Robin Feldman, Professor of Law & Director Institute for Innovation Law UC-Hastings. (Jason Doiy)
SAN FRANCISCO — The six patent cases taken up this term by the U.S. Supreme Court have reform advocates dreaming of a rare opportunity to rein in abusive litigation. And technology companies such as Apple, Google and Yahoo are already lining up to press their cases as amici curiae—though with differing viewpoints about how explicitly to target so-called patent trolls.
Two cases on fee-shifting and another on patent eligibility of computer-related inventions have made the biggest headlines, though some reform advocates say that a previously obscure case in a long-neglected area—indefiniteness—could be the sleeper of the term.
“Now that they’re paying attention to it, it’s like, ‘Oh my gosh,’” said Michael Barclay of the Electronic Frontier Foundation (EFF), which filed an amicus curiae in the case. “That could be a really big deal.”
The Supreme Court’s 9-0 ruling last week reversing the Federal Circuit in the first of the six cases, Medtronic v. Mirowski Family Ventures, fueled speculation that the court is poised for a reset.
Robin Feldman, director of the UC-Hastings Institute for Innovation Law, said it’s no surprise Silicon Valley is paying close attention.
“The Supreme Court has taken an extraordinary number of cases that have implications not only for patent holders in general, but nonpracticing entities and their business models in particular,” she said.
Of course, nobody knows how the court will rule in the remaining cases. But most of the Federal Circuit rulings on appeal favored patent-holder rights, and the accused infringers argue they will fuel more abusive litigation if left undisturbed.
Next month the court will hear arguments in two cases that carry the most obvious implications for patent reform. The issue in Octane Fitness v. Icon Health and Fitness and Highmark v. Allcare Management Systems is the test for determining whether a case is sufficiently “exceptional” under Section 285 of the Patent Act to require the losing side to pay the winner’s attorney fees.
Some of the nation’s largest technology and manufacturing companies argue the Federal Circuit has made fee-shifting too difficult and that easing the standard would discourage abusive litigation.
Apple is making the hardest charge, arguing in its amicus brief that the Federal Circuit’s test—which requires that a case be both objectively baseless and brought in bad faith—should be replaced with one that “takes account of the business models and motivations of the parties,” among other factors. Apple’s brief, signed by Orrick, Herrington & Sutcliffe partner Mark Davies, explicitly calls out Acacia Research, ArrivalStar and Guardian Media Technologies as the kinds of patent assertion entity “profiteers” who should get close scrutiny.
“A real threat of fee shifting would take away PAE’s biggest bargaining chip,” the brief states. “It would embolden operating companies to challenge frivolous claims in court instead of capitulating in terrorem. And it would keep those PAEs that contribute nothing to the patent market from taxing the returns of innovators.”
Apple competitor Google, meanwhile, has teamed up with Cisco Systems, Intel, Facebook, LinkedIn and other companies on their own amicus filed by former solicitor general Paul Clement, a partner at Bancroft. While critical of troll litigation, Clement acknowledges there “may be room for debate about what constitutes a patent assertion entity.” He urges that district judges be given broad discretion to award fees under any combination of factors, including “unreasonable legal theories” or “vexatious litigation practices.”
Barclay, who practiced at Wilson Sonsini Goodrich & Rosati for many years before joining EFF in 2010, said it’s not surprising that technology companies would file separate briefs even if they broadly share the same goals. Differences of opinion can arise over wording, but part of it also can be finding a lawyer who doesn’t have a conflict of interest.
“Try to find a law firm that will represent Google and Apple in the same case,” he said. “Good luck with that.”
If the Supreme Court does broaden the definition of exceptional case, it could place some limits on abusive litigation, but it won’t end it, Barclay said.
“All that Highmark and Octane Fitness are going to do is clarify what the word ‘exceptional’ means,” he said. “They’re not going to get rid of the word ‘exceptional.’”
Yahoo, which teamed up with NetApp, the New York Times, General Mills and other companies, nearly argues for a straight “loser pays” rule. Fee shifting should apply “whenever it would be grossly unjust or inequitable for the prevailing party to bear its own costs.” The coalition is represented by Jeffrey Lamken of MoloLamken.
Meanwhile, three traditional manufacturing companies—while making a similar pitch for more discretion to award fees—are pushing back on all the criticism of PAEs.
“While abusive patent litigation is a serious problem,” writes Pratik Shah of Akin Gump Strauss Hauer & Feld, “it would be a mistake to hold any particular class of patent litigants at fault.”
The troll problem “is no more serious than that created by many infringing defendants” who press frivolous defenses and counterclaims,” Shah writes on behalf of 3M, General Electric and Procter & Gamble.
Some of the other patent cases pending before the Supreme Court were granted cert so recently that the full amici line-up is still emerging. However, Google has stepped forward in Limelight v. Akamai Networks, a case where the Federal Circuit held a party could be liable for induced infringement even if its customers performed the final step of the claimed method.
The Federal Circuit’s new rule will “exacerbate the growing problem of high-cost and abusive patent litigation,” Quinn Emanuel Urquhart & Sullivan partner Kathleen Sullivan wrote in a brief joined by Oracle, Cisco, Xilinx and others. Altera, HTC and others, represented by Patterson & Sheridan, are making similar arguments.
So far no amicus briefs have been filed in one of the term’s mostly closely watched patent cases, Alice V. CLS Bank. However, the case, which yielded seven separate decisions from the Federal Circuit on the patentability of certain computed-related inventions, drew a dozen briefs supporting certiorari, mainly from bar associations, academics and financial services firms.
And although it flew mostly under the radar before the Supreme Court granted review Jan. 10, Nautilus v. Biosig Instruments could become a vehicle for cracking down on vaguely drafted claims, which critics say are a staple of patent troll litigation.
Section 112(b) of the Patent Act directs that claims conclude by “particularly pointing out and distinctly claiming the subject matter.”
“Sounds pretty precise, doesn’t it?” said EFF’s Barclay.
But the Federal Circuit has held that claims meet that standard so long as they’re not “insolubly ambiguous.” In Nautilus, that standard covered a claim for a heart rate monitor that specified two electrodes in a “spaced relationship with each other.” The Federal Circuit held the claim was not insolubly ambiguous because it was clear the electrodes could not be further apart than the width of the human hand that holds the monitor.
In its amicus brief supporting the grant of certiorari, EFF argues that such vagaries would never be tolerated in other areas of the law, “but for years the Federal Circuit has tolerated equally ambiguous descriptions of the metes and bounds of patents.”
Barclay said some PAEs expressly wield that kind of vagueness in settlement negotiations. They would say, “We appreciate that our patent claims are difficult to understand, but it’s going to cost you a million dollars to go through Markman” to find out.
Hastings’ Feldman believes a copyright case, Petrella v. Metro-Goldwyn-Mayer, could also reverberate in the patent arena. Petrella will decide whether a claim over the film “Raging Bull” that was filed within the Copyright Act statute of limitations—but 40 years after the movie’s release—is barred by the equitable doctrine of laches. If the court says yes, the same rule could apply when patent claims are asserted long after businesses have invested in new technology, said Feldman. She has filed amicus briefs in Petrella and Octane Fitness.
“It is never easy to read the Supreme Court tea leaves,” Feldman said. “Nevertheless, there does seem to be a pattern in the cases in which they’re granting cert and not granting cert. The pattern doesn’t bode well for certain patent litigation business models.”
Contact the reporter at firstname.lastname@example.org.