Statistical Study – PTAB post SAS

By: Patrick Murray

After the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), PTAB observers noted several ways in which the decision could affect the PTAB review process. Nearly five months after the decision was handed down, sufficient data exist to begin to answer several of the questions that practitioners identified in SAS’s wake. Below, we take a look at those questions and what we have been able to learn so far about SAS’s impacts.

SAS mandated that institution of trial is a binary choice – trial is now instituted for all challenged claims or none. No longer can the Board choose to review a subset of the claims challenged in a petition. A Sterne Kessler analysis conducted in May indicated that, at the time SAS was decided, about 20% of pending instituted trials had been instituted for fewer than all of the challenged claims. With the Board now required to make an all-or-nothing institution decision, practitioners speculated that the Board might respond to this requirement by instituting trial less frequently – denying institution in proceedings that previously would have been instituted for just a small subset of many challenged claims.

Evidence suggests that this scenario is playing out. An analysis of Docket Navigator institution data reveals a proceeding institution rate of 64% for institution decisions in Q1 2018. This is in line with (in fact slightly higher than) the institution rate in the year prior to the SAS decision (61%). For proceedings instituted after SAS and through August, the proceeding institution rate has dropped to 55%.

Perhaps even more telling, the institution rate for May was 62% – in line with the previous averages. Since June, the rate has fallen to 53%. It is certainly plausible that the May decisions were already “in the can” when the Supreme Court handed its decision down, and the Board could have tweaked these decisions to institute on all claims where it was planning to institute on a subset. When the Board approached a new batch of institution decisions to be issued in June, it would have done so with SAS in mind from the outset – driving the lower institution rate that we have observed.

With an all-or-nothing decision to make, the PTAB had an opportunity to reduce its work when crafting its institution decisions. Previously, every claim required analysis if the Board wanted to institute trial. Under SAS, once a reasonable likelihood of unpatentability is identified for a single claim, the Board could reasonably institute review for all challenged claims. If the Board decided to proceed in this manner, much of the work involved in writing the institution decision could be dismissed, and institution decisions might be much shorter as a result.

This does not appear to be happening. We examined all of the granted IPR institution decisions from March and July. The 75 March decisions had an average length of 30.2 pages, and July’s decisions averaged 29.4 pages each. By this measure, the Board appears to be providing about the same amount of analysis in each of its institution decisions.

If practitioners were correct, and the Board was less likely to institute petitions in which the case for review is relatively weak on some of the challenged claims, how should petitioners respond? By challenging fewer claims, some reasoned. By filing narrowly targeted petitions, petitioners would maximize the likelihood of achieving institution on the most important and/or vulnerable claims in the patent.

There is some evidence that petitioners have responded in this manner. Our most comprehensive existing data on challenged claims comes from institution data – we examined institution decisions issued from January through April of this year and found an average of 14.5 claims challenged per petition.[1] We also examined a random sample of petitions filed between July and September, finding an average of 11.9 challenged claims per petition – a decrease of about 2.5 claims or 17%. This analysis is limited, and merits further monitoring, but it provides an early indication that petitioners are filing more narrowly targeted petitions after SAS.[2]

In the long run, were SAS to result in a lower institution rate, accused infringers and others would likely be somewhat less inclined to file petitions in the first place. In the months immediately after the decision, we have observed filing volumes in line with the previously-established PTAB trends. In the very short term, petition filings were down sharply in April before the initial post-SAS uncertainty was resolved by the PTAB. Filings bounced back in May, however, making up for the low April numbers.

Overall, 2018 has the fewest petitions filed per month since 2013, with 134 per month through August – this is down from 2017’s all-time high of 150 per month. It has also been the most stable year on a month-to-month basis of any year in the PTAB’s history. It remains to be seen whether the long term trends of lowering institution rates (amplified by SAS) and lowering claim cancellation rates at final written decision will further diminish petitioners’ appetite for PTAB proceedings.