Over Half of Q4 Patent Litigation Targeted Online Sellers of Copycat Products

RPX’s latest quarterly report shows that operating companies added 236 defendants to patent litigation campaigns in Q4 2022, or about 24% less than the year-ago quarter, 5% lower than Q3 2022, and 28% less than the trailing quarterly average. Operating companies also added just over 1,000 defendants to patent litigation campaigns last year, which was 12% lower than 2021—a decline that was even sharper, at 16%, when excluding Abbreviated New Drug Application (ANDA) litigation.

Yet that data exclude another, distinct category of litigation filed by a small group of design and utility patent owners targeting copycats and counterfeiters selling products online. RPX excludes such “e-seller” cases from analyses of district court litigation because they tend to follow a different dynamic compared to a typical patent suit: These e-seller cases sometimes name hundreds of defendant entities, many of which may be merely online storefronts for the same ultimate parent. Additionally, plaintiffs mainly seek injunctive relief instead of damages, and their cases often end with the e-seller defendant’s failure to answer, followed by a default judgment.

This category of litigation, which began to spike in Q3 2020, is shown in grey below to illustrate its magnitude. As evident from the rightmost bar, e-seller litigation in Q4 2022 accounted for 1,271 defendants added, or 62% of all litigation during the quarter (subject to the caveat about defendants with multiple online storefronts noted above).

See RPX’s report on the fourth quarter and 2022 for more on trends impacting patent litigation and the patent marketplace.