Troubled Federal Circuit Hobbles US Patent System

It’s been another dismal term for the Federal Circuit Court of Appeals. Six of its patent law decisions were reviewed in the US Supreme Court’s 2016-17 term, and the Federal Circuit’s decisions were overturned in all six cases. That, unfortunately, is not surprising. Over the past 15 years, the tribunal once known as the nation’s “patent court” has seen many of its most important patent law decisions reversed by the Supreme Court– sometimes in withering opinions. This has seriously undermined the Federal Circuit’s power, reputation, jurisprudence, and (apparently) self-confidence – causing a major problem for the United States’ patent system.

The Federal Circuit was created in 1982 as a specialized court that would hear all appeals in certain areas of the law, including patent law. And “the court came in like gangbusters,” said Ronald Abramson, a partner in the law firm of Lewis Baach Kaufmann Middlemiss. In its first twenty years, the Federal Circuit issued many landmark rulings that made it easier to obtain and enforce patents.

“The Federal Circuit thought it was the Supreme Court of patent law,” said Prof. Timothy R. Holbrook of Emory University School of Law.

With good reason. In the US, the Federal Circuit judges were unmatched in their technical knowledge and expertise in the intricacies of patent law. And their rulings were rarely questioned by the Supreme Court.

“The Supreme Court reviewed only five cases across the first 15 years of the Federal Circuit’s life,” said Prof. Robin Feldman of University of California, Hastings Law School.

Then, in 2000, the situation changed. The US Supreme Court took a renewed interest in patent law. It began slowly, with the high court hearing one patent case in 2000, then another in 2001. A trend developed, with the Supreme Court gradually reviewing more patent cases per term. During the 2014-15 term, the high court heard an unprecedented six patent cases.

Supremely Critical

In the vast majority of post-1999 patent cases, the Supreme Court has overturned the Federal Circuit’s rulings. This, however, was to be expected. “If a Federal Circuit ruling was fine, the Supreme Court wouldn’t bother granting certiorari,” said Meredith Martin Addy, a partner in the law firm of Tabet DiVito & Rothstein.

But the sheer number of Supreme Court patent cases decided in the past 17 years – that was unusual. So, too, were the Supreme Court’s opinions in these cases, with the high court often unanimously rejecting longstanding Federal Circuit doctrine – and occasionally leveling harsh criticism at the Federal Circuit. For instance, in Limelight Networks, Inc. v. Akamai Technologies, Inc. [pdf], the Supreme Court wrote that the nation’s specialized patent court “fundamentally misunderstands what it means to infringe a patent.” In Bilski v. Kappos [pdf], “the Justices suggested that they disagreed with everything the Federal Circuit had ever said about patentable subject matter in the Circuit’s [almost] 30-year history,” said Feldman.

The Supreme Court has wound up throwing much of the Federal Circuit’s patent jurisprudence out the window. The high court overturned rules on such important topics as patent-eligibility, indirect infringement, willful infringement, patent exhaustion, venue for infringement suits, availability of injunctive relief, and amount of damages for design patent infringement.

“There is precious little from the Federal Circuit’s jurisprudence over the last 30 years that has survived the last 10 years of the Supreme Court,” said Abramson.

That analysis goes too far, according to some experts. “The Supreme Court has taken big swings at some important matters, but there’s still a lot left [of the Federal Circuit’s jurisprudence],” said Holbrook. “For instance, the Supreme Court has not addressed the disclosure obligations for a patent – how to make and use the invention.”

However, the Supreme Court isn’t done reviewing patent law. It has already agreed to hear two patent cases next term, and more are expected.

Bad Reputation

The Supreme Court’s repeated reversals of the Federal Circuit have diminished the lower court’s power and reputation, according to many experts. “The Federal Circuit should be the final authority for most of patent law, but now everyone says they will appeal to the Supreme Court, because they know the Supreme Court has been on a jag overruling the Federal Circuit,” said Abramson. He added, “Even district courts are taking notice. They don’t give Federal Circuit rulings the same weight as other Court of Appeals’ rulings.”

The Federal Circuit, too, has apparently lost confidence in itself. It has lately been issuing an unprecedented number of non-precedential rulings and Rule 36 affirmances (which lack opinions). That’s a big problem, according to Addy, because these decisions fail to provide needed guidance on the law. Moreover, she adds, the Federal Circuit “judges don’t have to be as careful in making these types of rulings, so they have issued sloppy decisions that don’t make any sense.”

The court is in crisis, according to many experts. “Congress could indeed decide that its grand experiment [with a single patent appellate court] has been a failure,” said Feldman.

One solution would be to end the Federal Circuit’s monopoly over patent appeals and redistribute patent appeals across all the circuit courts. That would end the Federal Circuit’s isolation and force it to address other appellate courts’ interpretations of patent law. “Isolated courts are at a disadvantage because the circuit system provides checks and balances on logical inconsistencies,” explained Feldman.

However, splitting patent appeals among the circuit courts was tried before, and it was a “disaster,” said Holbrook. The circuits had wildly different interpretations of patent law, and “some circuits would never find infringement,” Holbrook noted. The Federal Circuit was created specifically to fix these wild disparities in patent law.

Reverting to the pre-Federal Circuit era would create other problems. The regional circuits have decided few patent cases over the last 35 years, so those courts are unfamiliar with the intricacies of patent law and the complex technologies involved in many patent cases. It would take time and a great deal of effort to bring these already overburdened courts up to speed. “Shifting the cases back to them would create disruptions in the patent system,” said Holbrook. And, he added, “I don’t think the regional circuits want to hear patent cases.”

Many experts assert there is no need to make any major changes to the Federal Circuit, at least not yet. “Things are evolving at the Federal Circuit,” said Holbrook. He added that, instead of ignoring Supreme Court precedents and insisting on its own interpretation of patent law, “the Federal Circuit, in its recent decisions, has been trying its best to follow the Supreme Court. The Federal Circuit has started to get the message [from the high court], in part because there are so many new judges on the Federal Circuit.”

Though troubled, the Federal Circuit is vital for the nation’s patent system, numerous experts assert. “The Federal Circuit has specialized knowledge and expertise in patent law. It serves a very valuable role,” said Addy.

Supporters claim that the Federal Circuit’s role – as the main arbiter of patent appeals – cannot be performed by regional circuits; that was tried before with poor results. Nor can that role be performed by the Supreme Court, because the high court can squeeze only a handful of patent cases onto its crowded docket. Thus the Supreme Court can deal with patent law in only broad terms.

“The Supreme Court issues general guidance, and the Federal Circuit needs to implement that guidance,” said Addy. “But the Federal Circuit isn’t doing this because it is gun-shy right now. The Federal Circuit is not the strong appellate body it needs to be.”

Addy, however, remains optimistic. “I am a fan of the Federal Circuit. I want it to become a great power in patent law, as that court was in the past.” She added, “I believe the Federal Circuit will find its footing and make more confident decisions… and if they do so, the Supreme Court will turn its attention to other matters.”

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