The case for preferring patent-validity litigation over second-window review and gold-plated patents: when one size doesn't fit all, how could two do the trick?

University of Pennsylvania Law Review

Volumn 157, Issue 6, 2009, Pages 1937-1963

  Scott Kieff, F ^a  

^a WASHINGTON UNIVERSITY SCHOOL OF MEDICINE   (United States)

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EID: 69849112237     PISSN: 00419907     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (88)

1. See, e.g., Mark Lemley et al., What To Do About Bad Patents?, REGULATION, Winter 2005-2006, at 10, 12-13 ("[Applicants should be allowed to 'gold-plate' their patents by paying for the kind of searching review that would merit a presumption of validity.").
2. See 127 S. Ct. 1727 (2007) (holding that a patent was invalid having decided that it claimed a combination of two pre-existing technologies that any person of ordinary skill in the art would have been motivated to combine in a way that would have been expected to achieve the claimed invention).
3. See 545 F.3d 943 (Fed. Cir. 2008) (en banc) (narrowing what constitutes patentable subject matter in the field of business mediods), petition for cert, filed, 77 U.S.L.W. 3442 (U.S. Jan. 28, 2009) (No.08-964). 4
4. See FED. R. CIV". P. 1 ("[These rules] should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.").
5. See id. 13(a) (compulsory counterclaims); id. 18-22 (joinder of claims and parties); id. 24 (permissive and of right intervention); id. 56 (summary judgment).
6. See, e.g, F. Scott Kieff & Troy A Paredes, The Basics Matter: At the Periphery of Intellectual Property, 73 GEO. WASH. L. REV. 174 (2004) (urging that when problems arise at the interfaces that IP law shares with other areas of law, such as contract or antitrust, attention should be paid to considering the full range of interests from each of these distinct disciplines rather than taking any subset of them out of context).
7. See, e.g., F. Scott Kieff, Coordination, Property, and Intellectual Property: An Unconventional Approach to Anticompetitive Effects and Downstream Access, 56 EMORY L.J. 327 (2006) [hereinafter Kieff, Coordination, Property, and Intellectual Property] (providing a more indepth discussion of NIE analysis of enforcing IP like other forms of property);
8. F. Scott Kieff, On Coordinating Transactions in Intellectual Property: A Response to Smith's Delineating Entitlements in Information, 117 YALE L.J. POCKET PART 101 (2007) [hereinafter Kieff, On Coordinating Transactions in Intellectual Property] (providing a brief NIE analysis of enforcing IP rights like other forms of property). This Article also expands and updates the particular ideas about how to improve decision making about patent validity, as explored in
9. F. Scott Kieff, The Case for Registering Patents and the Law and Economics of Present Patent-Obtaining Rules, 45 B.C. L. REV. 55, 118-22 (2003) [hereinafter Kieff, Registering Patents], which elucidates how less searching review, such as mere registration without examination, may minimize the overall social costs of patent procurement and enforcement.
10. See, e.g., Stephen H. Haber et al., On the Importance to Economic Success of Property Rights in Finance and Innovation, 26 WASH. U. J.L. & POL'Y 215 (2008) (providing an NIE discussion of the importance of property rights to economic success).
11. See Kieff, On Coordinating Transactions in Intellectual Property, supra note 7, at 102-03 (discussing the benefits of this socially constructive coordination).
12. This is one role played by patent law's disclosure requirements. See 35 U.S.C. § 112,(2006).
13. This is the role played by the novelty, bar, and nonobviousness requirements. See 35 id. §§ 102-03.
14. See, e.g., Richard B. Stewart & Cass R. Sunstein, Public Programs and Private Rights, 95 HARV. L. REV. 1193 (1982). In describing the public values theory of agencies, Stewart and Sunstein write that the purpose of administrative agencies is to help to define and realize social and economic norms in industrialized society.... [It is] not a matter of counting economic costs and benefits, or of defending private entidements, but part of a continuing process of deciding what sort of a society we shall be - how risk averse, how hospitable to entrepreneurial change, how solicitous of the vulnerable, and how willing to allocate resources through markets or public control. Id. at 1238;
15. see also Richard B. Stewart, Administrative Law in the Twenty-First Century, 78 N.Y.U. L. REV. 437, 439-46 (2003) (reviewing various approaches to administrative law and describing the ultimate persistence of each); cf. JOHN S. APPLEGATE ET AL., CTR. FOR PROGRESSIVE REFORM, WHITE PAPER NO. 90, REINVIGORATING PROTECTION OF HEALTH, SAFETY, AND THE ENVIRONMENT: THE CHOICES FAONG CASS SUNSTEIN (2009), available at http://www.progressivereform.org/ articles/SunsteinOIRA901.pdf. (providing a critical review of the balancing choices made following the cost-benefit analysis approach to administrative law).
16. Compare A.C. PIGOU, THE ECONOMICS OF WELFARE 160-61, 166-68 (1920)160-61, 166-68 (emphasizing the need to set a perfect tax or subsidy for each activity that creates externalities), with
17. R.H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1, 6-8 (1960) (noting the inherent reciprocity of these externalities).
18. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) ("Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions....").
19. See Fla. Dep't of Revenue v. Piccadilly Cafeterias, Inc., 128 S. Ct 2326, 2339 (2008) ("[I]t is not for us to substitute our view of... policy for the legislation which has been passed by Congress." (quoting In re Hechinger Inv. Co. of Del., 335 F.3d 243, 256 (3d Cir. 2003))).
20. See FED. R. CIV. P. 1 ("[These rules] should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.").
21. See U.S. CONST, art III, § 2, cl. 1 (defining the federal judicial power as extending to "cases" and "controversies").
22. FED. R. CIV. P. 12(b)(6).
23. See, e.g., id. 26 (governing initial and pretrial disclosure).
24. Id. 56.
25. See id. 8(c) (listing estoppel and res judicata as affirmative defenses); id. 13 (governing counterclaims and crossclaims); id. 14 (governing third-party practice); id. 18-21 (governing joinder of claims and parties).
26. Id. 11.
27. See 28 U.S.C. § 1927 (2006) (permitting courts to sanction attorneys who "unreasonably" or "vexatiously" multiply proceedings).
28. See Mucha v. King, 792 F.2d 602, 606 (7th Cir. 1986) (ascribing to Rule 52(a) of the Federal Rules of Civil Procedure "notions of the proper division of responsibilities between trial and appellate courts" as well as "considerations of comparative accessibility to the evidence").
29. See In re Hall, 781 F.2d 897, 898-900 (Fed. Cir. 1986) (holding that a doctoral thesis that was shelved at a university library in Germany was sufficiendy publicly accessible to be treated as a "printed publication" under 35 U.S.C. § 102(b) (2006), making it available as prior art against a patent).
30. See In re Cronyn, 890 F.2d 1158, 1161 (Fed. Cir. 1989) (holding that three undergraduate theses "had not been catalogued or indexed in any meaningful way" and so would not be treated as "printed publications" under 35 U.S.C. § 102(b)).
31. See Gayler v. Wilder, 51 U.S. (10 How.) 477, 494-98 (1850) (applying the predecessor to 35 U.S.C § 102(a) and not counting the use of a technology relating to a safe as prior art unless it is accessible to the public);
32. see also 35 U.S.C. § 102(f) (derivation); 35 U.S.C. § 102(g) (prior invention). 28 U.S. CONST, amend. VI ("In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial... by an impartial jury....").
33. U.S. CONST, amend. VII ("In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial byjury shall be preserved....").
34. See, e.g., J. Steven Baughman, Reexamining Reexaminations: A Fresh Look at the Ex parte and Inter partes Mechanisms for Reviewing Issued Patents, 89 J. PAT. & TRADEMARK OFF. SOC'Y 349, 358 (2007) (noting that forty-one percent of inter partes reexamination requests involve patents already in litigation); Andrew S. Baluch &
35. Stephen B. Maebius, The Surprising Efficacy of Inter partes Reexaminations: An Analysis of the Factors Responsible for Its 73% Kill Rate and How to Properly Defend Against It 2, 7 (2008), http://www.patendyo.com/patent/ law/baluchmaebius.pdf (finding that contested reexaminations have an average pendency of 42.5 months). 31
36. See Posting of Jack Davis to SiliconBeat, Local Firm Blames 25% Job Cut on Microsoft Action, http://www.siliconbeatcom/2008/03/26/local-firm-blames-25: job-cuton-microsoft-action/ (Mar. 26, 2008) (noting that Microsoft placed all twenty-nine patents held by its potential competitor Avistar into reexamination).
37. See 409 U.S. 63, 71-72 (1972) (holding that a computer program was not a patentable process).
38. See 33 F.3d 1526, 1544 (Fed. Cir. 1994) (relying on the production of a "useful, concrete and tangible result" in determining that an invention involving a mathematical algorithim was patentable), abrogated by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc).
39. Jeffrey H. Birnbaum, Lawmakers Move to Grant Banks Immunity Against Patent Lawsuit, WASH. POST, Feb. 14, 2008, at A22.
40. 2 CHARLES DICKENS, A Poor Man's Tale of Patent, in WORKS OF CHARLES DICKENS 150 (1869).
41. See 35 U.S.C. § 282 (2006) ("A patent shall be presumed valid.").
42. See Rockwell Int'l Corp. v. United States, 147 F.3d 1358, 1364 (Fed. Cir. 1998) (requiring the challenging movant to show invalidity of the claims by "clear and convincing evidence").
43. See supra Section IIIA.
44. See supra Section III.B.
45. For more on fee shifting and incentives to settle, see, for example, George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1, 6-12 (1984) and
46. Keith N. Hylton, Fee Shifting and Predictability of Law, 71 CHI.-KENT L. REV. 427, 436-40 (1995), for a discussion of the Priest-Klein model.
47. See infra note 44 and accompanying text.
48. See 35 U.S.C. § 285 (2006);
49. see also id. § 284 (allowing a court to "increase the damages up to three times the amount found or assessed").
50. See Rohm & Haas Co. v. Crystal Chem. Co., 736 F.2d 688, 690-691 (Fed. Cir. 1984) ("Cases awarding attorney fees to prevailing patentees have typically found 'exceptional' circumstances in willful and deliberate infringement....").
51. 44 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc).
52. Id.
53. Id.
54. See 547 U.S. 388, 390 (2006) (discussing whether a patentee is entitled to an injunction after validity and infringement have been adjudicated).
55. See KSR Int'l Co. v. Teleflex Inc., 127 S. Ct 1727, 1732 (2007) (rejecting a strict application of the "teaching, suggestion, or motivation test" in favor of an approach focused more on "common sense").
56. See In re Bilski, 545 F.3d 943, 965-66 (Fed. Qr. 2008) (en banc) (holding that a business method encompassed a "purely mental process" and thus was not sufficiently tangible to be eligible for a patent), petition for cert, filed, 77 U.S.L.W. 3442 (U.S. Jan. 28, 2009) (No.08-964).
57. See F. Scott Kieff, Property Rights and Property Rules for Commercializing Inventions, 85 MINN. L. REV. 697, 713 n.76 (2001) (noting that numerous patents are later held invalid by a federal court);
58. Mark A Lemley, Rational Ignorance at the Patent Office, 95 Nw. U. L. REV. 1495, 1501, 1504, 1507 (2001) (estimating that less than two percent of patents are litigated and about five percent of patents are licensed for revenue, while nearly two-diirds of patents are eventually abandoned).
59. See Kieff, Registering Patents, supra note 7, at 74-100 (arguing for a soft-look examination system).
60. George L. Priest, Reexamining the Selection Hypothesis: Learning from Wittman's Mistakes, 14 J. LEGAL STUD. 215, 216-22 (1985); Priest & Klein, supra note 40, at 6-30. 53
61. See 1 LOUIS Loss ET AL, SECURITIES REGULATION 195-215 (4th ed. 2006) (discussing securities-registration and reporting requirements).
62. Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337, 1344 (Fed. Cir. 2004) (en banc) (holding that no adverse inference of willful infringement can be drawn from invocation of attorney-client privilege by a defendant in an infringement suit).
63. See Mark A Lemley & Ragesh K. Tangri, Ending Patent Law's Willfulness Game, 18 BERKELEY TECH. L.J. 1085, 1092 (2003) (arguing that companies that understand the system will pay the amount of money necessary to obtain an opinion that is favorable).
64. See id. at 1092-1093 ("Lawyers will generally be able to come up with plausible arguments that the patent is invalid or not infringed.").
65. 978 F. Supp. 184, 187 (D. Del. 1997), aff'd in part, vacated in part, 152 F.3d 1342 (Fed. Cir. 1998).
66. CellPro, 978 F. Supp. at 193.
67. CellPro, 152 F.3d at 1364.
68. See FED. R. CIV. P. 11(c) ("[T] he court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule [on representations made to the court].").
69. 110 F.3d 780, 781 (Fed. Qr. 1997).
70. Id. at 784.
71. Id.
72. See id. ("[T] here is no doubt that Judin failed to meet the minimum standards imposed by Rule 11....").
73. The Supreme Court's continued interest in the "Doctrine of Equivalents" - a body of law that allows patentees to capture territory beyond the literal scope of their claims - is motivated by this interest in giving patentees additional wiggle room. See
74. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 40-41 (1997) (reaffirming the vitality of the doctrine).
75. The desire of courts to cabin patent claim scope furthers this notice function of claims.
76. See 35 U.S.C. § 112 (2006) (requiring an enabling "written description of the invention" along with claims that "particularly point out" the legally protected territory). Indeed, the case law remained fairly stable in this area from at least as early as Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555 (Fed. Cir. 1991), to at least as late as the Rochester case in 2004.
77. See Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916, 930 (Fed. Cir. 2004) (finding that a class of methods for selectively inhibiting one pathway over another was not supported by disclosure that did not recite a specific compound that performed the method).
78. See 318 F.3d 1081, 1084 (Fed. Cir. 2003) (deciding that the patentee did not commit fraud or breach of contract).
79. See KSR Int'l Co. v. Teleflex Inc., 127 S. Ct 1727, 1730 (2007) (creating a more flexible obviousness test).
80. See In re Bilski, 545 F.3d 943, 963 (Fed. Cir. 2008) (en banc) (creating a more flexible test for patentable subject matter), petition for cert, filed, 77 U.S.L.W. 3442 (U.S. Jan. 28, 2009) (No.08-964).
81. See 548 U.S. 124, 137 (2006) (Breyer, J., dissenting from the dismissal of certiorari) (arguing that a "process" must "not amount to a simple natural correlation, i.e., a 'natural phenomenon'")
82. See No. 04cv1200 JAH (RBB), 2008 WL 878910, at *6-10 (S.D. Cal. Mar. 28, 2008) (emphasizing the importance of the distinction between man-made and natural phenomena in determining patentability).
83. Giles S. Rich, The Proposed Patent Legislation: Some Comments, 35 GEO. WASH. L. REV. 641, 644 (1967) (emphasis omitted) (responding to the then-proposed legislation S. 1042, 90th Cong. (1967); H.R. 5924, 90th Cong. (1967);
84. and REPORT OF THE PRESIDENT'S COMMISSION ON THE PATENT SYSTEM, "TO PROMOTE THE PROGRESS OF... USEFUL ARTS" IN AN AGE OF EXPLODING TECHNOLOGY (1966)).
85. See, e.g., Matthew D. Powers et al., The Successful Patent Litigator Must Learn the Way of Strategy: The Opportunities and Risks of Claim Construction, in
86. F. SCOTT KIEFF ET AL., PRINCIPLES OF PATENT LAW 874-877 (4th ed. 2008) (explaining how a smart patentee will move for summary judgment that the patent is not invalid before claim construction is fully decided).
87. See Haber et al., supra note 8, at 216 (noting that property rights are "at their best" when structured to be easy to find, predict, bundle, and divide).
88. See Kieff, Coordination, Property, and Intellectual Property, supra note 7, at 397 (explaining the economic forces acting on the parties in the Blackberry litigation, including the restrictions on the market for corporate control).