31 Mar 2017 in Newsletter
Why Does the U.S. Supreme Court Keep Reversing the Federal Circuit?
By: David Forman
The ultimate court of appeal in U.S. patent law is the Supreme Court, but throughout most of its history the Court decided relatively few patent cases, none at all in some years. That pattern continued after 1982, when all patent appeals were moved to a single appellate court, the United States Court of Appeals for the Federal Circuit. But then, in 2005, the Supreme Court began reviewing an unprecedented number of the Federal Circuit’s patent law decisions. Over the next 10 years, the court heard 27 patent cases, and in 22 of them the Court overturned the Federal Circuit’s interpretation of the law.
That trend has continued. In this term alone, the Supreme Court has already decided three patent cases: Samsung Electronics Co. v. Apple Inc. (design patent damages) and Life Tech v. Promega (infringement under 35 U.S.C. § 271(f)(1) for supplying single component), and SCA Hygiene Products AB et al. v. First Quality Baby Products LLC et al. (no laches defense in patent suits brought within the six-year statute of limitations) and reversed the Federal Circuit in all three cases. Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017, and ten more petitions for writs of certiorari are pending. The Federal Circuit has surpassed the Ninth Circuit as the appellate circuit most frequently reversed by the Supreme Court.
The Supreme Court’s recent interest in patent cases was discussed at a symposium on March 10, 2017, sponsored by the George Washington School of Law and the Harvard Law School, titled “Intellectual Property, Private Law, and the Supreme Court.” Lawyers who had argued patent cases before the Supreme Court, well-known law school professors, and even some judges, suggested a number of reasons that might be behind the Supreme Court’s increased interest in patent cases. As to the increase in patent cases at the Supreme Court beginning in 2005, several speakers noted that was the year when Chief Justice John Roberts joined the Court, and speculated that he may have developed an interest in intellectual property during his experience as a litigator. There was agreement that another contributing factor was the great increase in the value of patents once the Federal Circuit began to unify the law. The large number of amicus briefs filed in support of or opposition to petitions for certiorari is another sign of the importance of patent law to industry.
Another consideration that may be influencing the Court is that most cases that the Supreme Court accepts are taken to resolve a split in the circuits, where different appellate circuits have reached conflicting conclusions. Since patent appeals go only to the Federal Circuit, there is no equivalent of a split between circuits, so the Supreme Court may feel a greater responsibility to police Federal Circuit decisions to counter any drift in patent law from the mainstream. There are also some in the legal community who oppose the idea of specialized courts, and feel that it is best if generalist judges (such as the Supreme Court justices) review the decisions of specialist judges to keep them from developing their own in-bred jurisprudence.
When the Federal Circuit was formed, the Supreme Court at first seemed to be willing to leave the Federal Circuit alone to develop patent law. But, over time, some trends developed that the Supreme Court may have viewed as needing correction. First, the Federal Circuit was perceived by some as too pro-patent, with concerns that this favored weak patents and patent trolls. Whether or not this was a concern of the Court, recent decisions of the high court have mostly cut back on patent protections that had been upheld by the Federal Circuit. Striking examples are decisions that remove various kinds of subject matter from eligibility for patents, such as: Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012)(cannot patent a method viewed as encompassing a natural law); Association for Molecular Pathology v. Myriad Genetics (2013)(cannot patent segments of naturally-occurring DNA molecules, and by extension any naturally-occurring compound); Alice Corp. v. CLS Bank International (2014) (cannot patent an “abstract idea”).
Second, many Federal Circuit decisions established bright line rules, perhaps with the intention of making it easier for district courts to decide complex patent issues. However, the Supreme Court has often rejected these bright-line rules. Instead, the Supreme Court replaced them with more flexible, case-by-case analyses. Third, closely related, the Court has repeatedly rejected special rules for patent litigation created by the Federal Circuit. It would appear the Supreme Court prefers to apply the same principles to patent law which apply in other areas of the law. One example discussed at the symposium was EBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). Under Federal Circuit jurisprudence, a permanent injunction was almost always granted when a patentee proved infringement of a valid patent. The Supreme Court replaced that approach with a four-part test similar to the requirement for an injunction in other areas of the law. Thus, a patent-specific bright line rule was replaced with a flexible, case-by-case analysis similar to the standard for injunctions in other types of law. A consequence is that it has become more difficult for patent owners to enjoin infringers.
Another factor may be that the Federal Circuit decides patent cases based on case law that has evolved and developed over thousands of cases by the Federal Circuit and its predecessors, with only occasional input from the Supreme Court. The Supreme Court, on the other hand, places strong reliance on the small number of patent cases that it has decided, some of them many years ago, and shows much less interest in the case law of the Federal Circuit, which is not binding on the Supreme Court. The Supreme Court reviews Federal Circuit decisions for their consistency with Supreme Court precedents.
Of course, the Supreme Court does not take every patent case—certiorari was denied or dismissed in 35 more patent cases in 2016. It seems possible that some petitions for certiorari may have been filed simply because the Supreme Court has reversed so many Federal Circuit decisions, emboldening losers to try to win at the Supreme Court.
It seems likely that these trends will continue into the near future—many patent cases seeking appeal to the Supreme Court, the Court accepting more patent cases than in the past, and possible reversal of Federal Circuit decisions based on bright-line patent-specific rules or based on principles different from those in other areas of the law. Interestingly, Judge Kimberly Moore of the Federal Circuit said that appellants usually brief their cases based entirely on Federal Circuit law. Thus, she urged them to also discuss relevant principles in other areas of the law so that the Federal Circuit could reach decisions more in keeping with the messages that the Supreme Court has been sending to the Federal Circuit.