Last year, we observed that the number of patent litigations grew year over year from 2014 to 2015. However, this trend reversed dramatically over the past year with 2016 seeing the lowest patent litigation activity since 2011. This may indicate that the Leahy-Smith America Invents Act (AIA) has finally taken full effect, and may also indicate the impact that cases such as Alice are having on patent assertions.
Source: Brian Howard, “2016 Third Quarter Litigation Trends”, Lex Machina, https://lexmachina.com/2016-third-quarter-litigation-trends/, October 16, 2016, accessed December 21, 2016
Venues: U.S., E.U. and China
Within the U.S., reaction to Michelle Lee’s recent comments at the IAM Patent Law and Policy Conference suggest that the state of U.S. patent quality remains in flux. With SCOTUS granting certiorari to the TC Heartland v Kraft Food Brands Group case, the issue of venue is also unsettled. Further, U.S. patent reform efforts have essentially been put on hold in 2016, and looking into 2017, it is unclear what changes may be considered as a result of the incoming Trump administration, if any.
As for Europe, the U.K. government has promised that Brexit would not affect the standing or rights of either U.K. or European patent or application holders. While the U.K. recently ratified the Unified Patent Court Agreement, the Brexit transition is sure to be complicated and lengthy, leaving little doubt that patents will escape the turmoil.
On the other hand, China continues to emerge as a viable patent transaction and litigation alternative to the traditional venues in the West. According to the State Property Office of the P.R.C., over 1.1 million patent applications were filed in China in 2015. An examination of the November 2016 data suggests that this mark has already been surpassed and will likely grow substantially by the end of this month.
Source: State Intellectual Office of the P.R.C., “Information Statistics”, accessed December 21, 2016
Of course, patent filings are not the sole indicator of innovation, as the high number of filings are sure to prompt for measures of patent quality. It is likely that China’s nascent patent litigation court system may soon be tested by an increase in patent litigation activity.
The Trump Administration Factor
The turmoil surrounding the incoming Trump administration has done little to enable the prediction of what will happen in the world of patents. At a minimum, the Trump Administration will need to address the departure of Michelle Lee as Director of the USPTO. It is safe to say that their picks for the Supreme Court will reflect a more conservative approach that will rely less on regulation and more on natural market forces. It remains to be seen how these selections will be met by the IP community.
At a broad level, it is unclear if these issues (either separately or combined) will suggest that the pendulum of justice is ripe to swing away from patent users and back towards patent holders. It is an understatement to say that 2017 will be an interesting year in the world of patents, and we will be eager to see the impact of the issues on patent valuations and transactions.
Contact us today to see how we can help you in 2017.