By Barry Herman, Esq. and Christine Dupriest
There is no doubt the U.S. Supreme Court under Chief Justice John Roberts has taken a much more active role than previous regimes in shaping our nation’s patent laws.
The Roberts Court has granted certiorari in a multitude of patent cases and has generally issued decisions that rein in the Federal Circuit’s perceived autonomy over intellectual property matters while, at the same time, restricting the rights of patentees.
How active has this court been? The U.S. Court of Appeals for the Federal Circuit formed in 1982 and the Supreme Court decided a total of eight patent cases from 1982 to 2005. Since Roberts joined in 2005, and including cases to be decided this term, the court will have heard 21 cases involving patent rights in less than 10 years.
We’ll first look back at key patent cases decided by our nation’s highest court since Chief Justice Roberts joined in 2006, including the most recent decisions from last month, and then describe the issues set forth in the cases pending in 2014.
No Special Treatment for Patent Expertise
The Federal Circuit is unique among the 13 circuit courts of appeals in that it has nationwide jurisdiction in a variety of subject areas, including patents. Thus, the Supreme Court does not grant certiorari to resolve splits between the appellate courts. Instead, the court has repeatedly issued decisions attempting to bring the Federal Circuit in line with the other appellate courts and reminding it that patent cases should not receive special treatment.
• In MedImmune, Inc. v. Genentech Inc., 549 U.S. 118 (2007), the court reversed the Federal Circuit’s decision and held that licensees should be permitted to get out of bad license deals by challenging the validity of the underlying patents.
• In Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007), the court again reversed the Federal Circuit, holding that Section 271(f) of the Patent Act, which imposes infringement liability for the unauthorized supply of “components” of a patented invention for “combination” abroad, does not cover foreign duplication of software.
• In Global-Tech Appliances Inc. v. SEB S.A., 131 S. Ct. 2060 (2011), the court affirmed the judgment of the Federal Circuit but articulated a stricter “willful blindness” standard for finding liability for induced patent infringement absent proof of actual knowledge of the patent.
• In Medtronic Inc. v. Mirowski Family Ventures LLC, 134 S. Ct. 843 (2014), the court reversed the Federal Circuit to hold that the patentee has the burden of proving infringement even in declaratory judgment actions by a licensee in good standing.
• In Octane Fitness v. Icon Health & Fitness, Inc., 572 U.S. (2014), and Highmark v. Allcare Health Mgmt. Sys., 572 U.S. (2014), the court took its attack to the Federal Circuit and so-called patent trolls, making it much easier to award sanctions against patent holders that bring meritless suits. In Octane Fitness, the court rejected the Federal Circuit’s rule that sanctions are appropriate only when a case is “objectively baseless” and “brought in subjective bad faith” and instead found that fees may be awarded in any case that “stands out from others.” Likewise, in Highmark, the court rejected the Federal Circuit’s rule that fee awards are not entitled to deference and must be reviewed de novo.
Leaving Its Mark on Patentability
The Roberts Court has likewise taken a keen interest in patentability issues, and has generally restricted patent holder rights. For example, in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), the court held that “the results of ordinary innovation are not the subject of exclusive rights under the patent laws.” The court criticized the Federal Circuit’s “teaching, suggestion and motivation” test for obviousness, instead directing courts to employ “common sense,” and making it considerably easier for accused infringers to invalidate patent claims.
In Bilski v. Kappos, 130 S. Ct. 3218 (2010), the court rejected the rule that the “machine or transformation” test was the sole test for determining whether business method claims were patentable subject matter, instead encouraging a less rigid approach focused on the idea that patents are “designed to encompass new and unforeseen inventions.”
• Recently, in Mayo Collaborative Services v. Prometheus Laboratories Inc., 132 S. Ct. 1289 (2012), the court held that the patent at issue was an unpatentable law of nature and that new patents involving correlations between natural phenomena must do more than simply recite the natural correlation and tell the user to apply it.
• In Association for Molecular Pathology v. Myriad Genetics, 132 S. Ct. 1794 (2013), the court found that merely isolating genes in naturally occurring sequences of DNA does not make them patentable; however artificially created cDNA is patent eligible.
This is not to say that the Supreme Court never agrees with the Federal Circuit or never finds in favor of patent holder rights. The Roberts Court has issued two opinions that affirmed the Federal Circuit and were favorable to patentees. In Microsoft Corp. v. i4i Ltd. Partnership, 131 S. Ct. 2238 (2011), it upheld long-standing Federal Circuit precedent that patent invalidity defenses must be proven by clear and convincing evidence. Likewise, in Kappos v. Hyatt, 132 S. Ct. 1690 (2012), it held that rejected patent applicants may raise new evidence in district court proceedings, and the courts need not defer to the findings of the USPTO.
Pending Patent Cases [Editor’s note, now decided]
To date, the Roberts Court has reversed the Federal Circuit nine times, vacated its decision three times, affirmed but changed the applicable standard twice, and affirmed three times. Its rulings have had a negative effect on patent rights 12 times, and either kept the status quo or have had a positive effect on patent rights five times. For those keeping score, the Federal Circuit’s winning percentage is only 18 percent and patentees’ winning percentage is a slightly better 29 percent.
• In Alice Corp. Pty. Ltd. v. CLS Bank Int’l. (argument held Mar. 31, 2014; Decided June 19, 2014), the court will review the dividing line between patentable and unpatentable software. The court will presumably give guidance as to which inventions may be too abstract to be patentable. [Editor’s note: Federal Circuit decision affirmed; patents in suit determined to be ineligible subject matter for patent protection]
• In Nautilus Inc. v. Biosig Instruments Inc. (argument held Apr. 28, 2014, Decided June 2nd), the court will weigh in on the standard for proving patent indefinitness. If the Court rejects the Federal Circuit’s stringent standard for proving indefiniteness, many more patents will be more vulnerable to early invalidity challenges at the claim construction stage. [Editor’s note: Federal Circuit decision vacated with instructions to apply the new standard]
• In Limelight Networks Inc. v. Akamai Techs. Inc. (argument held Apr. 30, 2014; Decided), the court will review the Federal Circuit’s single-entity rule for induced infringement. The court is expected to decide whether “a party who performs some of the steps itself and induces another to perform the remaining steps that constitute infringement has precisely the same impact on the patentee as a party who induces a single person to carry out all of the steps.”
• In Teva Pharmaceuticals USA Inc. v. Sandoz Inc. (cert. granted Apr. 1, 2014), the court will decide whether a district court’s claim construction finding should be reviewed de novo or only for clear error. If more deference is given to the district court on what is often the key issue in determining liability, patent litigants will have more certainty and potentially less costly litigations.
If the pattern holds, patent holders are not likely to be happy with the outcome of these cases, and the Federal Circuit will again be reminded that despite its supposed expertise in patent law, it will not be given any special treatment.
Barry Herman is an intellectual property litigation partner at Womble Carlyle Sandridge & Rice working in the Silicon Valley and Baltimore offices. He can be contacted at email@example.com. Christine Dupriest also litigates intellectual property and patent-related disputes and can be contacted at firstname.lastname@example.org.
Read more: http://www.therecorder.com/id=1202657274343/Viewpoint%3A-Roberts-Court-Reins-In-the-Federal-Circuit#ixzz33Ckp7ELJ