“Why does Justice Kennedy seem to go out of his way and beyond the case records to adopt these pleas of the Coalition for Patent Fairness? No question, he believed them. But on what basis?”
An untold story of the patent “reform” era is how the High Court (as well as the Congress) blithely accepted an exaggerated narrative spun by the PR campaign of the Coalition for Patent Fairness (CPF). It might have been more accurately named the “Coalition for Patent Weakness.” That is what its massive PR/lobbying campaign relentlessly sought and the result CPF members ultimately got, including at the Supreme Court. But how did it happen?
To see it emerging, one need only look at three opinions of retired Justice Anthony Kennedy: eBay in 2006, KSR in 2007 and Bilski in 2010. Then compare his many factual assertions, although unsupported, except for two, to the widely publicized narrative of the CPF.
Ten Steps to an Epidemic
The opinion authored by Kennedy in eBay Inc.v. MercExchange, 547 U. S. 388, 396-97 was not even the opinion of the Court, but a short concurrence. Yet, over time it came to be treated by district courts as if it was the majority’s view. It was distinctly hostile to injunctions being granted to prevailing patent owners, particularly non-manufacturers, seeking to enforce their “exclusive right” to block continuing infringement after trial. The Justice Thomas opinion for the unanimous Court adopted nothing from the troll narrative, even allowing injunctions for universities. Nor did Chief Justice Roberts’ concurring opinion, supporting permanent injunctions as the historically normal remedy for proven infringement of a valid patent claim. But Kennedy’s, opposing injunctions, echoed every point of the CPF mantra.
- He wrote: “An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining license fees.” But as patent lawyers all know, that model was very common throughout the 19th and 20th centuries. And perfectly consistent with the deliberate design of the U.S. patent system, which eliminated a “working requirement” and was thus quite unlike Britain’s, which required the patentee to practice his or her invention by manufacturing products.
- Next, he said: “For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent.”
- Next, he wrote: “When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient….”
- Then, he wrote: “In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods….”
- Finally, he suggested: “The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.” That makes little sense because permanent injunctions, the issue in eBay, are only granted after validity has been upheld.
- Then, in Bilski (2010), Kennedy wrote: “With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent application of general principles.” 561 U.S. 593, 606-08, 612. That sounds like obviousness, not eligibility, but Kennedy conflates them and Mayo and Alice followed his lead.
- Kennedy wrote for the Court, paraphrasing his own concurrence in eBay, that: “…some business method patents raise special problems in terms of vagueness and suspect validity.” But patentability and eligibility are distinct issues and Kennedy conflates them in a case solely about eligibility.
- He continued, saying, “If a high enough bar is not set when considering patent applications of this sort, patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change.”
- Finally, the Bilski opinion, referring to the judicial exception to eligibility for “abstract ideas”, concluded: “The Court, therefore, need not define further what constitutes a patentable “process” beyond looking to the guideposts in Benson, Flook and Diehr.” But none of these cases defined “abstract.” And they involved mathematical formulas, not computerized systems for managing multi-party economic transactions.
- In the interim, Justice Kennedy wrote the Court’s 2007 opinion in KSR, which concerned not eligibility but obviousness. 550 U.S. 398, 419. He stated: “Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility.” But under Section 103, innovation is assessed according to prior art teachings, not some subjective notion of a judge about “real invention.” Indeed, Section 103 was added to the Patent Act in 1952 precisely to negate Supreme Court requirements like “flash of genius” and “synergy.” And Section 101 explicitly approves patents on an “improvement.”
So, in the space of four years, Justice Kennedy repeated every complaint of the CPF as if established fact, although the last eight assertions above cited nothing in the appeals’ factual record or any precedent, and even the first two cited only generally, and without quotation or explanation, to a Federal Trade Commission Report from 2003.
The Infection Takes Hold
These last eight assertions are subject to serious doubt as to their accuracy. Readers can judge for themselves. Patent lawyers, however, will have little doubt they are not accurate, but rest on speculations and assumptions.
Note, too, the choice of conditional or vague wording: “can be employed”; “exorbitant fees”; ” simply for undue leverage”; “potential vagueness of some of these patents”; “suspect validity”; “may affect”; “high enough bar”; “without real innovation”; “could be flooded”; “need not further define.”
Why does Justice Kennedy seem to go out of his way and beyond the case records to adopt these pleas of the CPF? No question, he believed them. But on what basis? Special interest pleading in some amicus briefs? House editorials in newspapers like the Wall Street Journal?
Although technically just dicta, the assertions found their way into later opinions of the Court, including Mayo and Alice, hardened into doctrine and influenced outcomes as well as encouraging more speculation-based, policy-oriented dicta.
Worst of all, the assertions invited the Court to greatly expand its self-assigned role as the framer of national innovation policy, a duty rightly belonging to Congress and, I submit, beyond the competence, appeal record and proper role of unelected Justices. Nevertheless, the Court accepted the invitation.
Still Searching for a Vaccine
That is how the Supreme Court got “infected.” Dicta run amok and Justice Kennedy, relying on assumptions that mirrored arguments of the CPF, writing as policy czar. That is the genesis of the mess in patent law.
Justice Kennedy’s mantle was taken up two years later by Justice Breyer in Mayo, as a subsequent article will demonstrate. But the three Kennedy opinions show how the CPF’s PR assertions entered Supreme Court opinions, infecting injunction and eligibility doctrine.