I would define a failed title reign as one in which one of the following things might happen (or both).
-the wrestler who gets the title fails to generate a bigger reaction out of the crowd than they did before. Sheamus would be an example of this, From the RAW crowds, the response he got was more apathy than anything else. Nobody cared about him. Giving him the belt didn't make the fans like him or hate him any more than they already did. Basically, did anyone care that Sheamus was champion, or did you think, thats great, but he is dead as soon as "so and so" gets a hold of him. If you think to yourself that if Wrestler X, the champion, were to ever face Wrestler Y, and that Wrestler X really has very little chance of keeping his title, its probably a failed title reign, because Wrestler X hasn't established that he can beat anyone, at any time.
-similiar to crowd reaction, what did the wrestler do with the title reign? Did they grab the bull by the horns, proverbially, or did they fail to do anything significant with it? Some guys, once given the belt, take it and run with it, and maximize the opportunity given them. They reach the highest mountain, and refuse to go back down. Randy Orton was nothing but a mid-carder, until he got his first title...Since then, he has been a permanent main eventer. He took it, and ran with it. Some guys don't. Sheamus is a good example of this too. After being the WWE champ, now that a "main eventer" has the belt again, is there any doubt that we will soon be seeing Sheamus drop back down to the mid-card level, where he belongs, as soon as the rumored HHH match at Wrestlemania happens? Trips is giving him his shot, and then he goes back to feuding with Kofi, MVP and the Miz. This almost happened to CM Punk too, but he seems more established as a main eventer this time around, with feuds against better wrestlers, and more TV exposure, and it doesn't look like he will fade back into obscurity.