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“Tell me where you are, and I’ll tell you what the law is.” That’s what patent lawyer Gerald Mossinghoff used to tell his law students at American University in the late 1970s. What Mossinghoff meant was that the federal appellate courts, left to their own devices by a U.S. Supreme Court that rarely took up patent cases, applied the law in widely different ways. Circuits got reputations. The 7th U.S. Circuit Court of Appeals, along with the 2nd and 5th circuits, became known among intellectual property lawyers as friendly forums for litigants enforcing their patents. So plaintiffs would try to file infringement suits in federal district courts covered by those circuits. “Infringers hated to be in Chicago,” home of the 7th Circuit, recalls James Davis, then and now a partner at the firm that has become Washington, D.C.’s Howrey Simon Arnold & White. On the other end of the spectrum, Davis says, the 8th and 10th circuits were both known as “patent graveyards” — good courts in which to challenge the validity of a competitor’s patent. The wide disparity in the law led to “unseemly races to the courthouse,” as companies sought to file in the most favorable venue, remembers Donald Dunner, a name partner at D.C.’s Finnegan, Henderson, Farabow, Garrett & Dunner. A lot has changed in two decades. Mossinghoff went on to serve as commissioner of the Patent and Trademark Office under President Ronald Reagan. Today, he’s senior counsel at Arlington, Va.’s Oblon, Spivak, McClelland, Maier & Neustadt. Davis became one of Howrey’s top rainmakers. And Dunner is one of patent law’s leading appellate advocates. It’s been a particularly formative period for patent law. In a time of exponential technological development, patents have been front and center. It’s even hip to be a patent lawyer now. And near the center of that revolution sits the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit was born on April 2, 1982, when President Reagan signed the Federal Courts Improvement Act. The bill, originally drafted by the Carter administration, created a new court with exclusive jurisdiction over patent appeals: the Federal Circuit or, as many practitioners call it, the CAFC. For patent lawyers and their clients, the creation of the Federal Circuit meant that the leanings of the regional circuits no longer mattered. Patent case appeals would come straight to the new court in Washington, D.C. Except for those rare instances when the Supreme Court decided to weigh in, the Federal Circuit would be the court of last resort. As the court approaches its 20th birthday, lawyers who were there at the creation agree that it has strengthened the nation’s patent system by setting uniform standards for interpreting and applying patent law. That was a goal of Pauline Newman and other in-house corporate lawyers who wanted a more predictable patent system — and hence more enforceable patents — to protect their companies’ investments in research and development. Back then, Newman was director of the patent, trademark, and licensing department at the FMC Corp., a diversified manufacturing company, and one of several in-house lawyers who lobbied hard for the creation of the Federal Circuit. Today, she sits on the Federal Circuit bench, appointed by President Reagan in 1984. “I think we’ve made an enormous difference in the technological base of the nation,” says Judge Newman. Others are not so happy. They say the court favors patent holders over their challengers and suffers from its overspecialization — problems that were predicted when the court legislation was working its way through Congress more than two decades ago. And some complain that the splits between regional circuits have merely been replaced by disagreements between different panels of the Federal Circuit — making patent law no more predictable than it was before 1982. But others respond that the court has forged an appropriate balance between upholding the validity of patents and limiting their claims. Herbert Schwartz of New York’s Fish & Neave says carefully, “The court has a complicated mission.” While the Federal Circuit garners what little media attention it receives for its patent decisions, its jurisdiction is in fact much broader. Patent cases make up about 25 to 30 percent of its caseload. The court also has exclusive jurisdiction over appeals from the Merit Systems Protection Board, the U.S. Court of Appeals for Veterans Claims, the U.S. Court of Federal Claims, the U.S. Court of International Trade, and other venues. The Merit Systems cases, which are government employment disputes, make up the largest part of the Federal Circuit’s caseload — around 33 percent. To a certain extent, this diffuse jurisdiction was necessary since the Federal Court was formed from the remains of two other courts. The original bench brought together 11 active judges from the now-defunct U.S. Court of Customs and Patent Appeals and the U.S. Court of Claims. (Four other judges came aboard with senior status.) And though the Federal Circuit was largely the vision of patent lawyers who wanted to fix the splintered state of the law, its roots go back 30 years to Chief Justice Warren Burger’s desire to find some way to reduce the Supreme Court’s burgeoning caseload. In 1972, a panel appointed by Burger and headed by Harvard Law Professor Paul Freund suggested the formation of a national court of appeals — between the regional circuits and the Supreme Court — to decide some cases and send others on to the high court. The idea stalled, but a similar suggestion followed in 1974 from a congressional panel headed by then-Sen. Roman Hruska of Nebraska. Again, the concept of a national appeals court — this one taking cases referred by the Supreme Court — went nowhere. The Hruska commission did note specifically that intercircuit conflicts in patent and tax law needed to be addressed. The commission ordered a study by Donald Dunner and University of Texas law Professor James Gambrell. Dunner and Gambrell surveyed the patent bar on the question of setting up a specialized patent court. Only one-fourth of the respondents supported the idea. “Faced with those lukewarm results,” Dunner told a Federal Circuit Bar Association conference this past spring, “Professor Gambrell and I opted instead for a national court of appeals and missed the opportunity to be declared the fathers of the Federal Circuit.” That role would be played by Daniel Meador, who in 1977 was tapped by Griffin Bell, attorney general under President Jimmy Carter, to head the Justice Department’s Office for Improvements in the Administration of Justice. The University of Virginia civil procedure professor had already pondered the theory of national courts with exclusive jurisdictions over specific areas of law. He had studied such courts in Germany, where 100-judge appellate courts divided up cases by legal specialties. Meador had concluded that national courts defined by the kinds of cases over which they presided produced tighter and more predictable case law. Given the ongoing complaints of patent lawyers and the conclusions of the Hruska commission, centralizing patent appeals “was an obvious target,” says Meador today. In 1978, Meador’s office formally proposed bringing together judges from the Court of Customs and Patent Appeals and the Court of Claims to form a new court at the level of a regional circuit. The court would handle everything those two courts had handled, plus all patent and tax appeals from the federal district courts. The notion of centralizing tax jurisdiction elicited mixed political support within the government, recalls Frank Cihlar, a lawyer on Meador’s team, and it was soon dropped from the proposal. But the inclusion of patent law — which was heavily supported by big business — was the key to Meador’s plan. At a White House ceremony in February 1979, President Carter and Attorney General Bell unveiled the Federal Circuit legislation. It was introduced in Congress by Sen. Edward Kennedy of Massachusetts, then chairman of the Judiciary Committee. In the late 1970s, this bill was one aspect of broader efforts on the part of the Carter administration to revitalize the nation’s flagging economy and to shore up the balance of trade with Japan and Germany. A group of industry representatives — including Pauline Newman, then with the FMC Corp. — was asked by President Carter to propose ways to help the country spur innovation. Donald Dunner, representing patent lawyers, was also on the panel, as was Gerald Mossinghoff, then deputy general counsel for NASA. Today, they all recall that the commission supported the centralization of patent law as a way to give corporations greater assurance that their R&D investments could pay off. “The goal was to remove the disincentives to innovation,” said Newman at this spring’s Federal Circuit Bar Association conference. “We just didn’t know how controversial this could be.” Indeed, as with any substantive bill in Congress, detractors soon surfaced. By proposing to significantly change the way that lawyers appealed patent cases, the legislation split the patent bar and drew formal opposition from the American Bar Association. The in-house patent bar continued to support a new court. But some litigators, who had learned how to use circuit conflicts to their clients’ advantage, were skeptical. “You didn’t know what you were going to get [from a patent appeals court],” says Roy Hofer, now of Brinks, Hofer, Gilson & Lione in Chicago. Hofer recalls that he and others were happy with the 7th Circuit’s way of doing business. They fretted that the Federal Circuit bench would be a dumping ground for political friends of the president with little patent experience. Worse, Hofer feared that in a court backed by big business, the small inventor would get a harsh reception. The ABA’s objections — and the split among lawyers — were laid out in a 1980 report by a special ABA committee on federal judicial improvements. The report noted that the ABA Section of Patent, Trademark and Copyright Law voted 96-66 to support the principle of centralizing patent jurisdiction in a single court of appeals. Nonetheless, the report concluded, “Although a degree of uniformity in the field of patent law would result, this benefit is not sufficient reason to restructure the appellate tier in the manner proposed.” And the ABA Section of Litigation and its Section of Labor and Employment Law also came out against the idea. When it came time for hearings on Capitol Hill, the ABA sent patent lawyer James Geriak of Irvine, Calif.’s Lyon & Lyon to represent the organization’s views. Geriak recalls telling lawmakers that the patent law, funneled exclusively through the Federal Circuit, would lose the benefit of “interaction between the circuits” — a common complaint against courts of specialized jurisdiction. But the ABA’s opposition wasn’t enough to stop the Federal Circuit proposal. The bill moved on through the Senate and House, only to get bogged down in conference committee by a number of unrelated amendments. Congress adjourned in 1980 without having passed the legislation. When President Reagan took office, he tapped Gerald Mossinghoff to head the Patent and Trademark Office. Mossinghoff supported the bill. But he was afraid that Reagan would oppose the initiative, as he was opposing most other measures pushed by the Carter administration. So Mossinghoff urged Secretary of Commerce Malcolm Baldridge to get behind for the idea. (The Patent and Trademark Office is part of the Commerce Department.) Baldridge was able to convince the Cabinet, and therefore Reagan, to back the new court. He even spoke up for it in a new round of congressional hearings. Frank Cihlar, who remained with the Justice Department, and Bruce Lehman, then chief counsel to the House subcommittee that oversaw the courts, point to another key source of support: the U.S. Judicial Conference, which Chief Justice Burger chaired. Lehman, who would later head the Patent Office during the Clinton administration, particularly emphasizes Burger’s support. “The patent people wouldn’t have carried it on their own,” he says. Bills were reintroduced in both houses in 1981, ultimately passed, and were signed by Reagan in the spring of 1982. Twenty years later, patent lawyers generally agree that the Federal Circuit has succeeded in bringing more uniformity to patent case law, making the patent system stronger in the process. “I think it’s done wonders,” says Mossinghoff, pointing out that yearly patent applications have grown from around 100,000 in 1982 to 300,000 today. Not all of that increase can be traced to the court, of course. The economy’s increasing reliance on sophisticated technology and the growth of globalization have contributed to the flood of patent applications. But, Mossinghoff adds, “The Federal Circuit really made the patent system relevant” by harmonizing the law. Roy Hofer, who had opposed the creation of the Federal Circuit, acknowledges that his original fear — that the court would be filled with political patronage appointees who would always support big business — “turned out to be incorrect. “The little guy did better than he ever anticipated,” says Hofer. Not that the court is anti-business. Former opponent James Geriak says that the court “lowered the bar” for patent holders suing infringers — lower, in fact, than the standards set by the 7th Circuit back in the old days. Additionally, says Geriak, “they haven’t been that stubborn” in undoing previous precedents — a problem he feared with a specialized court. The key to the court’s early direction was its first chief judge, Howard Markey. Markey had been chief of the old Court of Customs and Patent Appeals. He would head up the new court for eight years, during which time he established himself as something like the John Marshall of the Federal Circuit. Gerald Hosier, lawyer for the late Jerome Lemelson (a prolific inventor and a masterful player of the patent system), praises Markey for spearheading “the great renaissance in patent law.” Under Markey, the Federal Circuit cleaned up many intercircuit conflicts and issued a series of decisions tending to strengthen the value of patents. For example, in Vandenberg v. Dairy Equipment Co.(1984), Markey ended adherence to a 1941 Supreme Court holding that a patent, to be declared valid, “must reveal the flash of creative genius.” Markey wrote that the 1941 decision had long been overruled by a 1965 high court decision and found that “tests which call for an inquiry into the ‘genius’ revealed by a particular device are no longer viable.” Other key Markey-led decisions held that patents were presumed to be valid, reaffirmed the right to jury trials in patent cases, and upheld big damage awards for infringement. More generally, Dunner credits Markey with using the court’s first years to set out the parameters of patent law. Those early decisions tended to go beyond the facts and circumstances of particular cases — usually taboo among appellate judges — but, says Dunner, “Judge Markey was absolutely determined … that the courts should have an instant body of law.” Dunner gives this example: Before the Federal Circuit existed, “it used to be impossible to get a temporary injunction” in a patent infringement case. But in Atlas Powder Co. v. Ireco Chemicals(1985), the circuit established a four-part test for determining when district courts should grant injunctions. Now all patent holders alleging infringement had at least a shot at immediate relief. However, if the first years were devoted to strengthening the hand of the patent holder, says Dunner, “right now, the court is on the opposite binge.” Indeed, others have noticed the pendulum shifting back over the last several years. In Markman v. Westview Instruments Inc.(1995), the court declared that judges, not juries, have the power to interpret the scope of patents. The cases descending from Markman, some lawyers say, have tended to uphold narrow patent construction — thereby helping challengers. More recently, in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.(2000), the court limited the range of “equivalents” that certain patents cover. (A unanimous Supreme Court affirmed Markmanin 1996; the justices will review Festothis term.) “There’s a level of concern the court is construing claims too narrowly,” agrees Geriak. Observers have pointed to additional ways in which the Federal Circuit has sometimes been a less-than-stabilizing guardian of patent law. In 1998, Judge Randall Rader, who sits on the Federal Circuit, weighed in on the predictability problem in a concurrence in Cybor Corp. v. FAS Technologies Inc.He noted that the Federal Circuit in 1997 had reversed some part of a district court decision in 53 percent of its patent cases. Rader called such a reversal rate “the worst possible” because it discourages parties from either accepting the decision of the trial court or settling. “Because patent trial practitioners understand the distinct prospect of overturning trial court results on appeal, the trial arena loses some of its luster as the center stage of the dispute resolution drama,” Rader wrote. “Instead, the trial court becomes a ticket to the real center stage, the Court of Appeals for the Federal Circuit.” More recently, the reversal rate has dropped to about 30 percent, says Rader. A 50 percent reversal rate can be seen positively, if you ask University of Texas business Professor John Allison and University of California law Professor Mark Lemley. They looked at the court’s record on patent validity (and reported their findings in a spring 2000 article in the Florida State University Law Review). Analyzing all written Federal Circuit decisions on patent validity made from 1989 through 1996, they found that, on average, the court voted to uphold the validity of a patent 54 percent of the time. What did that mean? Allison and Lemley concluded: “Judges do not fit into pro-patent or anti-patent categories, or into affirmers or reversers. We think this is a good thing for the court system.” Less sanguine observers have begun to argue that while the Federal Circuit may have ended splits among the regional circuits, intracourt splits are causing the same problem. “You’ve got three or four different courts up there,” says Gerald Hosier, because decisions depend greatly on the makeup of the three-judge panel. The problem of splits between three-judge panels is, of course, not unique to the Federal Circuit. But the fact that the court decides so many cases in such a narrow area of law increases the chances for — and highlights the existence of — differences of opinion. Judge Rader believes that the Federal Circuit’s intense focus on patent cases means that the law develops more swiftly, thus creating frequent chances for conflicts to arise. He notes that he might write four opinions in one month on a particular aspect of patent law, while a regional circuit might handle only four cases a year on a comparable area of trademark or copyright law. The court makes a great effort to avoid intracourt splits. It employs four senior technical attorneys whose primary job is to check outgoing decisions for any missed precedent. The Federal Circuit is also one of the few appellate courts that circulates panel decisions to every judge on the court before releasing them. By filling out a “pink slip,” a single judge can prevent a decision from being released, sending the case back into deliberation. Occasionally, the court will vote to hear a case en banc. Sometimes, as it did in this year’s decision over the Prozac patent, the en banc court may order the original panel to rewrite its decision to comply with the overall court precedent. Judge Newman says that formal use of the pink slip is rare — less than once a year. “If we think one of our colleagues has gone off the deep end, we’ll just go over and tell him,” she says. Chief Judge H. Robert Mayer has heard generalized complaints that the court should take more cases en banc — right now it takes only a handful — to resolve conflicts between panels. But, he adds, “I don’t see the evidence.” In fact, Mayer thinks that the court issues too many precedential opinions “that are stating the same thing in different words.” Those different words become the fodder for lawyers to argue that the court is conflicted in a certain area of law. Judge Newman agrees that the court might do well to take “a few more” en banc cases, but she does not believe that would solve the problem of intracircuit conflicts. Instead, Newman sees the source of conflict in the fact that the Federal Circuit’s caseload is “right on the edge” of the law and new technology. Such cases do not lend themselves to sweeping decisions that clear up all potential areas of conflict. In applying old law to new science, the court must feel its way, cautiously. And lawyers — being lawyers — will always use the inspiration of evolving technologies to dream up new legal arguments. As Judge Newman points out, “Sitting en banc isn’t going to resolve that kind of issue.” Related Chart: 20 Years On the Bench

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