Rising and Falling: IPRs at Institution

The inter partes review (IPR) has been a popular route for challenging patent validity since it was introduced. A look at the data since September 2012 confirms this growing popularity: the number of petitions filed, and therefore institution decisions made, has indeed risen over time. More interestingly, the data also reveal that the success rate of petitions filed is falling. The Patent Trial and Appeal Board (PTAB) is granting review less frequently.

But, as explained below, there is clear risk in overstating either case, given that a “win” at institution is not always a total victory, and a “loss” is not always on the merits. Ignoring those details distorts the overall measure of success.

The charts above show:

That institution rates are high but falling... The rate of institution has been falling over time. From 2012 to present, the average monthly institution rate has dropped by 30 percentage points—whether the focus is directed on all decisions, regardless of basis (from 97 to 68%), or solely trained on decisions on the merits (from 93 to 61%).

 …but many decisions against institution skirt the merits. A considerable number of petitions fail for reasons other than weakness in the basis of the proposed challenge. Petitions are often denied because the petitioner is barred or estopped due to prior complaints. Sometimes the arguments presented are redundant of others already under consideration. Sometimes the petition fails to identify the real party in interest or suffers from another technical flaw. This variety of outcomes cautions against overestimating the strength of the patents challenged based solely on falling institution rates.

That decision rates are rising… No matter how you cut them, the monthly decision rates are rising. This finding matches expectations, as the number of petitions has grown over time. More instituted petitions means more patents are under review.

…but many decisions to institute are split decisions. A healthy chunk of reviews are instituted for only some, not all, of the challenged claims. Such data warn against conflating institution with total victory. When review is instituted for only some of the claims challenged, the outcome is less likely to end or prevent district court litigation (which is often the petitioner’s motivation for filing in the first place) because some claims survive.

The high institution rates of early IPR petitions have undoubtedly contributed to the rising popularity of the PTAB for challenging patent validity. But with the institution rates on all challenged claims already trending below 50%, it will be worth watching whether declining institution rates ultimately affect the popularity of the IPR process.

And, as RPX has recently reported, litigation drives the filing of most petitions for IPR, so the popularity of the IPR process also reflects continuing high levels of patent litigation even while the vast majority of patents asserted in district court litigation have never been subjected to IPR.