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In Court Decisions

By Andrew McAleavey

The “Supreme Court for Patents”

On 06, May 2014 | In Court Decisions | By Andrew McAleavey

Right now, the Supreme Court has a grudge match brewing with the Court of Appeals for the Federal Circuit, and for patent geeks like me, it’s kinda spellbinding.

A bit of history is helpful here.  In 1982, Congress created a new appellate court, the Court of Appeals for the Federal Circuit, and gave it exclusive jurisdiction over all patent appeals, regardless of where in the country the case arose.  The Federal Circuit also has jurisdiction over all appeals of actions by the USPTO, and handles some non-patent matters as well.  This is in contrast to the rest of the legal world, in which regional circuit courts of appeal handle appeals that arise in their specific geographical areas.  In doing this, Congress wanted to standardize the treatment of patents across the nation and build up special expertise in dealing with them.

Because the Federal Circuit is the only appeals court that hears patent appeals, it is often referred to as the “Supreme Court of Patents,” and for good reason — unless the Supreme Court decides to review a decision of the Federal Circuit, its word is the final say in all things patent.  In years past, the Supreme Court might have reviewed one important patent case every few years, but particularly since John Roberts took his seat on the Court, there have been as many as two or three important patent cases on the Supreme Court’s docket almost every year.  (This may also be related to the increasing number of patents that are issued each year, and the increasing volume of patent litigation — if the number of cases increases, so does the probability that a few of them will reach the Supreme Court.)

In 1996, the Supreme Court decided in Markman v. Westview Instruments that when a court is attempting to figure out exactly what a patent covers (i.e., the scope of the patent claims), that is an issue of law, rather than a factual issue.  The way the U.S. court system works, legal issues are decided by a judge, while factual issues are typically decided by a jury.  From that point on, early in a patent infringement trial, the judge would conduct a so-called “Markman hearing,” in which the meaning and the scope of the patent claims were decided.  It’s important to understand that cases are won and lost in these hearings — if a patent is interpreted by the judge in such a way that it absolutely cannot cover what an accused infringer is doing, the patentee loses.

The Federal Circuit, after considering the Supreme Court’s Markman decision, took it one step further and reaffirmed in the 1998 case Cybor v. FAS Technologies that when patent cases are appealed, the lower court’s rulings on what the patent covers should be reviewed by the Federal Circuit de novo — in other words, without deferring to the factual or legal findings of the district court.  This is unusual in the U.S. legal system, because appellate courts usually accept the factual findings of the lower courts unless they are very clearly erroneous.Over the years since, critics of these cases, including some judges on the Federal Circuit itself, have complained that this is unfair. If the Federal Circuit can simply wipe out the lower court’s rulings on what a patent covers and substitute its own judgment they say, then the only way to find out what a patent truly covers is to appeal one’s case to the Federal Circuit.Recently, this issue has come to a head.  In January, Teva Pharmaceuticals asked the Supreme Court to review a judgment of the Federal Circuit in a patent dispute with Sandoz Pharmaceuticals.  Teva’s specific grievance was that the Federal Circuit’s decision in Cybor upends the usual rule that an appellate court must give deference to the factual findings of the lower court.

While that was happening in the Supreme Court, the Federal Circuit itself agreed to sit en banc to hear the same issue: whether Cybor should be overruled.  In that case, Lighting Ballast v. Phillips, the Federal Circuit (on February 21, 2014) ultimately upheld its earlier ruling in Cybor, leaving the law unchanged for reasons of stare decisis — essentially meaning that the Federal Circuit saw Cybor as settled law, and did not see sufficient reason to overturn it.

Meanwhile, on March 31, 2014, the Supreme Court agreed to hear the Teva Pharmaceuticals case, essentially agreeing to review what the Federal Circuit just decided in the Lighting Ballast case.  When the Court did this, it knew about the Lighting Ballast case, because that case had been pointed on in some of the briefs.

To my eyes, there seems to be a tacit but adversarial dialogue going on between the Federal Circuit and the Supreme Court.  This is not the first time that a litigant has taken a particular patent issue to the Supreme Court, only to have the Federal Circuit issue an extensive opinion on the same subject in another case before the Supreme Court could complete its work on the first case.  (It happened in 2007 with KSR v. Teleflex.)  To me, the fact that the legal principle of stare decisis features so prominently in the Federal Circuit’s Lighting Ballast decision seems to be a plea to the Supreme Court not to overturn the ruling in the Teva case.  (Anyone who watched the Roberts confirmation hearings some years ago might remember that Roberts cited stare decisis several times in explaining that even controversial cases were settled law at this point.)

There should be a decision in the Teva case by the end of the Supreme Court’s decision in June.


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