The Quiet Revolution in Patents
| Publication year | 1987 |
| Pages | 2171 |
| Citation | Vol. 15 No. 9 Pg. 2171 |
1987, December, Pg. 2171. The Quiet Revolution in Patents
There has been a great deal of recent publicity and discussion about so-called "tort reform," based upon allegedly excessive damage awards in personal injury and malpractice cases. A lesser-known phenomena involving higher and more frequent damage awards is also taking place in the field of patent law. In fact, patents have recently taken on greater commercial significance because litigated patents now have a greater chance of surviving judicial scrutiny, and of being held valid, than they would have had just a few years ago. As a result, businesses are paying greater attention to patents, both from an offensive as well as from a defensive standpoint.
These changes have been brought about by the rulings of a new federal appellate court, the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit"), which sits principally at Washington, D.C. Created five years ago, the Federal Circuit hears all appeals in patent infringement cases from each of the federal district courts throughout the country.
Congress had decided that instead of twelve regional courts of appeal, a single appellate court should be designated to review all patent infringement cases in order to establish uniformity in the patent law. It concluded that a single appellate court would eliminate the sometimes substantial regional differences in interpretation of the laws relating to patents by the several regional courts of appeal, and also the resulting regional differences in the bases for patent validity determinations. No longer are the parties to patent litigation subject to the differing interpretations of the various regional circuit courts of appeal. Moreover, an accused infringer may no longer derive an advantage by taking the initiative and filing a declaratory judgment action to force a patent validity determination in the appellate circuit which may be hospitable to that position.
Before the Federal Circuit was established, patents had a dismal track record and were being held invalid in about from 60 to 70 percent of the cases decided by all of the regional courts of appeal. When including cases in which the patents were held valid but were determined not to be infringed, the total cases lost by the patent owner amounted to about 80 percent of all patent infringement cases decided by the regional appellate courts.
In addition to the rather depressing overall patent validity and infringement statistics before the Federal Circuit was created, there was also a marked circuit-to-circuit variation in validity determination percentages. For example, in the U.S. Court of Appeals for the Third Circuit, which encompasses the states of Pennsylvania, New Jersey and Delaware, patents were determined to be invalid about 77 percent of the time; when those cases in which the patents were found to be valid but not infringed are included, the percentage of cases lost by the patent owner increased to 83 percent. On the other hand, in the Tenth Circuit, which encompasses the states of Colorado, Kansas, Oklahoma, New Mexico, Utah and Wyoming, patents were determined to be invalid in only 38 percent of the cases; when those cases in which the patents were found to be valid but not infringed are included, the percentage of cases lost by the patent owner increased to only about 43 percent.
Thus, depending on the part of the country in which the infringement suit was brought, a patent owner's chances of prevailing against an alleged infringer varied; those chances could be twice as good in one geographical area than another. This discrepancy encouraged patent owners to go "forum shopping," and accused infringers to bring a substantial number of declaratory judgment actions, all in an effort to position the controversy in the most favorable forum from the standpoint of the party initiating the litigation.
Although the new court hears all patent appeals, it is not strictly a specialized patent court. The Federal Circuit was given the jurisdiction of the former Court of Customs and Patent Appeals, which heard customs and international trade cases, as well as appeals from decisions
of the U.S. Patent and Trademark Office. It also was given the appellate jurisdiction of the former Court of Claims, which heard cases involving certain monetary claims made against the federal government. In effect, the Federal Circuit replaced those two former courts, and...
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