RPX Corp NPE Litigation Surges in First Half of 2015

By all measures, patent litigation is up so far in 2015: NPEs are more active than they have been in the last few years, especially against small companies. It also appears that NPEs are tracking recent changes in Congress and in the courts.

Patent litigation in 2015 is near 2013 levels. As Figure 1 shows, more cases have been filed in 2015 than in any previous first or second half-year since 2012—and the number of total defendants added by NPEs in the first half of 2015 was close to that of the same period in 2013 (see Figure 2a). Most new defendants in NPE litigations in the first half of 2015 have faced a patent assertion entity (PAE), an NPE that earns revenue predominantly from asserting patents. As in previous years, universities, individual inventors, and non-competing entities (NCEs) have been less active as NPE plaintiffs (see Figure 2b).

Figure 1: Cases Filed

Figure 2a: Total Defendants Added

Figure 2b: NPE Defendants Added in 1H 2015 by NPE Plaintiff Sub-type

Small companies are bearing the brunt of this surge, as Figure 3 shows. Again, in both absolute volume (1,410) and relative proportion (52%), companies with less than $100M in revenue were hit harder by NPEs.

Figure 3: NPE Defendants Added by Revenue

Recent changes—Alice, stays pending IPR, and patent reform proposals—appear to have made Texas an even more popular venue. The surge may be a sign of NPE opportunism. NPEs sued more defendants in June 2015 than in any month since 2013, and more of them did so in the Eastern District of Texas. (See Figures 4, 5.) At times during the first half of 2015, that share exceeded 70%. In contrast, during the same period, less than 5% of defendants sued by operating companies were sued in the Eastern District of Texas. (Not shown.)

Surges in the Eastern District of Texas can sometimes be attributed to a few large filings. The most active plaintiffs there in peak months each sued up to 100 defendants: DataTreasury Corporation (May 2013) and eDekka LLC (April 2014 and May 2015). In June 2015, however, activity in the Eastern District was more evenly distributed, with two dozen NPEs each suing 10 to 30 defendants.

Figure 4: NPE Defendants Added by District

In Figure 5 below, we see that over time, the share of NPE filings in Texas has increased on average, while in Delaware, the share is declining.

Figure 5: Top Districts’ Share of NPE Defendants Added over Time

We will continue to track, update, and share NPE litigation data throughout the year. RPX’s methodology is described in its annual NPE Litigation Report. Comments and questions are welcome; please send them to reports@rpxcorp.com.