Who appeals (and wins) patent cases?

By Jason Rantanen

There are lots of studies of Federal Circuit decisions, but very few involve the link between all cases filed at the district court cases and appeals. This prompted the question for me: who actually files appeals in patent infringement cases and how representative are they of the underlying civil actions filed in the courts? It turns out that the answer is “mostly patent asserters” and that they aren’t necessarily representative of case filings.

One of my research team’s ongoing projects is the Federal Circuit Dataset Project, which involves collecting all of the opinions & orders that the Federal Circuit makes available on its website, coding information about them, and then putting it all together into a publicly-accessible database that anyone can use to answer their own questions about the Federal Circuit.  There’s a user-friendly portal to the decisions dataset at empirical.law.uiowa.edu, and the full dataset is available at https://dataverse.harvard.edu/dataverse/CAFC_Dataset_Project.

This year, our major project involved linking up the CAFC dataset with datasets of patent infringement cases filed in the district courts. A draft of the first paper to spin out of this project is now up on SSRN at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979. (There is an option to download without logging in, but sometimes you have to hunt for it on the page.)  Thanks to the Houston Law Center’s Institute for Intellectual Property and Information Law for inviting me to present it at their national conference in June. Some takeaways:

  • For patent infringement cases filed between 2011 and 2016, about 6% have at least one appeal, although this rate has been declining from 7.8% of cases filed in 2011 to 4.4% of cases filed in 2016.
  • The average time from case filing to first appeal is 27 months, although there is substantial variation (SD of 18 months with rightward skew).
  • Appeals are overwhelmingly filed by patent asserters: 82% of first appeals in the set were filed by patent asserters compared to 18% by accused infringers.

For this particular project, we linked the Federal Circuit dataset to the Stanford NPE Litigation Database, which contains coding on patent asserter types. (Details about the Stanford dataset are available in Miller et al., Who’s Suing Us? Decoding Patent Plaintiffs since 2000 with the Stanford NPE Litigation Dataset, 21 Stan. Tech. L. Rev. 235 (2018)). Using this data, we found some differences between the frequencies of case filings and appeals.  Figure 2 from the paper shows the most frequent cases by Stanford litigation dataset category. Category 1 are companies that acquired patents but do not themselves make any products or provide any services.

Table of case filer frequency

Figure 2 from Who Appeals Patent Cases

Figure 2 shows that while companies that acquired patents (Stanford litigation dataset category 1) filed 37% of patent infringement actions from 2011-2016, only 25% of appeals from cases filed between 2011 and 2016 arose from those cases. On the other hand, while product companies accounted for only slightly more patent infringement lawsuits (just over 40%), appeals in cases filed by product companies constituted 54% of all appeals filed. In other words, cases brought by product companies are appealed at a higher rater than cases brought by companies that acquired patents. This is consistent with prior findings that cases brought by PAEs settle at a higher rate than cases brought by product companies. Not only that, but we also found a difference in who is bringing the appeal in these cases: in cases brought by a PAE, the patent asserter was the primary appellant about 90% of the time, whereas in cases brought by product companies the patent asserter was the primary appellant only about 70% of the time.

What about who wins these cases?  That’s a bit more complex, and depends on how you define “win.” We define a “win” as obtaining an affirmance if a party is the appellee and an affirmance-in-part, reversal or vacate if a party is the appellant.  Using this definition, we found that overall, patent asserters usually lose on appeal, with product companies being much more successful than PAEs. However, this is heavily affected by the fact that both patent asserters generally and PAEs specifically are in the shoes of the appellant most of the time, and more often than not, the Federal Circuit affirms the district court.

The paper itself goes into more detail, including information about affirmance rates by appellant type, other categories, and the kinds of forms that these decisions take.  You can read it here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979.

Disclosure: I am receiving an honorarium from the University of Houston Law Center Institute for Intellectual Property & Information Law upon publication of this paper in the Houston Law Review.

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