Yesterday, February 10, 2012, in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 2010-1510 (Fed. Cir. February 10, 2012)(majority opinion authored by Judge Gajarsa and joined by Judge Linn)(dissent by Judge Newman), the Federal Circuit majority opinion affirmed a lower court’s denial of a permanent injunction against a direct competitor of the patentee found to have willfully infringed a patent regarding surgical grafts (as well as other related medical devices where the parties were not in direct competition). The dissent focused on liability and did not discuss in any detail remedies. By the way, did I say this was a medical device case between direct competitors?
The majority agreed with the district court that “it was in the public interest to allow competition in the medical device arena” Bard Peripheral Vascular, Inc. Majority Slip. op. at 37, citing, Bard Peripheral Vascular, Inc., and David Goldfarb, M.D., vs. W.L. Gore & Associates, Inc., No. CV-03-597-PHX-MHM, 2009 WL 920300, at *4–10 (D. Az. 2009). The majority gave more analysis to affirming the on-going royalty in lieu of an injunction as an equitable remedy than to denial of the permanent injunction itself. Bard Peripheral Vascular, Inc. Slip. op. at 37, citing, Bard Peripheral Vascular, Inc., and David Goldfarb, M.D., vs. W.L. Gore & Associates, Inc., No. CV-03-597-PHX-MHM (D. Az. Sept. 2010)(Slip op.). The dissent focuses on liability and does not directly address remedies.
What is remarkable is that the refusal to grant the permanent injunction is made in light of two important facts: First, the parties were direct competitors in the market for surgical grafts, and the medical need for these products trumped the patentee’s right to an injunction. As the district court found, “Surgical graft products include those products on which Gore and Bard directly compete, including the surgical graft and patch products for which the jury awarded Bard lost profit damages. The Court has sometimes referred to Gore’s surgical graft products as its ‘Counterpart Products.’” Lines 9-12, page 12, Bard Peripheral Vascular, Inc., and David Goldfarb, M.D., vs. W.L. Gore & Associates, Inc., No. CV-03-597-PHX-MHM (D. Az. Sept. 2010)(Slip op). (For an analysis of the district court’s decision, and a detailed analysis of pricing and terms of how the on-going rights would be licensed per the district courts September 2010 order, see my colleagues’ blog at http://patent-damages.com/2010/12/detailed-opinion-on-ongoing-royalties-from-arizona-court/).
Second, the Federal Circuit majority agreed the public interest favored competition for the medical products in suit. Would this be true in every medical device patent infringement case? Would this also be true in cases over drugs, agricultural improvements, and safety devices, among other things? Further, the premise of the Antitrust Laws, including the Sherman Act, the Clayton Act, and the Federal Trade Commission Act, is that competition is a good thing in every market: Patent rights are an exception to this rule.
Like many people in this business, I understood that the Supreme Court’s decision in 2006 in eBay v. MercExchange, to be the end of “mandatory” injunctions in patent cases. Although Section 283 of Title 35 had never been amended since the 1952 codification of the patent laws into the United States Code (http://uscode.house.gov/download/pls/35C29.txt), nonetheless 54 years after that law was passed, in 2006 the Supreme Court reversed decades of precedent requiring injunctions in patent cases (with very rare and extreme exceptions) based on the statute’s language referring to traditional rules of equity. This 2006 change in the law left many patent owners with only damages as a remedy.
However, I clung to the notion that on-going equitable royalties were for cases that involved non-practicing entities, or entities that did not compete with each other directly, or sometimes even competing entities that had a history of, or a commitment to, license other competitors (whether through standards-setting activity or licensing programs, etc.). A law review article studied the frequency of injunctions in the 2008-2009 timeframe, and found direct competition to be a strong predictor of an injunction post-eBay: Rachel M. Janutis, THE SUPREME COURT’S UNREMARKABLE DECISION IN EBAY INC. V. MERCEXCHANGE, L.L.C., LEWIS & CLARK LAW REVIEW Vol. 14:2, pp. 605-607 (April 2010)(http://www.lclark.edu/live/files/4810).
Yet now, with little comment from the majority or dissent, a Federal Circuit opinion affirms denial of a permanent injunction and approves an ongoing equitable royalty where a direct competitor in the medical device field was found to be a willful infringer of the patent-in-suit — due in large part to public health or interest concerns. Is this confirmation of the dwindling right to injunctions and the increasing use of the on-going equitable royalties as the “new normal”? Is this a good thing or a bad thing? Are eBay and its progeny judicial activism at work, or common sense application of the factors for injunctive relief in equity referred to in the text of Section 283 as codified in 1952?
Your comments please?
February 11, 2012
CRAIG THORNER AND VIRTUAL REALITY FEEDBACK CORPORATION v. SONY COMPUTER ENTERTAINMENT AMERICA LLC, 2011-1114
(Fed. Cir. February 1, 2012) (Rader, J., Moore, J., Aiken, Dist J.; opinion by Judge Moore).
HTC CORPORATION v. IPCOM GMBH & CO., KG, 2011-1004 (Fed. Cir. January 30, 2012)(Bryson, J., Linn, J., O’Malley, J.; opinion by Judge O’Malley).
I had thought that the issue of claim construction and the role of the specification was resolved when the full Federal Circuit declined the motion for rehearing in Retractable Technologies, Inc. v. Beckton Dickson, last October. At that time, the majority seemed wedded to the principle that the claims and the specification must be read together, and that the claims can be no broader than the teaching of the specification. There were three separate dissents, each slightly different, but each complaining that too much importance was being put on the specification in one way or another: By Judge Rader, Judge Moore and Judge O’Malley. But no!
In HTC, decided at the end of January the specification is explicitly put on equal footing with the claim language. This matches the language of the statute, Section 112:
“The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such
full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make
and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.
The specification shall conclude with one or more claims particularly pointing out and distinctly
claiming the subject matter which the applicant regards as his invention.” (Emphasis added).
In HTC the panel explicitly wrote that the specification was of equal dignity with the claims in interpreting the scope of the patent. In contrast, Thorner resurrected lots of
language from cases stressing the difficult burden of limiting claim language beyond the wording of the claims themselves through use of the specification or the file history.
Why do you care? Because you don’t know what your patent is worth and no one else does either – claim interpretation, the legal interpretation of the scope of the
patent right – is reviewed “de novo” on appeal. The trial judge can spend a tremendous amount of time and effort construing the claims, have a trial, and
it all can be reversed, on appeal. Now how it is reversed – to be more strictly connected to the disclosure or to be read according to the wording of the claims — is “panel” dependent.
Reversal of claim construction usually means the entire case goes back to the trial judge: Everything is “un-done”, infringement (or not), validity, damages, several types of
enforceability. Add on another year minimum in the trial court after remand. Add on another year for another appeal. Spin the wheel: What will happen with the law in the interim or if the next panel does not disagree with the first panel. Maybe products will be obsolete? At least your lawyers will make a lot of money. Maybe you and your neighbor could fix your fence line this way – too bad there is no Title Policy for a patent.
Perhaps I am not being romantic enough — and I should view the claims of the patent, the property right created by them, as a “Castle on a Cloud” — floating, ever floating, never fixed, always free to take you where you want to go…Well, it is almost Valentine’s Day…
February 6, 2012
Will 2012 be the tipping point for patents in the U.S.? Bluntly put, we cannot have a patent system with the same motto as Outback Steakhouse — “No rules, just right”. Patents should be like letters of credit: Clear, quickly and easily enforced. Like letters of credit, patents should be limited to what was paid in when the owner seeks to collect its due.
The key to effective, fast patent enforcement is, like a letter of credit, to have a clear definition of the right.
The Nature of the Patent Right: Patents are written for one of ordinary skill in the art to understand them through the written description and figures. Patent claims are allowed based on what an examiner reads in the context of the application as a whole, not the claims in isolation. The “trade-off” or “bargain” in the Constitution is contribution to technology, “teaching”, versus monopoly over the invention: That contribution is in the written description (including the figures) not the claim language. The language of a claim is never going to be clear enough given the inherent ambiguity in words and their juxtaposition, for a single unquestioned interpretation. Section 112 says the claims are to point out what in the specification is the inventor’s novel contribution: The statute would lead one to believe the claims are (in effect) the “yellow highlighting” on the specification to identify what is new. A majority of judges on the Federal Circuit seem to now adhere to this view as shown by the denial of rehearing en banc in Retractable Technologies, Inc. (see prior post). All judges at every level should enforce this rule as the law as a matter of precedent, enforcement of Section 112, fulfillment of the Constitutional mandate, and the necessity of commercial reality.
Enforcement of the Patent Right: If claims are confined to the specification, we eliminate or narrow the biggest fight in most patent cases: The scope of the claims. Truth be told, direct infringement in nearly all mechanical and electrical cases should be decided on summary judgment with claim construction. Mass produced products, components for other products, products that are part of networks, software designed to run on millions of devices with the same result, all work the same every time. There is no doubt or mystery to their function, properties or design. The only doubt is if the accused part or process is within the claims. This is a question of claim construction. When claims are not construed strictly, however, judges end up with fact issues where none should exist. (Could you sell a million phones if you were not positive that they all worked the same?) If claims were construed strictly, the application of the claims to parts and processes would be clearer; fact issues would not typically exist on liability for direct infringement in the overwhelming majority of cases in mechanical and electrical fields. Intent, knowledge, credibility, joint action, divided infringement, inducement or willfulness might remain jury issues, but the streamlining of the process would be profound.
If a patent right is clearly defined, then the question for preliminary injunction should be much simpler under Fed. R. Civ. P. 65: Is there a likelihood of success that the patent as defined by its specification is infringed? Is there an adequate remedy by damages — that is does the patentee have a practice or a business model of licensing that patent? Or is the patentee under an obligation to license from a standards group or other patent pool? Is there a public policy reason not to grant the injunction, such as a risk to cancer patients denied treatment? Or the patentee does not practice the patent and products manufactured by the defendant would be unnecessarily removed from the market? Is there on balance, de minimis harm to the patent owner’s business, compared to the “start up” put out of business, before a trial?
In large part, my opinion is the reluctance to grant preliminary injunctions flows from the uncertainty as to the scope of the patent right, which raises questions of infringement, validity, and relief. For this reason the dissents from denial of rehearing en banc in Kimberly Clark (see prior post) complained that the actual test now is if there is a viable defense, not a likelihood of success on the merits. In an extreme application of this test, a district judge recently found in his view the patent was infringed, the patent owner was entitled to relief, but that since a jury might disagree with his view of the evidence, he could not say there was a likelihood of success.
The other aspects of enforcement that create uncertainty and inflate expense, include venue, damages and juries as arbiters of patent cases. Venue should be resolved by the Federal Circuit one of two ways: Either under the patent venue statute, section 1400(b) of Title 28, as a matter of patent law — or recognize that since Congress could not agree on venue reform after several attempts to do so, the Federal Circuit cannot unilaterally change the law (and “back off” until Congress Acts). Instead, Mandamus, that extraordinary writ, is now an ordinary part of patent litigation: Yet even Mandamus results are not entirely consistent. Often legalistic differences with nothing to do with the practical aspects of a trial are applied differently: E.g. places of incorporation, trump in some cases and are of no moment in others. Fighting over venue is a waste of time and money — and takes away judicial resources better spent on the merits. Venue battles need to be stopped by having a rule, one way or the other, “black or white”, pick…
Damages are now so opaque that an experienced district judge appointed an FRE 706 expert on damages in Oracle v. Google. While the recent law harkens back to early twentieth century opinions on reasonable royalties (see, e.g., apportionment discussion in Lucent v. Gateway), the courts ignore the reality that prior to the merger of law and equity in 1938, and the post-WWII combination of R.S.4919 and R.S. 4921 into Section 284, reasonable royalty was solely an equitable remedy. (see two posts from September 2010 and one post from February 2011). Now, although we are pulled back to the reasoning and requirements of 100 year-old equity cases, lay juries are instead given these questions. This type of ”selective memory” would match that of any teenager in an argument with his or her parents…
The Seventh Amendment preserved the right to jury in civil cases as it existed at the time the amendment passed. Reasonable royalties are not a type of remedy a common law court would have permitted in 1800 (the common law’s harsh rule required damages be calculated with certainty or none were awarded, despite proven wrongdoing and injury). Reasonable royalties were not given in patent cases at law prior to the merger of law and equity in 1938. Prior to the mid-1990s nearly all patent trials were bench trials. Frankly, the real focus in every patent case before 2006 (pre-eBay) was the injunction (who cared about the damages when the injunction let you write your own check?). The status quo is not fair to jurors who must be frustrated when asked to decide something that is incredibly difficult for even lawyers and judges and economists — nor is it fair to litigants left to appeal the “black box” of a jury verdict as opposed to specific, written, findings and conclusions by a judicial officer (who at least knows the law and has a strong post-graduate education, even if not technical).
Bottom line: The law limiting claims to the written description exists; it needs to be uniformly enforced. Clarity in patent scope cures a lot of ills and saves a lot of money, even if it is not perfect or a “panacea”. Most likely, clarity would make judges more comfortable with summary judgments on direct infringement, as well as preliminary injunctions. Enforcing this law uniformly would cut litigation costs and delay, and enhance patent value. Patents may be narrower, but they would be worth more, and offer better, faster, cheaper remedies.
Problems remain in opaque damages law, quirky venue practice, and reasonable royalty issues left to lay juries — that historically were, and should today, be decided by judicial officers based on findings and conclusions reviewable on appeal.
Referring to software patents, Marshall Phelps, former head of intellectual property at International Business Machines Corp. and Microsoft Corp., was quoted in Bloomberg News recently saying, “‘Nobody has ever kept competitors out of any market with patents,’ in part because software can usually be slightly changed to find a non-infringing alternative, he said.” Patents that can be enforced quickly, cheaply, predictably, might put Mr. Phelps’ observation to the test. But, in the status quo, there is much truth to this statement.
Outback Steakhouse, maybe great, but what makes for a good restaurant experience is not the way to create a strong, reliable and predictable patent system.
December 31, 2011
It appears that there will be a Senate vote on the nomination of Mr. Gilstrap to be the United States District Judge for the Eastern District of Texas, in Marshall, Texas between December 5 and the last day of the term in December. http://democrats.senate.gov/2011/11/18/consent-agreement-on-judicial-nominations/
November 23, 2011
Question for the “Readership”: Can common law intellectual property rights — under certain circumstances — provide relief where current patent law “cut backs” or intra-Federal Circuit conflicts may delay or deny the remedy your business needs? Especially in competitor cases?
For example, in a recent case, the Texas Court of Appeals for Forth Worth, held in certain areas, common law unfair competition protection does not conflict with Federal Patent Law: After full briefing, the Texas Supreme Court declined to review the opinion, Astoria Industries of Iowa, Inc. v. Brand FX Body Co., 2010 WL 1433404 (Tex.App.-Fort Worth Apr 08, 2010) (NO. 2-08-144-CV), reconsideration en banc denied (May 13, 2010), rehearing overruled (May 13, 2010), review denied (Apr 01, 2011), rehearing of petition for review denied (May 20, 2011). Astoria-Industries-2ndcoa.courts.state.tx.us_opinions_pdf
The Federal Circuit has previously likewise affirmed patent laws do not pre-empt common law rights that require proof of an additional or different element for protection, as distinct from patent protection. See, e.g., Dow Chem. Co. v. Exxon Corp., 139 F.3d 1470, 1473-79 (Fed.Cir.1998) (no complete preemption of a state law cause of action alleging intentional interference with contractual relations, even though the action implicated the patent law issue of inequitable conduct). Compare ClearPlay, Inc. v. Abecassis, 602 F.3d 1364, 1367 (Fed. Cir. 2010) (“…if there is a theory of liability for each of the asserted claims for which it is not necessary to resolve an issue of federal patent law,” the district court lacks section 1338 jurisdiction.”).
In Astoria, the Fort Worth Court of Appeals affirmed the verdict for the plaintiff on several counts, including the common law design misappropriation claim. The court of appeals rejected the argument that this type of common law claim conflicts with, or is preempted by, Federal Patent Law. The court wrote: “A common law misappropriation claim alleges a form of unfair competition under Texas law.” The court noted that under Texas law (as is the law in most states) ‘unfair competition’ is a label for statutory and non-statutory causes of action arising out of business conduct contrary to honest practice. The court found that Texas law, among other types of unfair competition, provided relief where the plaintiff, could show: (a) the creation of a product through extensive time, labor, skill and money, (b) the defendant’s use of that product in competition with the plaintiff, thereby gaining a special advantage in that competition (i.e., a “free ride”), and (3) commercial damage to the plaintiff. In the same opinion, the court held that state unfair competition laws, in contrast to patent law, generally serve a different purpose by protecting against copying of nonfunctional aspects of consumer products. The court noted that state unfair competition laws on public product features are not preempted by federal patent law where they do not protect the “functional aspects” of the product. (However, trade secret law, another type of unfair competition, can protect the functional aspects of a product, either prior to or instead of, an issued patent, for the period where the design or formula or idea is kept secret and provides a business advantage).
In this case, there was a commercial product and an argument over whether the design of the relevant portion of the product was functional or not. There was no issue as to whether a design patent was valid, or whether a utility patent covered the function. While the defendant’s design was alleged to have been copied from the plaintiff’s design, it was not an exact copy. The court affirmed a jury verdict based on conflicting evidence of whether the design of the stairs at issue in the case were functional or not; finding sufficient evidence to show the stair design was not functional (as decided by the jury).
Unlike copyright law, patent law does not have broad preemption or preemptive jurisdiction. Of course, cases can be “removed” (transferred) from state courts to the federal court where the state court is located, if the state law claim crosses the line into rights protected by utility patents, Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) (and Federal Circuit cases cited above). But common law claims do exist for a manufacturer who has invested in product design to stop a competitor who in effect copied the design, and is now exploiting the manufacturer’s investment in competition with the manufacturer. Common law claims based on state law can be brought in state court where goods are sold in competition with each other, or other venues as permitted by state jurisdictional and venue rules — as well as federal courts under diversity of citizenship jurisdiction. Lanham Act claims might also be brought, but common law claims are typically slightly more flexible in their interpretation than federal law claims. State procedural rules may be better for a plaintiff depending on the state — for example, the law on preliminary injunctions, or the summary judgment standard. Finally, there is no issue of invalidity for failure to comply with any aspect of the patent laws.
And this isn’t just a Texas thing: Massachusetts has a very potent unfair business practices statute, Massachusetts General Laws Chapter 93A (see, e.g., “Section 2. (a) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.”). Likewise many other state have similar common law or statutory protections against unfair competition.
I will also add the court of appeals for Fort Worth does not cover the same counties as the United States District Court of the Eastern District of Texas in Marshall. In other words, this is not a “Marshall” re-run, for those who think “Mars-hall” is really 2 “four letter words”. Generally, when Texas lawyers think of the court of appeals in Fort Worth, they do not think of a warm, cozy plaintiff-oriented forum…
From a strategic point of view there may be a benefit if these claims are brought and pursued separately in a state court action (configured so that it is not subject to “removal” to federal court or will later be subject to claim or issue preclusion from a co-pending federal court action). In federal courts, pendent state claims tend to get treated as the “tail of the dog”. Further, with the Federal Circuit’s expanded jurisdiction under the AIA (revised Section 1295(a)(1) of Title 28 of the United State Code), the appeal may end up in the Federal Circuit, which historically places patent law principles before those of unfair competition. (see slides posted on Multi-Defendant Litigation after the AIA, both in prior post and on Lessons and Learning Page).
As patent law works its way through the uncertainty the splits in the Federal Circuit acknowledged by different members of the court in their dissents from en banc review recently (see prior post on November 15, 2011), and limitations on injunctive relief and damages developed under patent law in the last five years, state statutes and common law on unfair competition may provide a “design around” for injured parties…
Again, food for thought, materials and questions for readers to ponder, and comments invited…
November 17, 2011
According to Patent strategy aims to further boost innovation, China Daily, November 16, 2011, the Chinese Government, released yet another plan to increase the quantity and quality of patents by Chinese companies in Beijing on November 9, 2011 . The plan was followed by a technology fair to publicize the plan’s goals. This plan includes the formation of patent pools: “Under the national plan, around 30 patent pools from industry associations will be founded over the next year that will allow member companies and organizations in the same industry to cross-license patents, with leading companies expected to play a major role.” In addition, the Government’s plan calls for more resources to assist Chinese Companies in obtaining, enforcing and defending against patents in other countries: “The program also plans to assist in international patent and trade disputes. Authorities have been helping Chinese companies apply for patents overseas and will provide aid to help protect their intellectual property on the world market. The system will include guidance, analysis and patent warnings for Chinese companies doing business overseas.”
Meantime, back in the U.S. of A., we have in the last few weeks, seen Federal Circuit Judges split over whether to take cases to clear up what the Judges themselves say are conflicts and confusion on important legal issues for U.S. patent value and enforcement: The standards for preliminary injunctions, see dissents from denial of petition for rehearing en banc in Kimberly Clark v. First Quality, 2010-1382, September 29, 2011, and dissents on recent denial of rehearing en banc on claim construction. See prior post on Retractable Technologies Inc. v. Becton, Dickinson & Co. We have seen the Federal Circuit make clear recently that patent infringement carries no presumption of irreparable harm. See prior post on Robert Bosch LLC v. Pylon Manufacturing Corp. The AIA has adopted measures designed to make it more difficult for patent owners to enforce their patents against multiple infringers, 35 U.S.C. Section 299, and changes to post grant review and inter partes procedures that are intended as much to encourage more stays of litigation as well as improve the process. See presentation posted on Multi-Defendant Patent Litigation After the AIA.
So here are my questions, 1) given that the government of China is managing its economy and patent system to improve the patent position of Chinese companies at home and elsewhere, will the balance of patent power tip against U.S. companies? 2) Should U.S. companies be stocking up on patents in other jurisdictions where the time and cost of enforcement, as well as the definition of the patent right, are either more predictable or less problematic (or both)? 3) Does the U.S. need to pull out of the confusion over claim scope (claim construction) and preliminary injunctions, as well as make enforcement more predictable in results and time, to be competitive? 4) Are we at a tipping point?
These are questions for the business, legal, academic, and political communities to ask and discuss — not in light of the annoyance of any particular problem — but in light of where we as a country are headed….It is time to put aside partisan views and to look at the big picture.
November 16, 2011
I have revised a set of slides from a panel presentation from an IPO webinair I participated in on November 8, 2011. The topic is multi-party patent litigation as impacted by the new Section 299 of Title 35 of the United States Code: Limiting joinder of defendants in a single patent suit. The slides also touch on changes to Federal Circuit jurisdiction in Title 28, as well as other changes to be implemented over time in parts of Title 35 (false marking, post grant and inter partes review, virtual marking, best mode, etc.). These slides raise points for consideration and discussion among business people, lawyers, academics and others, but do not predict how the law will develop over time: Presentation on AIA’s Impact on Multi-Party Patent Litigation
November 13, 2011
Steve Susman, Chad Everingham and I will be speaking at 2pm Eastern, 1pm Central, 11am California, tomorrow, Tuesday, November 8, 2011, on the impact of Leahy-Smith on litigation.
November 7, 2011
In the dissent from the denial of rehearing en banc in Retractable Technologies, Inc. v. Beckton, Dickson , October 31, 2011 (see my October 31 post and link to the order), Judge Moore wrote, joined by Chief Judge Rader, the following:
“Claim construction is the single most important event in the course of a patent litigation. It defines the scope of the property right being enforced, and is often the difference between infringement and non-infringement, or validity and invalidity. Despite the crucial role that claim construction plays in patent litigation, our rules are still ill-defined and inconsistently applied, even by us. Commentators have observed that claim construction appeals are “panel dependent” which leads to frustrating and unpredictable results for both the litigants and the trial court. See, e.g., Fed. Cir. Split for 2nd Time In 2011 On Use of Patent Specification In Claim Construction, BNA Patent, Trademark & Copyright Law Daily (noting the “disagreement within the Federal Circuit on the extent to which judges may look to the patent specification to interpret claims continues”); Court Continues to Struggle with Claim Construction, Patently-O (2011), http://www.patentlyo.com/patent/2011/07/court-continues-to-struggle-with-claim-construction.html (noting the “panel dependence” in claim construction); see also Wegner, H.C., Arlington Indus. v. Bridgeport Fittings: The 20 Year Claim Construction Debate, IP Frontline, http://www.ipfrontline.com/depts/printabletemplate.aspx?id=24829 (“Until there is a final resolution of this debate there will never be clarity in claim construction at the Federal Circuit.”). Nowhere is the conflict more apparent then in our jurisprudence on the use of the specification in the interpretation of claim language.”
In a separate dissent, Judge O’Malley did not criticize the methodoloy but did criticize the Cybor (de novo) standard of review. Judge O’Malley underscored that the lack of deference to the factual context of claim construction produced such inconsistent results that there was a split of 2-1 in the panel decision.
Here is the question for the house. Please comment. If three Federal Circuit Judges say that claim construction now is so unpredictable as require en banc rearticulation of how to do claim construction (whether due to a split or splits among the panels, or the standard of review under Cybor) + if the panel itself split two to one on this one case + the panel’s 2 to 1 majority, reverses the constructions used by two district judges, THEN how can there be any intentional infringement of a patent?
How can we have a law of willful infringement (short of copying)? How can we have a law of inducement? How can we have any intent based infringement if the law of claim construction is in such a mess that multiple experienced judges disagree on the result, methodology and standard of review that should be applied?
How can litigants be found to intentionally infringe when the property right itself is not subject to definition short of a final appellate opinion?
Should defendants move for summary judgment on inducement claims? On willfulness? On the basis that there cannot be a penalty for violation beyond those available for direct infringement, when no one can predict prior to the court of appeals’ decision what will be a violation?
What do you think?
November 2, 2011
This post is about the cost of confusion in patent law in the U.S. and the courageous statements by three judges on the Federal Circuit that acknowledged that confusion in asking for a rehearing en banc to end the confusion. More so, it is about how U.S. patent rights are diminished by the confusion in the very definition of the right.
In many trials of patent cases, lawyers will argue to the jury that a patent is like a deed to a piece of real estate: An interest in property granted by the government. The “claims” (the numbered paragraphs at the end of the U.S. Utility Patent) are like the description, the “metes and bounds” of the property. In real estate, the “metes and bounds” attempt to carefully define the boundaries of the property. Sales of property financed by a bank require a “survey” where the boundaries are carefully measured according to the standards that must be followed by a certified surveying firm. Title insurance must be purchased in the event that the survey contains a mistake or omission or that there is a question of title from past transactions.
In an order today 2010-1402 Retractable Technologies Inc v Becton Dickinson denial of en banc order and dissents (available here and on the Federal Circuit’s home page), three Judges of the Court, including its Chief Judge, acknowledged that claim construction had become a confusing mess creating inconsistent appellate opinions – leaving trial judges, patent owners, and litigants without clear guidance on how to measure the “metes and bounds” of the patent right. Imagine owning a piece of land where you had no certainty where the property line was located?
This is candor that I applaud as both honest and courageous. However, it points out a fundamental problem with the U.S. Patent — it is a property right that has no definition anyone can rely on in commerce. Worse, the patent right is subject to common law (judicial) revision — even abrogation — without notice. In 2006, 54 years after the 1952 Patent Act, in the eBay case, the U.S. Supreme Court reversed over a half-century of firm unquestioned patent law, by eliminating the “mandatory” injunction awarded to a patentee. Recently in the Robert Bosch case (subject of an earlier post, “The new exclusivity”), the Federal Circuit eliminated even a presumption of irreparable harm from a verdict and judgment of infringement. In the recent past, courts reversed long standing practices on approximating reasonable royalties (which by definition are a fiction); limited the scope of “means plus function” claims; and created mandatory license procedures for future use of an invention after a judgment of infringement. None of this came from legislative mandate. All of it hurt the value of a U.S. patent.
The point is that we need consistent, reliable rules for patent interpretation, remedies, and enforcement. The creation of the Federal Circuit was designed to accomplish this end, but as the three courageous judges pointed out today, the opposite effect has fallen on the most essential aspect of the right itself: The definition of the property awarded to the patentee by the U.S. Patent Office.
I was taught in law school the “mailbox” rule, that a document was effective upon being mailed. The professor explained the rule simply by saying you need a rule that is uniform and easily understood and applied by everyone. The rule could be when the document is mailed, or when it is received, or when it is postmarked, but among these equally good alternatives, you have to pick a rule.
There is much to be said to interpreting the claims in light of the disclosure in the specification. There is, however, a simplicity in interpreting the claims based on their wording regardless of the disclosure absent an express definition or limitation of the use of a word by the patentee. There is good reason to interpret patents as a matter of law, giving them uniform definition once construed; but also something to be said for interpreting the claims informed by the facts surrounding the technology. But it is far less important what the rule is than that there be ONE CLEAR RULE. We can no more afford to have the “metes and bounds” of U.S. patents subject to different measures, than we could afford to have such uncertainty in real estate transactions. Imagine your living room is on your property today but not tomorrow?
An asset’s value is impaired if no one can tell you what it is worth…that’s where we are…
October 31, 2011