Federal Judges Weigh In On Patent Reform, Supreme Court's KSR Ruling
During the House floor debate on patent reform, legislators boasted that they had sought input from all the industries and organizations affected by the legislation. But they apparently overlooked one of the groups most steeped in patent litigation: the U.S. Court of Appeals for the Federal Circuit.
Federal Circuit Chief Judge Paul Michel expressed dismay that judges were left out of the discussion on how to overhaul the patent system. Speaking before the annual meeting of the Intellectual Property Owners Association, Michel said it was "very unfortunate" that no judge had been called as a witness in Congressional hearings on the legislation, nor had Congress solicited an opinion from the Judicial Conference or sought an analysis from the Federal Judicial Center.
"As far as I could tell, the Congress had little interest in what the judges thought the practical impact [of the patent reform legislation] would be, both at the trial level and the appellate level," Michel said during a Sept. 11 panel discussion in New York City.
Michel said he is very concerned about the provision that would allow interlocutory appeals of rulings on patent claim terms. "Essentially any ruling on a claim construction would become immediately appealable in the absence of a final judgment" under this provision, he said. He said the law would increase the time between filing an appeal and issuance of an opinion from one year to two or three years.
The House adopted its version of the patent reform bill last week, although bill sponsor Rep. Howard Berman, D-Calif., pledged to revise the provision on apportionment of damages, which is opposed by the pharmaceutical and biotechnology industries (1"The Pink Sheet" Sept. 10, 2007, p. 11).
While legislators did not seek his input, Michel sent letters to Senate leaders in May and again in June stating his opposition to the interlocutory appeals provision and the provision on apportionment of damages in infringement suits (2"The Pink Sheet" June 25, 2007, p. 9).
In his talk, Michel focused on claim construction. He said the Federal Circuit's high reversal rate of district court rulings on the meanings of patent term claims was unacceptable "if nothing else because of its impact on retarding settlements." He suggested that the Federal Circuit reconsider how it reviews district court decisions on claim construction and what level of deference is appropriate to give district court judges.
He also suggested two ways to improve claim construction proceedings: having technically trained special masters carry out claim construction and using mediation or arbitration early in a dispute, even prior to filing. He noted that the Federal Circuit currently requires mediation in selected cases.
Federal Circuit Judge Pauline Newman spoke about the Supreme Court's recent ruling on what courts should consider in determining if an invention is obvious. In KSR v. Teleflex, the court found the test used by the Federal Circuit to determine obviousness is too rigid and formulaic (3"The Pink Sheet" May 7, 2007, p. 7).
Newman said the ruling gives judges and intellectual property owners a chance to take a fresh look at what is patentable. She told the meeting attendees - lawyers and members of such companies as IBM, Intel and GlaxoSmithKline - that it was up to them to decide how the system should be changed.
"Do we really need to think creatively and profoundly about some drastic and dramatic changes?" she asked. "Can we really live with a nine- or 10-year backlog in examination?"
"We have been presented with the opportunity and the obligation to rethink where we want to go with what's patentable and how much predictability or enhancement [there should be]," she continued. "Perhaps we need some sort of super-specialized tax court kind of structure where the experts will do the claim construction instead of the judges."
Michel suggested that the Federal Circuit would not dramatically change its approach to patent disputes in response to the Supreme Court's finding. Comparing the decision to a flagman guiding a fighter pilot onto an aircraft carrier, Michel said: "I think the KSR decision was a signal from the deck, but it doesn't really answer the questions."
The ruling "just tells us to be more flexible and more reflective, so we'll have to work it out," he added. "I think it's a matter of small adjustments, 5 percent this way, 6 percent that way."
- Brenda Sandburg
This article is reprinted from "The Pink Sheet" – September 17, 2007
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