Friday, December 23, 2011

Judge Richard Linn: Changing Times, Changing Demands

Which cases do the Federal Circuit judges think are the most important right now? On September 27, 2011, the Honorable Judge Richard Linn of the U.S. Court of Appeals for the Federal Circuit shared his views on which cases should make it to the top of the list when he gave a videotaped lecture on "Changing Times: Changing Demands" at Southern Methodist University Dedman School of Law in Dallas, Texas. Not surprisingly, his list corresponds well with academic scholarship.

Judge Linn began with a few of the Federal Circuit’s noteworthy opinions from 2011. First, in Uniloc USA, Inc. v. Microsoft Corp., the Federal Circuit abolished the long-standing twenty-five percent rule of thumb used in calculating damages for patent infringement based on a reasonable royalty.  Uniloc has been analyzed closely by economics consultants and academics.  See The Economics of the Entire Market Value Rule: As Applied to Complex Products, by Richard S. Higgins (FSGexperts) and Donald L. Martin (ARPC, Inc.); All Your Base Are Belong to Us: Towards an Appropriate Usage and Definition of the 'Entire Market Value' Rule, by Michael A. Greene (Boston College, J.D. Candidate). Second, in Therasense, Inc. v. Becton, Dickinson & Co., the Federal Circuit raised the standard for proving a patentee engaged in inequitable conduct while procuring his patent, by requiring the alleged bad act be material to patentability and done with the intent to deceive the Patent Office. For an engaging analysis of the implications of Therasense, see Therasense v. Becton Dickinson: A First Impression, by Jason Rantanen (Univ. of Iowa) and Lee Petherbridge (Loyola-LA); and Clarifying the Doctrine of Inequitable Conduct, by Elizabeth I. Winston (Catholic Univ. of America). Third, in Association for Molecular Pathology v. USPTO (Myriad Genetics), the court brought isolated gene sequences into the realm of patentable subject matter. The policy implications of Myriad Genetics have been analyzed in Coding for Life - Should Any Entity Have the Exclusive Right to Use and Sell Isolated DNA?, by Douglas L. Rogers (Ohio State Univ.). Lastly, Judge Linn highlighted McKesson Technologies Inc. v. Epic Systems Corp. as a case to watch.  It was decided shortly after the lecture. In McKesson, the Federal Circuit denied joint infringement of a method patent when all of the claimed steps were not performed by a single entity.

Particularly interesting was Judge Linn’s discussion on the dichotomy between opinions of the Supreme Court and those of the Federal Circuit. Judge Linn explained that the Federal Circuit understands the role patents play in today’s economy, as well as the importance of bright-line rules and “knowing what to expect” in a business environment. This understanding is perhaps why they are seen as the patentee-friendly bench. The Supreme Court, on the other hand, is generally more interested in establishing broad principles and setting forth general guidelines that are left for future case-by-case elaboration. Judge Linn pointed out two consistencies in the Supreme Court's opinions on patent law. First, the Supreme Court consistently upholds Supreme Court precedent. Additionally, they consistently strike down the Federal Circuit’s bright-line and patent-specific rules in favor of flexible principles or guidelines. Judge Linn suggested this second point was the fundamental difference between the two courts.

This disconnect is evident in two of the infamous Supreme Court opinions addressed during Judge Linn's lecture. In KSR International Co. v. Teleflex, Inc., the Supreme Court abolished the rigid teaching, suggestion, or motivation test for determining obviousness in favor of the Court’s preferred case-by-case analysis, thus lowering the certainty of the outcome for the invalidity claim and swinging the pendulum to the side of the alleged infringer. For analyses of the implications of KSR, see The Layers of Obviousness in Patent Law, by Jeanne C. Fromer (Fordham); 'Obvious to Try': A Proper Patentability Standard in the Pharmaceutical Arts?, by Andrew V. Trask (Jones Day); An Empirical Study of the Effect of KSR v. Teleflex on the Federal Circuit’s Patent Validity Jurisprudence, by Ali Mojibi. Similarly, in eBay Inc. v. MercExchange, L.L.C., the Supreme Court removed the long-standing rule granting a patent holder a final injunction against a proven infringer.  This decision brought the injunction analysis of patent law under the four-factor balancing framework required for non-patent injunctions, again swinging the pendulum to the side of the potential infringer. Not surprisingly, eBay attracted serious scholarly attention. See Demystifying the Right to Exclude: Of Property, Inviolability, and Automatic Injunctions, by Shyamkrishna Balganesh (Univ. of Pennsylvania); Prospective Compensation in Lieu of a Final Injunction in Patent and Copyright Cases, by Tomas Gomez-Arostegui (Lewis & Clark); The Property Rights Movement's Embrace of Intellectual Property: True Love or Doomed Relationship?, by Peter S. Menell (UC Berkeley); The Aftermath of eBay v. MercExchange, 126 S. Ct. 1837 (2006): A Review of Subsequent Judicial Decisions, by Andrew Beckerman-Rodau (Suffolk).  Judge Linn further discussed the Supreme Court's decision to deny petition for certiorari in In re Seagate Technology, L.L.C. 

Why has the Supreme Court expressed an increased interest in patent law over the past few years? Judge Linn's lecture touched on this as well. He suggested the Supreme Court's increased interest has been a result of the rising importance of intellectual property to the nation’s economy, as well as a desire to remind the Federal Circuit that the Supreme Court actually has the final say and that patent law does not play by its own rules.  Additionally, the increased number of patent related cases heard by the Supreme Court is an indication of the growing skill of the patent bar in presenting issues to the Court and increased knowledge of the Supreme Court law clerks in the field of patent law. Regardless the reasons, the Supreme Court’s interest does not appear to be lessening. Just this month they heard arguments on whether the correlation between blood test results and patient health is patentable subject matter in Mayo Collaborative Services v. Prometheus Laboratories, Inc., on the counterclaim provision of the Hatch-Waxman Act in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, and the Court will begin the new year with Kappos v. Hyatt, addressing de novo review of patent denials.

After the noteworthy changes in patent law over the last decade, and now the passage of Leahy-Smith America Invents Act, the direction in which patent law is headed is uncertain. Some are hopeful for spurred innovation and job creation, while others are doubtful on both. Judge Linn suggested one outcome you can count on is an increase in litigation required to interpret the new legislation, including cases making their way to the Federal Circuit.

Posted by Brandi Doyle, a third-year law student at SMU Dedman School of Law, patent agent, President of the SMU Student IP Organization, and research assistant to Sarah Tran.

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