What does an IPR cost?

The America Invents Act (AIA) touted the post-grant review procedures as a faster and cheaper alternative to patent litigation. The inter partes review (IPR) procedure replaced inter partes reexamination adding tight time limits to ensure the procedure would proceed faster than litigation. As implemented, IPR's are in fact FASTER than litigation. At most, the Patent Trial and Appeal Board is taking 18 months from filing of the petition until a decision on patentability. Is the IPR less expensive than litigation?

At the January 2014 AIPLA meeting, Tom Engellenner of PepperHamilton presented the following chart, showing IPR costs as much, much less than federal court or ITC proceedings.

Q1 was identified for IPR's as the IPR Petition. Q2 is the Patent Owner discovery and response. Q3 is the Petitioner discovery and reply. Q4 is for motions. Q5 is for the hearing.

In a blog entry, RPX describes IPRs as "Cheaper [than litigation] but by no means cheap." Based on a "voluntary survey of IPR petitioners," RPX reports that petitioner costs prior to institution (i.e., for the petition) average $139k - much higher than the $50k reported at AIPLA. For the full IPR proceedings (through hearing), RPX reports petitioner costs average $487k, which is much higher than the ~$250k total in the AIPLA presentation.

One reason for the difference may be the fact that the AIPLA data comes from prior to 2014 whereas the RPX data is more recent (July 2015). The success rates for institution of an IPR trial have dropped significantly from when IPRs first started. A tougher "grading" standard by the PTAB to institute an IPR trial likely has led to increased time and effort in preparing the IPR petition (and, therefore, higher costs).

My firm (Foley & Lardner) has handled over 100 IPRs. Total costs for these IPRs vary depending on the particular circumstances. An average of our firm's IPR matters from beginning to end is probably around $350k. One skeptical litigation partner argues that IPRs will just add to the total cost since clients will pay for both a litigation and an IPR. However, what the numbers do not clearly show are the impact that well-written, well-researched IPR petitions have. A good number of our IPR petitions have resulted in settlement--resolving both the litigation and IPR early.

While it is hard to give a typical total cost of an IPR, the "costs" of not doing one include lost leverage against the patent owner, resulting in larger litigation costs (because the litigation proceeds further) and higher settlement fees