NPE Filings Decreased in 2023 Due to IP Edge Standstill and West Texas Downturn

NPEs added 1,597 defendants to patent litigation campaigns in 2023, a decrease of 30% compared to 2022 (when such plaintiffs added 2,283 defendants). Operating companies, in contrast, added 1,161 defendants in 2023, a 14.5% increase from the year prior. Overall, 2,758 defendants were added to litigation campaigns in 2023, a 16.3% drop from 2022 (at 3,297 defendants added).

The decrease in NPE litigation observed in 2023 does not appear to reflect a general trend. Rather, as RPX has previously reported, the drop was primarily caused by two notable developments in 2022. The most impactful of those developments was a pause in litigation by the large set of plaintiffs with ties to patent monetization firm IP Edge LLC (hereinafter, “IP Edge”). Those plaintiffs stopped filing new complaints starting in December 2022 as a result of pressure over transparency and corporate disclosures in Delaware, where Chief Judge Colm F. Connolly pursued information on the firm’s secretive entity formation strategy in a contentious, drawn-out inquiry that lasted most of 2023. As detailed in RPX’s latest quarterly report, Judge Connolly has since concluded as a result of that investigation that IP Edge, a related consulting firm, and the attorneys behind them engaged in a litany of misconduct.

IP Edge had long been the top filer of patent litigation by volume prior to that pause, consistently suing about 50 defendants per month and hitting a total of 562 defendants in 2022. However, apart from a small new campaign launched in Q3 2023 and a single refiled complaint, IP Edge filed no new cases whatsoever last year—meaning that by ceasing its activity, the firm was alone responsible for 81.6% of the total NPE decline last year (559 out of 686 defendants). Excluding litigation from IP Edge, NPE activity was down by just 7.4% last year.

The other development contributing to the 2023 drop was a July 2022 order in the Western District of Texas that was designed to undercut the concentration of patent litigation before Waco District Judge Alan D. Albright. The order closed a divisional filing loophole that previously allowed plaintiffs to get Judge Albright by directing their complaints into Waco, where he is the only district judge—providing instead that Waco’s patent cases are to be randomly assigned among a larger group of judges, including Judge Albright. While the district has since developed a practice of assigning cases in existing litigation campaigns to the same judge who has presided over previous filings (i.e., those with the same parties and patents), meaning that Judge Albright still sees an outsized portion of such “legacy” litigation, cases in new campaigns have been more randomly distributed. The fact that plaintiffs are no longer guaranteed to get Judge Albright by filing in Waco has led to a significant drop in NPE filings there: Such plaintiffs added 356 defendants in Waco in 2023, compared to 681 defendants the year prior.

Added together, the reductions from IP Edge and in Waco—771 defendants in total, adjusting for the overlap in IP Edge and Waco cases—accounted for the entirety of the NPE decline between 2022 and 2023 and then some. The net decrease in total NPE filings was 686 defendants, as noted above, a partial offset caused by other plaintiffs shifting from West Texas to other districts in smaller numbers.

See RPX’s fourth-quarter review for more on this and other key patent litigation trends in Q4 and 2023 overall.