Patent Rights at Risk, En Banc Review Needed in Chrimar v. ALE

By Andy Schlafly
November 10, 2019

“Patent rights should not be merely second-class property. A jury verdict for a patent should be as robust as a jury verdict about a contract.”

https://depositphotos.com/21972223/stock-photo-juries-seating-in-court.htmlJury verdicts are supposed to be sacrosanct. The biggest opposition to the ratification of our Constitution in 1788 was due to its lack of protection for jury trials in civil cases. The omission was corrected by adding the Seventh Amendment as part of the Bill of Rights.

So, when a patent holder wins a jury verdict, that should mean more than the paper the verdict is written on. Yet it does not, under recent decisions by the U.S. Court of Appeals for the Federal Circuit.

On behalf of Eagle Forum Education & Legal Defense Fund, I filed an amicus brief on November 4 in support of a petition for rehearing en banc by the full Federal Circuit to end the abusive authority of the Patent Trial and Appeal Board (PTAB) to overturn jury verdicts. Many other amicus briefs were subsequently filed in this case, Chrimar Systems, Inc. v. ALE USA, Inc. FKA Alcatel-Lucent Enterprise USA, Inc. (Fed. Circ. Case No. 18-2420), to make similar requests of the Federal Circuit [IPWatchdog will provide analysis shortly].

A Cruel Interference

Under an aberrational ruling in the case of Fresenius USA v. Baxter International in 2013, the Federal Circuit held that a verdict for a patent holder will be overturned if the PTAB subsequently decides against him or her on the underlying patent, an appeal related to the original verdict is still pending, and the PTAB decision is affirmed. The infringer can keep the case alive while waiting for the PTAB to invalidate the patent in an unrelated proceeding.

This cruel interference with patent rights happened to Chrimar on its brilliant patent for transmitting power over the ethernet without sacrificing bandwidth. It won a jury verdict on its patent, and there were no errors of law to overturn that verdict on appeal.

But Chrimar’s adversary, ALE USA, kept the case alive with an appeal of a minor issue while the underlying patent was being challenged by someone else at the PTAB.

Alas, the PTAB ultimately invalidated the underlying patent. The Federal Circuit affirmed the PTAB decision and then on the same day overturned the jury verdict in favor of Chrimar. All the victorious work by Chrimar in the federal trial court went out the window, not because of any error of law at trial, but based on interference by an agency with a judicial proceeding.

Respect Must Be Restored

Neither Congress nor agencies are allowed, by the Constitution, to interfere with judgments by the courts. Respect for the judiciary and the finality of its judgments requires that other branches of government do not interfere after a judgment is rendered.

Indeed, as explained once by Justice Antonin Scalia, a motivation for the Constitution was outrage at how legislatures in colonial America were reversing court judgments. The Constitution established a strict separation of powers to prevent that sort of interference, particularly post-judgment reversal of a verdict rendered by a court.

So why are patent holders being deprived of the value of jury verdicts rendered in their favor?

They should not be. In no other area of law can an agency override a jury verdict.

Patent rights should not be merely second-class property. A jury verdict for a patent should be as robust as a jury verdict about a contract.

When a federal jury renders a verdict in favor of a plaintiff on a contract, then that decision cannot later be reversed by the Commerce Department. Patent holders who win jury verdicts should not find them gone with the wind whenever the USPTO, in an agency proceeding lacking the rigor of a court of law, disagrees with the validity of the patent.

The Federal Circuit should restore respect for patent rights, separation of powers, and the right to a jury trial by overturning its mistake of Fresenius. Going en banc in the Chrimar case can right this wrong.

Image Source: Deposit Photos
Image ID: 21972223
Copyright: londondeposit 

 

The Author

Andy Schlafly

Andy Schlafly has a college degree in Electrical Engineering & Computer Science, and worked in both fields before attending Harvard Law School, where he was an editor of the Harvard Law Review. He has submitted amicus briefs in support of patent rights in multiple high-profile cases.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 18 Comments comments. Join the discussion.

  1. Pro Say November 10, 2019 6:54 pm

    “So why are patent holders being deprived of the value of jury verdicts rendered in their favor?”

    Because — but only when it comes to patents — we are not a Nation of law.

    Separation of powers?

    Shoot, that’s for losers.

    And inventors are losers.

  2. Concerned November 10, 2019 9:51 pm

    Overturning a jury verdict is routine, conventional and well understood. It is an inventive concept.

    For those that are patent attorneys, did you ever think matters would get this out of hand? Sad.

  3. angry dude November 10, 2019 9:54 pm

    Pro Say @1

    If you don’t feed your army, you will feed someone else’s army

    Same with inventors

    USA is already feeding Chinese inventors (many of them escaping from the “great” USA)

    Guess I might need a little plastic surgery to pass for native (but deaf and mute) Chinese

    Shame… shame… shame…

  4. Concerned November 10, 2019 10:19 pm

    I feel that my patent application would have a great chance for approval by a jury over the current prosecution by the USPTO examiner.

    I would love to see the examiner explain to a jury how he admits my process solved a long sought problem beyond all the experts since the inception of the program decades ago, yet my process has no alleged practical application.

    Or how my inventive step is routine, conventional and well understood when nobody on Earth has ever done the same, and it was proven no Medicaid/Social Security jurisdiction performs the inventive step either.

    I just don’t see a jury accepting the examiner’s “because I said so” explanation or a bunch of irrelevant court cases that are borderplate quotes on every rejection.

    Sad state of affairs. Good luck with your efforts!

  5. Mike November 11, 2019 5:38 am

    You sue me for trespassing on your land and win. I appeal. Someone else comes along and demonstrates that it’s not your land after all, it’s a public park. I don’t pay any damages. You have a temper tantrum.

  6. Night Writer November 11, 2019 7:24 am

    This is consequence of Oil States. It has always been the case that you could lose your patent claims in another lawsuit.

    Now under Oil States the PTO can invalidate your claims pretty much at their whim.

    Oil States is the problem. Your case stands for the proposition that dist. courts no longer have much power in the patent arena. The real issue too is that not only can this happen once, but IPR after IPR can be filed by different petitioners making it almost impossible to ever have a patent that can be enforced.

  7. Josh Malone November 11, 2019 9:03 am

    Correcting Mike’s analogy.

    You sue me for trespassing on your land and win. I appeal. In parallel I appoint my friend as the master critic of all surveys and he comes along and demonstrates that your survey uses Times New Roman font which he dislikes, and declares your title void ab initio. I don’t pay any damages. You have a temper tantrum.

  8. Josh Malone November 11, 2019 9:21 am

    Or,

    You sue me for trespassing on your land and win. I appeal. In parallel I appoint my friend as the master critic of all surveys and he comes along and demonstrates that he prefers to construe your dimensions as inches instead of feet, and declares your title void ab initio. I don’t pay any damages. You have a temper tantrum and refuse to move your house to the 60 inch by 120 inch corner of your old driveway..

  9. TFCFM November 11, 2019 10:33 am

    Wow, this must be a record. The author lost me right at the first sentence:

    AS: “Jury verdicts are supposed to be sacrosanct.

    If that statement were remotely accurate, then there would never have been such civil procedures as motions notwithstanding the verdict or appellate review of jury verdicts. The existence, judicial approval, and legislative acquiescence for such (admittedly extraordinary procedures) demonstrates their validity.

    When the first sentence of a piece is an outright falsehood (and not followed immediately by, “Just kidding,” it’s difficult not to view the entire piece as fatally flawed.

  10. MaxDrei November 11, 2019 11:16 am

    Lost me, TFCFM, too. And for the same reason. Respectfully, readers, I suggest that out of the mouth of Andrew Schlafly, the word “sacrosanct” has to be approached cautiously. I suspect it means one thing to me, but something quite different to Andrew.

    One would think that all lawyers could agree on the value and integrity of the Rule of Law. But, sadly, it seems not.

    https://rationalwiki.org/wiki/Association_of_American_Physicians_and_Surgeons

  11. random person November 11, 2019 1:19 pm

    Back when I was a new patent litigator I remember a partner assigning me the research question of whether an infringement verdict would be at risk by a reexam invalidating the claims. I specifically remember saying (before doing the research) that there’s no way that could happen because of separation of powers. The judicial branch would never surrender that kind of power to the executive branch. Oops.

    Righting the ship on this one is waaaaaaaaayyyyy overdue.

  12. Anon November 11, 2019 7:53 pm

    Hmmm,

    I will have to check myself, as I find myself in agreement here with Mike, TFCFM, and MaxDrei.

    There seems to be more umbrage — at the wrong reasons — than I am comfortable with.

  13. TFCFM November 12, 2019 9:48 am

    MD @#10: “I suggest that out of the mouth of Andrew Schlafly, the word “sacrosanct” has to be approached cautiously. I suspect it means one thing to me, but something quite different to Andrew.

    Perhaps. It appeared to me that he was writing in the English language, rather than in some private, individual language specific to him. I suspect others might foolishly make the same assumption I did.

    From the American Dictionary of the English Language:

    sac·ro·sanct (s?k?r?-s?ngkt?)
    adj.
    Regarded as sacred and inviolable.
    [Latin sacr?s?nctus, consecrated with religious ceremonies : sacr?, ablative of sacrum, religious rite (from neuter of sacer, sacred; see SACRED) + s?nctus, past participle of sanc?re, to consecrate…]

  14. anonymous November 12, 2019 8:53 pm

    If you had read the brief, you’d know the word sacrosanct was used in a quote from a federal district court judge. “We hold a jury’s verdict to be sacrosanct.” United States v. Felton, 239 F. Supp. 2d 122,124 (D. Mass. 2003).

  15. Anon November 13, 2019 1:44 pm

    Like errant cites that do not represent a holding of a case, a lifting of a pin-cite for the effect of a particular word does NOT lessen the impact when people see that word and think “no, that’s not proper in this circumstance.”

    Just saying.

  16. Alan Burnett November 14, 2019 1:25 pm

    I believe a huge issue with this third party use of an IPR scenario is the real party in interest for IPRs is a complete farce. A defendant in a litigation could pay for the cost of another party to prepare an IPR petition and prosecute the IPR trial phase under the guise that the other party was a real party in interest (they other party would merely need a tangible basis for filing the IPR). Moreover, a sequence of IPRs could be coordinated by such a defendant. While this is technically not proper, the USPTO is certainly not policing it. Since jury patent verdicts can remain on appeal for years, a patent hold might have to survive multiple post-verdict IPRs. If one of those IPRs gets assigned to an incompetent board (which is pretty likely), the patent claims may/will get invalidated.

  17. Pro Say November 14, 2019 2:19 pm

    Q: When did patent rights become patent wrongs?

    A: It began with eBay.

  18. Anon November 14, 2019 6:07 pm

    Alan @ 16,

    While I do not address your assertion that the USPTO is not policing the matter, I do not agree with your statement of:

    could pay for the cost of another party to prepare an IPR petition and prosecute the IPR trial phase under the guise that the other party was a real party in interest (they other party would merely need a tangible basis for filing the IPR).

    for at least two reasons:

    1) Filing an IPR is done in the Executive branch and the IPR system was set up by Congress to explicitly NOT require any standing (as would be required in the Article III forum of the Judicial Branch). There need not be ANY basis for filing an IPR (other than the assertion that that claims are invalid for the provided prior art references).

    2) Notwithstanding the lack of any basis, filings ARE done by attorneys (and are thus controlled by attorney ethics, which include false statements as to the Real Parties In Interest). Note that THIS has played out in a different manner for those entities that basically have a “rent us” business model (for example, Unified Patents). For these entities, they have been strenuously attempting to shield their business model from being an agent of ALL of their members (and thus requiring an admission of RPI to be the members as opposed them as a Shield.

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