision. However, the ruling granted the USPTO director significant new review authority over inter partes review (IPR) decisions in the process. The Patent Office's resulting interim director review program could cause delays and backlogs in some IPRs. Meanwhile, petitioners appear to be increasingly shifting from IPR to its predecessor, ex parte reexamination, as a result of Board rules that limit IPR's availability for district court defendants.
Additionally, the second quarter saw multiple NPEs taking their enforcement campaigns to the International Trade Commission (ITC) while also filing yet more district court litigation-all alleging infringement of patents developed by operating companies. Also in Q2, a variety of familiar players formed new NPEs during the quarter, likely in preparation for the acquisition and assertion of patents. Finally, one court set forth a novel local rule requiring the disclosure of litigation funding, while a newly enforced state law took aim at an NPE targeting small businesses.
A PDF version of this report can be downloaded here. RPX members also have exclusive access to an on-demand RPX Community webinar covering highlights from this post; CLE credit may be available. Members can view the webinar on RPX Insight.
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District Court Update: NPE Filings Hold Steady Despite Q2 Dip as OpCo Litigation Decreases
NPEs added 1,196 defendants to patent litigation campaigns during the first half of 2021, or 7% more than in the first half of the past year (during which NPEs added 1,118 defendants). Most of that increase is due to litigation filed by apparent affiliates of prolific patent monetization firm IP Edge LLC, which were responsible for 307 (or 25.7%) of the defendants added in the first half of this year.
Excluding IP Edge, NPE litigation was still up by 1.4% during the first half of the year, essentially holding steady compared to the same period in 2020. Even without IP Edge, NPEs filed more litigation in the first half of the year than they have during any initial half-year since 2016. With IP Edge included, NPEs had their busiest first half-year since 2017.
Operating companies, for their part, added 579 defendants in the first half of 2021, or 16.7% less than the same half of 2020 (during which they added 695 defendants).
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