On September 4, 2014, I had the opportunity to do a webinar conversation with Bob Stoll, former Commissioner for Patents at the United States Patent and Trademark Office and current partner at Drinker Biddle in Washington, D.C. Our wide ranging discussion lasted for just over one hour. This conversation, the first of many, was made possible with support from Innography, which is one of our sponsors on IPWatchdog.com. You can access the entire recording, which is free, by visiting Patent Eligibility in a Time of Patent Turmoil.
What follows is a bit of our conversation to wet your appetite. We discuss the Supreme Court generally, the lack of technical expertise at the Supreme Court, the realities of creating software, amicus briefs, the ramifications for watering down patent rights, the need for bright line rules and whether Congress needs to get involved.
STOLL: As someone very interested in the patent arena and getting the standards correct, I’ve been really worrying about things. I think we are in a very confusing state at the moment. I think that the courts are actually undermining patent eligibility in many different areas. And the irony seems to be, Gene, that the Supreme Court and now this Court of Appeals for the Federal Circuit seem to be not considering the fact that the United States is leading in many of these emerging technologies and specifically thinking about software and diagnostic methods and personalized medicine and gene sequences. I mean we are actually leading the world in this subject matter. We’ve developed these emerging technologies. We’re quite good at building upon a base of patents in these areas and I don’t think anybody’s taking into consideration the job creation and economic growth that these industries bring to the United States before mucking around in the standards.
Gene Quinn at the AIPF Annual Meeting in Washington, DC, September 29, 2014.
Today I am going to talk about what I call the patent pendulum. When Todd Van Thomme and I originally started talking about what I would talk about today I said that there would undoubtedly be something that comes up at the last minute. I even joked that I might wind up talking about how the Supreme Court actually got the Alice decision right, surprising us all and saying once and for all that software is clearly patentable. We all know it didn’t turn out that way. So the title of my presentation today is this: Dark Days Ahead: The Patent Pendulum.
As you are probably all familiar, patent law never stays the same in the same spot. It is always swinging one or another, either swinging more towards stronger patent rights and the patent owner, or away from strong patent rights and away from the owner. It has been that way throughout history.
Normally what’s happened is that we’ve seen the pendulum swing over longer periods of time, like over decades, and then it’ll move away. For example the 1952 Patent Act was premised on the fact that Congress didn’t like the way the law was developing over the preceding years and wanted more things be patentable, hence the 1952 Patent Act did away with the flash of creative genius test. So things swung back toward a more patent friendly law, at least for a while. And then in the 1970s no courts ever saw a patent that actually had valid patent claims. This famously prompted Congress to create the Federal Circuit. Under the guidance of Chief Judge Markey and Judges like Giles Sutherland Rich and Pauline Newman, who is still on the court, the pendulum swings back toward the patent owner once again.
There was a lot riding on Alice v. CLS Bank, and the Supreme Court got it wrong. There is no point in sugar-coating it, or pretending that everything will be alright. The Supreme Court is openly hostile to patents, and increasingly so is the Federal Circuit. Simply stated, strong patent rights are an absolute prerequisite for a high tech economy.
It is a sad realization, but we are indeed at a point were commercially viable claims worth litigating are virtually assured to be invalid claims. Until this changes the economy suffer in due course. After all, it isn’t the copycats who create new things. Copycats copy and innovators innovate. You cannot infringe patents owned by an innovator and claim that because the product is new to you it is an innovation. NO! It is merely new to you and a rip-off from the true innovator.
Patent law has always swung like a pendulum. The law swings between extremes, spending very little time in the middle. It is easy to get caught up with the shifting laws and even easier to start looking at the trees instead of the forrest, worrying where there is really no need to become so distressed. Lately, however, there has been an ever increasing and significant assaults on patent rights. It is not much of an exaggeration to wonder whether any commercially relevant innovation can be and remain patented. We seem to be back to the days when valid patent claims were those that had not been litigated. Today it is more fair to say valid patent claims are those that haven’t reached the Supreme Court or the Federal Circuit. Ubiquity is now the touchstone of ineligibility, or obviousness, rather than being celebrated for such wide spread adoption.
I am more concerned now than ever that the pendulum has swung so far and has gained so much momentum that it will fly clear from its support base point. I raised this with Ray Niro, the famous patent litigator who was originally called the first patent troll, back in July 2013. Then he told me: “looking at the bright side of things, I believe that the pendulum will swing. I believe it will come back.” I again asked him his thoughts on the matter in another interview approximately 11 months later, Niro said that he thought the pendulum would swing back, but he was far less optimistic.
As I was reading recent Federal Circuit decisions I initially skipped right past I/P Engine, Inc. v. AOL, Inc. (CAFC, August 15, 2014). After all, this decision was non-precedential, so how important could it really be? But the Federal Circuit seems to have a peculiar definition of “non-precedential” these days.
In this case the jury found that the asserted claims were infringed, the jury found that the asserted claims remained non-obvious because the defendants’ evidence did not establish obviousness with clear and convincing evidence, and the plaintiff won a verdict of over $30 million with an ongoing royalty rate of 3.5%. The district court judge reviewed the jury determinations, particularly with respect to obviousness, and found that the jury was correct. The Federal Circuit, in their infinite wisdom, disagreed and found the asserted claims obvious. To do so the majority provided no deference to the factual determinations of the jury.
Along with their ABC’s and multiplication tables, patent lawyers learn two basic principles. First, claims define the invention. Second, a court should not read limitations from a single embodiment into the claims, absent a demonstrated clear intention by the patentee to do so.
Don’t believe them.
When the Federal Circuit brings up the principle that one should not import the limitations of a single embodiment into a broader claim, expect the opinion to show how, under the particular, specifically limited facts of the present case, the inventor actually intended to limit the claims to the disclosed embodiment. The decision in Abbott Labs. v. Sandoz, Inc. provides an excellent example of the court’s reasoning. There, the specification described only a single embodiment, but the claims extended beyond the embodiment, but no issues of either prior art of enablement were present. The fact that the patent presented only a single example served as a starting point, after which the court was able to find “clear intent” to limit a broad claim term, “crystalline,” to a particular crystal.
Last week the United States Court of Appeals for the Federal Circuit issued a decision in State of Vermont v. MPHJ Technology Investments, LLC. The decision, which was really not much of a decision because the Federal Circuit concluded they lacked jurisdiction, is interesting for at least several reasons.
While Vermont’s actions are undoubtably laudable, despite what some conclude I suspect that when challenged the legislation will fall because it pre-empts patent law, which is federal. For example, one of the factors that would suggest a bad faith patent enforcement under the Vermont statute is if there has previously been a lawsuit or threatened lawsuit based on the same or similar claim of patent infringement.
This is the third and final installment of my recent interview with former Federal Circuit Chief Judge Paul Michel. In this installment of the interview we discuss the future of the Federal Circuit now that Judge Rader is a private citizen. We discuss the type of candidate that should be appointed to replace him, and the always concerning panel dependency.
QUINN: So now we still have one topic still to discuss. Perhaps, if you have the time, we could talk about the Federal Circuit. I don’t want to get into any of the touchy subjects, which some people are diving into. I’m more interesting in talking about moving forward, you know, Judge Rader is now a private citizen and he was clearly one of the champions of the patent system and a believer in the power and the importance of patents. And now he’s not on the Court any more. I wonder what that’s going to mean moving forward. I wonder— and then I can’t help but wonder about panel dependency, which is a problem that a lot of people talk about. And particularly in light of the fact that the Supreme Court has remanded Ultramercial to the Federal Circuit. And Judge Rader was on that panel. So you already have people talking about whether that outcome in what could be a very important case will become panel dependent.
MICHEL: Right. Well, first of all I think Judge Rader will continue to play a very constructive role as a vocal spokesman now in the private citizen realm. And in fact being a private citizen he can be much more frank and candid than he was able to be as a sitting judge. So his voice may get even more interesting and even louder as a part of the overall debate. His replacement will be very important. So just as people are focused on is Phil Johnson going to become the new patent director, will he get nominated, can he get confirmed, how will he do? All those interesting very important questions, people should also be asking who will replace Judge Rader? Who will get nominated, can that person get confirmed, can they get confirmed as fast as they need to get confirmed so the Court is at full strength?
In what can really only be characterized as a stunning development, earlier today Judge Randall Rader of the United States Court of Appeals for the Federal Circuit announced that he is retiring effective June 30, 2014. This announcement comes only weeks after he stepped down as Chief Judge.
On May 23, 2014, then Chief Judge Rader announced that he would step down as Chief Judge of the Federal Circuit on May 30, 2014. At that time Rader also said that he would continue in active service on the Court, although the official announcement said that he will also undertake additional teaching, lecturing and travel. Given Rader’s statement that he would remain on the Court just weeks ago the announcement today is shocking. It is too early to know exactly why Judge Rader has made this decision, as news is just breaking, but the speed with which Rader has gone from Chief Judge, to Circuit Judge to private citizen is staggering.
Justice Samuel Alito, authored the Limelight decision for a unanimous Court.
There are some who are questioning the wisdom and correctness of the Supreme Court’s recent decision, authored by Justice Alito for a unanimous Court, in Limelight Networks, Inc. v. Akamai Technologies, Inc. One particular point of criticism seems to be centered around the fact that the Supreme Court failed to take into consideration the existence of 35 U.S.C. § 271(f). Section 271(f) was enacted by Congress to overrule a 1972 Supreme Court decision that held that supplying parts to be assembled outside the United States could not result in infringement of a U.S. patented combination machine because the assembly occurred outside the territorial reach of the U.S., and therefore beyond the scope of the exclusive rights granted by a U.S. patent.
We recognize that certain Supreme Court patent decisions over the past several generations have legitimately raised questions about the Court’s familiarity with overall patent law concepts. Indeed, the Supreme Court has been criticized, including here on IPWatchdog.com, for muddying patent waters, failing to articulate clearly applicable standards and promulgating rulings that seem internally inconsistent, if not scientifically inaccurate. Any legitimate criticism of Supreme Court patent jurisprudence should, however, be on a case-by-case basis. Further, it is important to recognize that the Supreme Court does from time to time get a patent decision perfectly correct. See Diamond v. Chakrabarty, Diamond v. Diehr, Octane Fitness v. ICON Health & Fitness, Highmark v. Allcare, Gunn v. Minton, Bowman v. Monsanto, i4i v. Microsoft and Kappos v. Hyatt.
This current criticism swirling around Limelight seems misguided. Arguing that the Supreme Court erred by misinterpreting, or failing to apply, 271(f) misses the point entirely. The question presented in the appeal to the Supreme Court was whether there can be infringement under 271(b) if there is no direct infringement under 271(a). Infringement under 271(f)(1) was not at issue in the case, and 271(f)(1) was not relied upon by the Federal Circuit below.