Background

The 2011 America Invents Act established the Patent Trial and Appeal Board (PTAB) as a division within the USPTO to conduct trials challenging the validity of previously issued patents.

Since 2011, there have been almost 10,000 proceedings affecting almost 7,000 patents. One important subject of analysis is the Institution Rate. This is the preliminary decision where if the PTAB decides that a patent is suspected to be defective, a trial is ordered. It is similar to an indictment in a criminal proceeding.

The USPTO reports the institution rates, but their analysis is based on petitions, rather than patents. Since many patents are challenged multiple times (in one case a patent was challenged 23 times), it is helpful to understand the net patent invalidation rate.

NOTE: The author acknowledges and applauds the USPTO for addressing this concern at the recent Patent Public Advisory Committee meeting. That is a good start. At the time of publication the official report is still (misleadingly) based on petitions.

Fig 1 – USPTO Reported Institution Rates (Source: USPTO)

The USPTO reports that 314 petitions were granted and 265 petitions were denied so far in FY2020, resulting in a 54% institution rate. However 62 of the 265 petitions that were denied had one or more sibling petitions against the same patent which were granted. Those 62 petitions were members of successful family of petitions against the targeted patents, thus should not be counted as favorable to the inventor.

Patent Institution Rates

Institution is a critical threshold for inventors. Once instituted, a patent is stripped of the presumption of validity and the procedures heavily favor invalidation. Previous reports have shown that the PTAB invalidates 84% of patents (in part or whole) that reach a final decision. This analysis covers 5,983 patents for which the PTAB has issued an Institution Decision.

Data is obtained directly from the USPTO via the PTAB v2 API at https://developer.uspto.gov/ptab-api/swagger-ui.html#/proceedings, which was queried and summarized via this Excel Query Table.

Fig 2 – Institution Rate Based on Patents

As can be seen the institution rate per patent is 65% to 70%, substantially higher than the institution rate per petition reported by the USPTO. That is because the USPTO permits multiple petitions per patent as noted above. Exploring the institution rate as a function of the number of petitions per patent is informative. All date headings in this report reflect the USPTO Fiscal Year which begins Oct 1 of the preceding calendar year.

Multiple Petitions Effect on Institution Probability

Fig 3 – Patent Institution Rate as a Function of No. Petitions Per Patent

The number of petitions strongly correlates with the probability of institution. As can be seen, the probability of institution increases from 63% with a single petition to over 90% for 6 or more petitions. Challengers appear to have taken advantage of this correlation.

Frequency of Multiple Petitions

Fig 4 – Volume of Petitions Filed as a Function of No. Petitions Per Patent
Fig 5 – Percentage of Petitions Filed as a Function of No. Petitions Per Patent

Only 42% of petitions are filed as a sole petition against a patent. The other petitions are filed as one of several against the same patent.

No Penalties for Multiple Petitions

Fig 6 – Institution Rate Based on No. Petitions Per Patent

The outcomes indicate there are no penalties nor diminishing returns for filing multiple petitions. In fact the petition institution rate is virtually independent of the number of petitions filed against a patent. The data indicates that multiple petitions are stable at around 60% institution rate. Petitions that are part of a larger group against the same patent have the same probability of success. For clarification of the methodology, refer to the entry in the 2014 column with the value of 71%. The dataset indicates that in 2014 there were 6 patents that each had 4 petitions filed against them as follows:

US 6,032,137 – 3 of 4 petitions instituted
US 6,151,604 – 2 of 4 petitions instituted
US 6,340,475 – 3 of 4 petitions instituted
US 6,738,799 – 3 of 4 petitions instituted
US 7,987,274 – 4 of 4 petitions instituted
US 8,278,351 – 2 of 4 petitions instituted
Total – 17 of 24 petitions instituted = 71%

Serial vs. Parallel Petitions

Fig 7 – Distribution of Repeat Petitions

Serial petitions are reportedly disfavored by the USTPO as potentially abusive or prejudicial to the patent owner. A serial petition for this study is defined as a petition filed more than 90 days after a prior petition. A parallel petition is defined as a petition filed less than 90 days after a prior petition, however in most cases they are filed on the same day as the prior one.

Multiple petitions are roughly balanced between parallel and serial. There does appear to be a shift starting in 2019 where serial petitions flipped from a slight majority to a slight minority of multiple petitions.

Net Effect of Multiple Petitions on Patent Institution Rate

Fig 8 – Institution Rate for Repeat Petitions

Filing of multiple petitions is a very effective strategy to invalidate patents at the PTAB. A single petition enjoys a 63% probability of institution. A parallel petition increases the probability to 73%, and a serial petition increases the probability to 84%.

Specific Examples

Drilling down can shed more light on what transpires in the proceedings underlying these statistics.

Fig 9 – Sample Entry for Drill Down Inspection

FY 2020 shows 70 petitions were filed as part of a group of 6 or more petitions, and that 100% of the patents associated with those petitions were instituted.

Fig 10 – Drill Down for 70 Petitions

The 70 petitions were filed against 9 different patents. 4 patents received 6 petitions each, 3 patents received 7 petitions each , one patent received 10 petitions, and one 15 petitions.

4 patents were subject to parallel petitions and 5 were subject to serial petitions.

Most importantly, it can be seen that not all the petitions were instituted, yet all the patents were instituted. The institution rate on a petition basis is 64% ((6+3+2+5+4+7+7+8+3) ÷ (7+6+7+6+6+7+15+10+6)). However, the patent institution rate is 100%.

Drilling down further we can see what transpired for the recently issued patent US 10,186,523.

Fig 11 – Institution Details for US 10,186,523 (Source: Docket Navigator)

Several observations can be made here:

  • The Patent was challenged 6 times by the same entity (Intel Corporation)
  • These were parallel petitions
  • The basis of each petition was obviousness under §103
  • Claim 1 was challenged 6 times
  • Claim 2 was challenged 4 times
  • 3 of 6 petitions were instituted (granted)
  • Every challenged claim was denied
  • Every challenged claim was instituted

The USPTO report as shown in Figure 1 considers this a 50% institution rate. Our reporting counts this as 100% institution rate.

Conclusion

USPTO official reporting of PTAB institution rates fails to account for the effect of multiple petitions filed against the same patent. Stakeholders and policymakers would be better informed to consider the institution rate based on patents. While both approaches indicate extremely high institution rates (over 50%), the rate is substantially higher when the effects of multiple petitions are considered.

As can be seen in the charts and tables above, there is no significant change in the occurrence of repeat petitions or in the patent institution rate from 2014 to 2020. Any policy changes at the USPTO appear to have had no effect. Institution rates remain extremely high at 65%-70% of challenged patents consistently being instituted for trial.

For questions or comments about this report contact josh@usinventor.org