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WASHINGTON-In the often highly technical, cutting-edge world of inventions, the U.S. Court of Appeals for the Federal Circuit is the Mount Olympus of patent law. But are its 12 Olympians falling? The U.S. Supreme Court is reviewing more of the circuit court’s patent decisions and liking them less, which is a much-noted trend in the relatively small patent bar. Some patent litigators are increasingly critical of a Federal Circuit which, in its desire to achieve certainty and harmony in patent law, they say, has become overly formalistic, expanding the power of patent holders at the expense of innovation. And some scholars suggest that after 25 years as the only game in town for review of patent appeals, the Federal Circuit might benefit, both in terms of its overall workload and the development of patent law, from some outside input, not just from the Supreme Court but from a limited number of regional circuit courts getting back into the business of handling patent appeals. Does the Supreme Court’s heightened interest and increased reversals mean that the Federal Circuit has run amok? “Some of the shriller commentators have suggested the Supreme Court may be concerned the Federal Circuit is a runaway court or a pro-patent court. I don’t think there is the slightest substance to those observations by a couple of people,” said Chief Judge Paul R. Michel. His best guess as to why the high court has stepped up its interest, he explained, is that “the Federal Circuit has had a good amount of time to wrestle with fundamental issues of patent law and has developed a body of law on those fundamental issues. The time is ripe for the Supreme Court to review the way we have resolved those issues. It’s neither surprising nor worrisome.” Echoing others’ comments, litigator Kenneth R. Adamo in the Cleveland office of Jones Day, who has been involved in roughly 30 appeals in the Federal Circuit, said he believes the Supreme Court feels there was not enough supervision previously of the circuit court’s work. “What the justices read and hear from law clerks and others is there’s something wrong with the U.S. patent system despite the fact the Federal Circuit was put in place, in large measure, to unify patent jurisprudence,” he said. “Does that mean they think the Federal Circuit is lost in space? No,” he added. “They’ve looked at some of these decisions, the en banc, major decisions with pluralities and concurrences, and are wondering, why is all this still so roiled up?” High marks The patent law community itself seems divided over whether the Federal Circuit has gone off track and what, if anything, should be done about it. But those who follow the court closely generally give it high marks for being a very hard-working court with very dedicated, smart judges. Congress created the court in 1982 with the Federal Courts Improvement Act. The court was formed by the merger of the U.S. Court of Customs and Patent Appeals and the appellate division of the U.S. Court of Claims. The Federal Circuit is unique in that it is the only Article III appellate court whose jurisdiction is based on subject matter, not geographic location. Although the primary motivation for its creation was to end forum-shopping in patent cases and to bring certainty to patent law, the court also was given nationwide jurisdiction over claims involving international trade, government contracts, trademarks, federal personnel and veterans’ benefits, and certain money claims against the federal government. With the recent Senate confirmation of Judge Kimberly Moore, the court now has a full complement of 12 active judges. In a speech last summer to the Federal Circuit Bar Association, Michel, the chief judge, reported that the court’s overall condition was “fine,” but, he added, “We are now stressed, stressed both by the quantity and difficulty of our current cases.” Although the court is generally known as the nation’s top patent court, it was just this year that patent appeals became the largest category of cases on the court’s docket-a change with significant impact on the judges’ workload. “Even more significant than the rise in numbers is the rise in complexity, size and difficulty of the technology in these cases,” said Michel. “On average, the district court patent cases we receive are perhaps 10 times more difficult than the average patent case in the mid-1980s.” Patent cases represent about one-third of the court’s total caseload, said the chief judge, but if time devoted to those cases is measured, instead of just number of cases, the judges spend 50% more time adjudicating the patent cases than others on the docket. The court recently made mandatory its voluntary mediation program for all appeals, said Michel, adding that the change should help the court with its workload. Surprisingly, even when the program was voluntary, a majority of cases that did settle were patent cases, he said. The court just hired intellectual property litigator James Amend, of counsel to Chicago’s Kirkland & Ellis, to run the mediation program. “I think with this man in place, patent cases will settle at a considerably higher rate than when our program didn’t have an ace litigator running it and when it was only voluntary,” said Michel. Is it successful? As the Federal Circuit approaches its 25th birthday, the measure of its success generally depends on whom you talk to and what time period you’re talking about, said patent scholar Lee Petherbridge of Loyola Law School, Los Angeles, who, with R. Polk Wagner of the University of Pennsylvania Law School, has done empirical research on the court’s work. “In terms of the pre-Federal Circuit days, the court did go in and take hold of patents and provide certainty,” he said. “That much is true and in that sense it represents success. Patents became stronger; a presumption of validity was more recognized. What that led to was a better ability of the patentee to concentrate capital for research and development.” The court has strengthened patents, which is what Congress intended it to do, said Petherbridge. But, he added, “The same things that bring us good effects from patents also open the system and the court to criticism.” Record on appeal Some of the doctrinal criticism is obviously embodied in the recent appeals to the Supreme Court. Jones Day’s Adamo noted: from 1990 to 2001, the court granted certiorari eight times, heard eight cases, and affirmed the Federal Circuit’s decisions 50% of the time. But from 2002 to now, the court granted certiorari nine times, heard seven cases-and did not affirm in any of the cases. “I think the Supreme Court has started to pay attention to patent law for two reasons: disquiet with the Federal Circuit and also because patent law and patent reform are so on the radar screen,” said patent scholar Timothy R. Holbrook of Chicago-Kent College of Law. There have been two major recent studies of the patent system that noted problems, as well as patent reform proposals introduced in Congress, said Holbrook. On the “disquiet” reason, he said, “everyone thinks the Federal Circuit is pro-patent.” The court is pro-patent in terms of patent validity, he said. “Patents are supposed to reward significant advances in the state of the art. The obviousness doctrine governs that. But the test articulated by the court makes it very difficult to show the patent is obvious so we get lots of patents on very simple inventions.” The court’s test for obviousness is at the heart of KSR International v. Teleflex Inc., No. 04-1350, to be decided by the Supreme Court this term. The issue is fundamental to patent validity, and the solicitor general of the United States and the U.S. Patent and Trademark Office (PTO) have told the justices that the Federal Circuit is wrong. KSR and the high court’s recent rulings involving the Federal Circuit’s view of the doctrine of equivalents and the use of injunctions for patent infringement, said Holbrook, reflect the Supreme Court’s concern that patent law is out of control and that the Federal Circuit’s formalistic approach is inappropriate. “The Federal Circuit has this mantra of certainty,” he said. “It wants clarity and certainty in the law and draws that from its congressional mandate. The problem is they articulate very bright-line, formal rules. I think the Supreme Court recognizes the need for certainty but disagrees with way the Federal Circuit is doing it.” Much of what the Federal Circuit has done-both good and bad-can be ascribed to excessive formalism, agreed Jay Dratler Jr. of the University of Akron School of Law. On the good side, he said, the court has narrowed the type of evidence that can be used to construe claims in patent cases, trying to ensure that the evidence used is in the public record, accessible to all. Where it has gone badly astray, in his opinion, is its unwillingness to look beyond what is written on paper in informing its decisions. “My complaint, and the complaint of a lot of people, is you can’t really understand patents without understanding a little bit of the technology and a lot of the economics that go into the industry,” he said. “To make decisions devoid of that background is, to me, nonsensical.” The court does that, Dratler said, not only because of excessive formalism but because most of its judges lack the technical and scientific backgrounds needed for these issues. Although patents are not its sole jurisdiction, patents were the primary motivation for creating the court, he said. De novo review Another major area of concern or criticism is the Federal Circuit’s de novo review of district court patent cases and its rather high reversal rate-roughly 30% to 35%-of those decisions. Most of those cases are appeals of summary judgment decisions. The most important part of any patent dispute is the construction of claim terms in a given patent. After a Supreme Court decision removed claim construction from the province of juries and gave it to judges, the Federal Circuit held that it would review district judges’ decisions de novo. Critics of de novo review and the reversal rate say that they increase uncertainty surrounding patents as well as the cost of litigation. Last year, before she became a Federal Circuit judge, Moore, in an empirical study of district court reversals, reported the reversal rate, eight years after the Supreme Court ruling, was rising instead of declining as judges got more experience with claim construction. The fault, she wrote, rests with the Federal Circuit, which was not providing sufficient guidance: “There have not evolved any clear canons of claim construction to aid district court judges, and in fact the Federal Circuit judges seem to disagree among themselves regarding the tools available for claim construction.” Time for change? So what does it all add up to, these criticisms and the Supreme Court’s heightened interest in Federal Circuit rulings? Is it time for radical change? No one seems to be advocating a return to the pre-Federal Circuit days when forum-shopping in patent cases among the 12 regional appellate courts was rampant and patent law was all over the map. But some court scholars suggest it is time at least to discuss some change. Craig A. Nard, director of the Center for Law, Technology and the Arts at Case Western Reserve University School of Law, and John F. Duffy of George Washington University Law School have suggested allowing two or perhaps three regional appellate courts to join the Federal Circuit in reviewing patent appeals. “Our view is the problems are not with the judges, but by being the only game in town the Federal Circuit has no competition, does not enjoy a peer or the benefit of sister circuit jurisprudence,” explained Nard. “Because of that, it doesn’t have the type of engaged, thoughtful rationale other courts have.” Absent a peer, he said, the Federal Circuit has fallen into a kind of insularity and “path dependency.” It gets locked into its own precedents, he explained. “To the extent you have judges on panels disagreeing with another, it looks like the Federal Circuit is all over the place. It’s a problem.” There are no intercircuit conflicts to trigger Supreme Court review, he added. The justices, in a disproportionate number of patent cases, ask the solicitor general for his opinion and the solicitor general turns to the PTO. “That’s OK, but the best way is to have a couple of circuits weigh in and express themselves,” said Nard. And if you are the Federal Circuit with a monopoly on patent jurisprudence, he added, attorneys-whom courts rely on generally for information about the law and facts in a case-are somewhat reticent to challenge Federal Circuit precedents and make creative arguments, especially if they are repeat players at the court. “Our goal is to generate discussion,” he said. No court achieves all expectations, said patent litigator Donald Dunner of Washington’s Finnegan, Henderson, Farabow, Garrett & Dunner. The Federal Circuit, he said, was originally formed in order to avoid forum-shopping, to bring uniformity and predictability to the process of deciding patent cases and “largely it has done that.” He gives the court “very good grades,” sees nothing “broken” about it, and believes it fares no worse in the Supreme Court than other circuits and better than some, such as the 9th Circuit. Claims construction Michel, the chief judge, is keenly aware of what is said and written about the Federal Circuit. He acknowledges concerns about the reversal rate of district court patent decisions, but notes that claim construction is very complicated with many opportunities to make mistakes. Because his court does not give district court rulings the usual deference they receive in other cases, “that presses toward our disagreeing on some of the constructions.” But, he said, the average reversal rate in civil litigation is about 20%, so 30% is not shocking on de novo review of very complex cases. He thinks that legislation proposing a pilot program in certain district courts designating judges to handle patent cases would help eventually to lower his court’s reversal rate. Michel prizes the diverse backgrounds of his judges and relishes the diversity of the court’s caseload. Suggestions that the court is insular, he said, are inaccurate. “I think the diversity of judges’ background and caseload was a brilliant conception of the architects of this court,” he said. That diversity just about guarantees against insularity, he explained. Reinvolving the regional appellate courts in patent law, particularly after 25 years of noninvolvement, would create the risk of conflicts in patent law that the Federal Circuit was created to eliminate, Michel said. “I frankly don’t think there is anything fundamentally undesirable about the makeup, caseloads or performance of the Federal Circuit,” said Michel. “At the margins, everyone can have his own personal theory of what little improvements could be made, but in terms of radical changes, I certainly don’t see grounds for that,” he said. His court, Michel added, gets criticized about equally by patent holders and nonpatent holders. And, he said, it is “interesting” there is some resentment by a number of tenured patent professors that the court doesn’t cite their law review articles. “We have an extensive body of case law, and that and Supreme Court precedent is what we would mainly be citing,” he explained. There are true dilemmas in patent law, added Michel. “You’re balancing competing social interests and it’s not always clear what the right balance is. Congress has left it broadly defined in the statute, which has not changed greatly since 1952.” “A lot of patent law is judge-made law,” Michel said. “It’s quite natural and expected that the Supreme Court would, from time to time, dip into the major patent dilemmas and give them a look.”

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