Why the Supreme Court keeps smacking down America’s top patent court

Updated by  on September 26, 2014, 10:40 a.m. ET tim@vox.com


The CLS v. Alice decision was written by Justice Clarence Thomas.Alex Wong/Getty Images
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If there’s one institution responsible for the state of patent law today, it’s the United States Court of Appeals for the Federal Circuit.

In 1982, Congress created the Federal Circuit and gave it jurisdiction over all patent cases. It was an unusual arrangement — most other areas of law are overseen by a dozen generalist appeals courts whose jurisdiction is based on geography, not subject matter. Federal Circuit decisions are subject to review by the Supreme Court, but in the early years, the Supreme Court gave the Federal Circuit a long leash. The high court rarely reviewed Federal Circuit decisions, making the lower court the de facto “Supreme Court of patent law.”

The results haven’t been pretty. During the 1980s and 1990s, the Federal Circuit made patent law increasingly favorable to patent holders. This produced a rapid increase in the number of patents and a surge in litigation. In recent years, patent litigation has become such a pervasive problem that the term “patent troll” has entered the public lexicon.

These developments have not escaped the attention of the Supreme Court, which has shown increasing interest in patent law in recent years. In a new essay, University of California, Hastings law professor Robin Feldman writes about the Supreme Court’s increasingly blunt efforts to force the Federal Circuit to respect the high court’s own precedents, which generally place stricter limits on patent rights.

In the most recent Supreme Court term, the high court reviewed a record six Federal Circuit rulings. In all of these cases, Feldman told me, ”the Supreme Court soundly and unanimously rejected the Federal Circuit’s logic.” Feldman believes that this heavy-handed approach was necessary because the Federal Circuit had “failed to take the hint” from previous Supreme Court rulings.

The most consequential of the Supreme Court’s rulings this term was CLS Bank v. Alice, the first Supreme Court ruling on the patentability of software in 33 years. Not only did the patent in Alice get struck down, but in the 3 months since then the precedent has led to at least 11 lower court rulings invalidating other software patents. Experts expect a lot more software patents to be invalidated in the coming years.

We spoke by phone on Tuesday afternoon. The interview has been edited for length and clarity.

Timothy B. Lee: You note in your paper that the Federal Circuit seems to be more favorable to the interests of patent holders than the Supreme Court. Do you have any idea why that is? One theory that some people have advanced is a capture theory — that the Federal Circuit has become unduly influenced by the ideology of patent lawyers, who tend to have a strongly pro-patent outlook.

Robin Feldman: I think the Supreme Court sees itself as sending strong messages to both the Federal Circuit and to the patent bar. For example, in the Alice decision, the Supreme Court five times referred to “draftsmen’s art” or “drafting efforts.”

These are strong messages not just to the bench but also to the bar that business as usual must change. In other words, there’s certainly a perception that the Federal Circuit and the patent bar are closely tied.

In my view, the stronger problem is an isolated court. Without the disciplining effect of frequent supervision or dialogue among other circuits, it’s difficult to avoid becoming insular. In other words, problems at the Federal Circuit are structurally predictable.

TBL: Why do you think the Federal Circuit’s approach to patent issues seems so different from that of the Supreme Court?

RF: For decades, the Federal Circuit operated with little oversight from the Supreme Court. For example, in the first 15 years [after 1982], the Supreme Court decided a total of only five cases from the Federal Circuit. That’s a remarkably small number compared to cases the Supreme Court took from other circuits. In addition, other circuits have the disciplining effect of different judges, different circuits coming to different opinions and conclusions. The Federal Circuit acted alone.

In that time, it developed a habit of relying on rules of convenience. That is, they may have reached the right result for the particular case, but they lacked a coherent logical base. With little oversight from the Supreme Court, little dialog from other circuits, it was easy for the Federal Circuit to operate in that manner.

Eventually, observations from various commentators and academics created interest at the level of the Supreme Court. And since the turn of the millennium, the Supreme Court has increasingly taken cases out of the Federal Circuit. This culminated in the last term, in which the Supreme Court took more cases than any other year since the founding of the Federal Circuit in 1982.

FOR DECADES, THE FEDERAL CIRCUIT OPERATED WITH LITTLE OVERSIGHT FROM THE SUPREME COURT

In all six patent cases decided last year by the Federal Circuit, the SC soundly and unanimously rejected the Federal Circuit’s logic. That has been a consistent pattern for the Supreme Court to the Federal Circuit in recent years.

In the article, I describe a pattern in which the Supreme Court initially tries to suggest the type of approach it would like to see, without specifying the approach, remands to the Federal Circuit, the Federal Circuit fails to take the hint, and eventually the Supreme Court slams down even harder.

TBL: It seems like since Alice, the Federal Circuit has seemed a little more motivated to follow the Supreme Court’s guidance. Do you think there’s a generational aspect to this? Are younger judges less resistant to following the Supreme Court’s direction?

THE SUPREME COURT DEMONSTRATES REMARKABLE FOCUS ON PATENT LAW

RF: I have not looked at the different judges’ opinions in a careful, empirical manner. i would say that when a court is shifting direction, it may be easier for judges who are newer to the court to adapt to the shifting winds. It’s more difficult for those who have been on the court for longer to operate in a different fashion.

TBL: Is that because the older judges have opinions on the books that they’d have to repudiate?

RF: Old habits die hard.

The lower courts have invalidated about a dozen software patents since Alice came down a few months ago. Two of those decisions came from the Federal Circuit. The language of both decisions gave careful deference to the Supreme Court.

TBL: Some people, have proposed changing the rules to give jurisdiction over some patent appeals to courts other than the Federal Circuit. Do you think reforms like that would be a good idea?

RF: I haven’t read the proposal you’re talking about so it would be difficult for me to comment on it. But I suspect we are a long way from major changes in the Federal Circuit’s jurisdiction. Enthusiasm for those proposals will depend significantly on how the Federal Circuit itself reacts to the latest round of Supreme Court pronouncements.

The public is increasingly focused on patents and patent law. If public perception about the Federal Circuit becomes unfavorable, those proposals may gain credibility.

TBL: How big of a shift will the Federal Circuit need to make on patent law to satisfy the Supreme Court?

RF: The Supreme Court can only take a limited number of cases each year. The Federal Circuit continues to have significant latitude. To me, the question will be whether the court appears to be making an effort to conform to the spirit of Supreme Court pronouncements.

I read one commentator who noted essentially that patent lawyers have survived other decisions like Alice by simply shifting the way they write patent claims, and they will respond precisely the same way. If that happens, I suspect the Supreme Court will not take kindly to it.

In taking so many cases this year, the Supreme Court demonstrates remarkable focus on patent law. I would not expect that to change any time soon.

CARD 12 OF 17LAUNCH CARDS

Why do so many patent lawsuits involve software?

Research shows that patents on software are particularly prone to litigation. There are several reasons for that:

  • Software patents can be extremely broad. For example, a famous Amazon.com patent covers the concept of purchasing products online with one click. Another patent owned by a troll called MPHJ has a patent that covers the concept of scanning documents to an email address. This kind of broad patent makes it easy for businesses to infringe by accident.
  • Most companies aren’t just users of software, they also have IT departments and web developers that produce it. So firms that wouldn’t otherwise have to worry about patent law are at risk of infringing software patents.
  • Software is extremely complex. Computer programs contain thousands, and sometimes millions, of lines of code. Since patents can be infringed in just a few lines of code, there’s no practical way for companies to figure out which patents their software products might be infringing.
Everything you need to know about patents17 CARDS / EDITED BY TIMOTHY B. LEE UPDATED JUL 1 2014, 11:40A
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