Filter Company News
Subscribe
  • Recent Changes In The Patent Landscape
    Patent Law and Practice

    Robert J. GoldmanMany thanks to patent attorney Robert J. Goldman, author of Schwartz’s Patent Law And Practice, (8th edition, 2015) who shared his insights with Julie Blackman for this article.[1]

    Overview

    The number of patent trials has decreased recently.  In 2014, the number of trials was down 13 percent.  This was the first decline since 2009. [2]  In 2015, the number of new U.S. patents granted also decreased.[3]

    In 2011, President Obama signed the Leahy-Smith America Invents Acts (AIA) into law.  Under the AIA, as of 2012, the U.S. Patent and Trademark Office (PTO) offers new post-grant patent review procedures that have made it easier to challenge patent validity.  Then, in 2014, a unanimous Supreme Court ruled for the defendant in Alice Corp v. CLS Bank and found Alice’s inventions ineligible for patent protection because the claims described an abstract idea – a method for exchanging financial obligations.  The Supreme Court held that implementing those claims on a computer was not enough to make that abstract idea into patent-eligible subject matter.  And, although the decision in this case did not mention “software” per se, since Alice, software patents have been invalidated at a very high rate (78% as of May 1, 2015)[4] [5]

    More On The Book And The Author

    Bob Goldman is the author of Schwartz’s Patent Law and Practice (2015), the eighth edition of a volume that has guided judges and patent attorneys since the first edition, then titled Patent Law and Practice, appeared in 1988.[6]  The eighth edition is this book’s first comprehensive review of the case law and the procedural changes that have followed the AIA and the Alice decision.[7]

    Goldman, who recently retired from Ropes & Gray, represented Polaroid, Compaq/HP, Altera, Purdue Pharma, and many other major corporations at patent trials in District Courts across the country over his 38-year career.  Below, I rely on and quote from his expert view on the impact of the AIA and Alice on patent litigation.

    The Changes That Have Resulted From The AIA

    The biggest change at the Patent Office post-AIA came in the form of the new Inter Partes Review (IPR), which allowed anyone willing to pay a filing fee to challenge the validity of an already issued patent in the PTO without commencing District Court litigation.[8]

    The IPR process has relaxed the requirement of standing to challenge a patent.  Unlike in the District Courts, the challenger does not need actual or threatened litigation to request an IPR.  And, importantly, the standards of review are different.  In the District Courts, by statute, patents are presumed valid and the burden of proof to prove otherwise is clear and convincing evidence.  Defenses include but are not limited to what appears in the prior art.  Because of how cases are presented to judges and juries, business equities are frequently in play.  Not so in the PTO.  In an IPR, the PTO applies the lower burden of preponderance of the evidence in a proceeding where, nominally, only prior art defenses – obviousness and anticipation – are considered in assessing a patent’s validity.[9]

    Bob Goldman offered succinct advice:

    “If you think you have a prior art defense — if your case is about the technology and the prior art and not the business equities — the Patent Office may be the better place for you.”

    The AIA also set the IPR standard for interpreting claim language as the “broadest reasonable interpretation of the claim.”  Dictionary definitions of claim terms apply unless they are contradicted by the patent specification and file history.   Again, this is different from the District Court where claim language is interpreted in the context of the specification and file history without initial deference to dictionary definitions.

    The net effect of the differences between the IPR’s and the District Court’s approaches to patent validity broadly and claim construction specifically is the creation of two different litigation systems that can yield two different results.  And these differences have important ramifications for potential litigants.

    Goldman explained:

    “Proceeding in the Patent Office (via the IPR) based on prior art defenses is going to focus on technical differences between the prior art and the claimed invention.  District Court litigation will happen before a lay jury or a lay judge and will more heavily involve the contextual facts relating to the making of the invention, its reception in the marketplace and the surrounding dispute between the parties.  So, you have to decide whether you believe that a particular case is about technology or is it a commercial dispute that has a technical component?”

    The Importance Of Consistent Patent Policies

    Corporations have long relied on the courts to provide a consistent standard for the resolution of business matters with patents at their core.  Historical concerns about inconsistencies that attached to the region of the country in which patent trials took place were addressed by the 1982 creation of the Federal Circuit Court – the appellate court that stands between the District Courts and the Supreme Court for patent matters.

    The creation of the Federal Circuit is an active, ongoing reminder of the high value placed on consistent policy with regard to the merits of intellectual property.  And, yet, here we are faced with a fork in the road, a new divided process whose different paths can yield notably different levels of protection for patents.  The IPR facilitates challenges to validity and makes such challenges potentially easier to sustain.

    Along Came Alice

    In this context of a consistency-providing Federal Circuit, it is especially noteworthy that the Federal Circuit was deeply divided in its ruling on Alice.  Ten Federal Circuit court judges wrote seven different opinions with no single opinion supported by a majority of the judges.[10]  The Supreme Court, however, brought unanimity to this divided picture.

    As Goldman noted:

    “The Supreme Court’s unanimous 2014 ruling yielded a situation of less patent eligibility for certain classes of inventions, including many that had already been patented under pre-Alice law.  Post-Alice, it is more difficult to get patents relating to business methods and information processing, including both software and medical diagnostics, sustained.  Do you want to undertake the cost?  Post-Alice people were looking at their portfolios [of patents] and thinking that, for some types of inventions, they might not get far.”

    What Now?

    Only a few years have passed since the AIA took effect.  Goldman takes a “wait and see” attitude.  Although he acknowledges that since Alice and other cases that have narrowed patentable subject matter, “ít has become a much tougher world for people with patents that they’re trying to assert,” Goldman rightly clings to the fundamental question in this new and transitional time:

    “Is the whole patent  system running into a ditch or are things better now because people were getting patents on low quality inventions which can now be more easily challenged?” 

    Valid patents are valuable and they come to life in a world where some champion the importance of patents while others disparage them.  Brand-name pharmaceutical companies are able to charge many times the price generic companies charge because of the power of patents.  Not surprisingly, many resent this and are glad to see patent eligibility narrowed and narrowed again.  And, yet, patent monopolies undergird vigorous research and development programs that no generic could or would undertake.

    Inventors are, well, inventive, and it seems reasonable to believe that the pressures created by the AIA and Alice will yield more carefully and elaborately claimed patents with more revealed to the public in exchange for the grant of a patent.  And, once this shift has occurred, patent law and practice should achieve a new normal – hopefully, in time for the ninth edition of Goldman’s incisive book.

     


     

    [1] Julie Blackman interviewed Bob Goldman in May of 2016.

    [2] Price Waterhouse Coopers’ 2015 Patent Litigation Study:  A Change in Patentee Fortunes, May 2015:  “In a dramatic shift from recent years, the annual number of patent actions filed declined for the first time since 2009. Approximately 5,700 cases were filed in 2014—representing a drop of 13%. The decline in year-over-year growth is in stark contrast to the compound annual growth rate (CAGR) in the number of patent cases filed since 2009, which had been growing at 24% through 2013. The overall CAGR between 1991 and 2014 now stands at 7%. The decline in the number of patent cases filed is likely driven by various factors, the primary one being the Supreme Court’s June decision in Alice Corp. v. CLS Bank, which significantly impacted the ability to obtain and assert software patents.”

    [3] Biotechnology generated fewer patents in 2015 than in 2014, according to the latest edition of Thomson Reuters’ annual “State of Innovation” report as cited in Gen Exclusives, May 16, 2016  article, “Court Decisions Take a Toll on Innovation:  “State of Innovation” Report Shows Fewer Patents for Biotech in 2015,” by Alex Philippidis.  And, according to Law360 (May 17, 2016), “The number of patents granted by the U.S. Patent and Trademark Office dipped for the first time in seven years in 2015, a drop likely attributable to the Alice decision’s impact on obtaining and asserting software patents, according to an annual study by analysts at PricewaterhouseCoopers LLP.”  Patent Grants Dropped for the First Time in 7 Years, Report Says, by Kevin Penton.

    [4] See Steve Callahan, Alice: The Death of Software-Related Patents, ND Texas Blog (May 1, 2015).

    [5] Two earlier Supreme Court decisions, Mayo Collaborative Services v. Prometheus Laboratories (2012) and Association for Molecular Pathology v. Myriad Genetics (2013) have also functioned to narrow patent eligibility in medical diagnostics and biotechnology respectively.  Alice extended this narrowing from medicine to software.

    [6] The title change to the eighth edition honors the memory of the original author and then co-author along with Robert Goldman, Herbert F. Schwartz.

    [7] The seventh edition was published in 2011 just after the AIA was signed into law.

    [8]Note that requesting an IPR is much more costly than filing a lawsuit. The range of quoted prices for an IPR is $9,000 to $14,000. Filing a lawsuit in District Court costs $50. Compare: http://www.uspto.gov/learning-and-resources/fees-and-payment/uspto-fee-schedule with http://www.uscourts.gov/services-forms/fees/district-court-miscellaneous-fee-schedule. However, because proceedings in the PTO are streamlined both as to the amount of pretrial discovery available and as to the time in which they are completed, the overall cost of an IPR should be substantially less than the cost of a District Court patent infringement action that proceeds to trial.

    [9] In Covered Business Method Patent reviews, patent eligibility is also at issue.  Moreover, issues relating to claim definiteness or sufficiency of disclosure may arise as collateral issues if the patent owner attempts to amend its claims during the IPR process.  In at least one IPR, the PTO decided that the proposed amended claim at issue was indefinite.  This led to a subsequent District Court ruling that the original claims were also invalid for indefiniteness, an issue which the IPR could not resolve.

    [10] Wikipedia piece on Alice Corp v. CLS Bank (2014).


Share This: LinkedIn Twitter Google+ Facebook Email Reddit Digg
COMMENTS

Leave a Reply or Subscribe

Your email address will not be published.