EXPERTS, GENERALISTS, LAYPEOPLE, AND THE FEDERAL CIRCUIT.

Author:Sipe, Matthew G.
 
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TABLE OF CONTENTS I. INTRODUCTION 575 II. THE PATENT LANDSCAPE TODAY 579 A. Administrative Overhaul: from the AIA to Oil States 579 B. District Court Changes: Concentration, Pilots, and the 585 Pursuit of Juries III. METHODOLOGY 591 A. Data Source 591 B. Coding Procedure 592 IV. ANALYSIS 596 A. PTAB Data 597 B. District Court Data 605 C. Drawing Comparisons 610 D. Critiques and Concerns 617 V. MAKING SENSE OF THE DATA: ANTI-EXCEPTIONALISM AND 622 CONTEXT-SPECIFIC DEFERENCE VI. CONCLUSION 631 I. INTRODUCTION

I CANNOT STOP WITHOUT CALLING ATTENTION TO THE EXTRAORDINARY CONDITION OF THE LAW WHICH MAKES IT POSSIBLE FOR A MAN WITHOUT ANY KNOWLEDGE OF EVEN THE RUDIMENTS OF CHEMISTRY TO PASS UPON SUCH QUESTIONS AS THESE... FOR ONLY A TRAINED CHEMIST IS REALLY CAPABLE OF PASSING UPON SUCH FACTS... HOW LONG SHALL WE CONTINUE TO BLUNDER ALONG WITHOUT THE AID OF UNPARTISAN AND AUTHORITATIVE SCIENTIFIC ASSISTANCE IN THE ADMINISTRATION OF JUSTICE, NO ONE KNOWS. --JUDGE LEARNED HAND (1) Who should decide a patent case? There is no shortage of anecdotal--and contradictory--answers, depending on who is asked. Jurors are either woefully unqualified (2) or paragons of virtue (3). Judges need either more technical specialization (4)--or less. (5) And administrative tribunals are either "patent death squads" (6) or the only bulwark left against innovation-choking trolls (7).

The patent landscape has changed radically in the past decade, particularly in terms of decision-makers. The Leahy-Smith America Invents Act ("AIA") (8) expanded the U.S. Patent and Trademark Office's authority as an administrative tribunal and greatly increased third-party participation in the patent grant (and post-grant) process. (9) The Patent Cases Pilot Program now funnels many patent cases to judges with enhanced patent training and experience, on top of a litigant-driven concentration among a handful of districts and a growing demand for juries. (10) Meanwhile, more than half of the seats on the Court of Appeals for the Federal Circuit--the sole appellate tribunal of right for these matters--have changed hands. (11)

Recent empirical studies of patent litigation have offered considerable insight into, for example, the significance of different areas of patented technology (12) or particular district courts (13) on case outcomes. But few have shed light on the differences between classes of adjudicators: administrative patent judges on the Patent Trial and Appeal Board ("PTAB"), district court judges of various stripes, and juries. (14) And no studies offer a comprehensive picture of the natural experiment currently unfolding. That is, comparable patent validity issues are decided separately by judges, juries, and administrators, but all of their decision-making is reviewed in turn by a singular, controlling entity: the Federal Circuit. Accordingly, examining and comparing the results of appeals to the Federal Circuit from each of these adjudicators offers a particularly clear window into the relationships between these entities--and into the varying effects of expertise and specialization in the patent world overall.

This Article capitalizes on the current adjudicatory structure of patent law, analyzing more than two thousand Federal Circuit cases and opinions--each hand-coded for validity findings and their disposition on appeal issue-by-issue. Though an incredibly time-intensive approach, (15) the result is a uniquely complete and clear dataset. A straightforward empirical analysis of the data, moreover, challenges several longstanding and widespread anecdotal assumptions about patent adjudication.

In brief, the data suggests that the Federal Circuit affirms findings made by the PTAB reliably more often than findings made by district court judges--particularly when the findings involve questions of fact rather than questions of law. Whether the district court judge (or district itself) has more prior experience with patent cases appears to be irrelevant to appellate results. whether the finding was made by a jury, on the other hand, is highly relevant, with those findings affirmed at the highest rate. Moreover, PTAB findings that invalidate patent claims are affirmed more often than findings that uphold patent claims. No similar pattern exists in district court appeals. And the underlying technological subject matter of the patent at issue does not seem to perceptibly influence results on appeal for either.

The dataset thus tells a story about the Federal Circuit and patent litigation that is more subtle than the dominant narratives have been to date. Despite a generally non-deferential relationship to the PTAB, the Federal Circuit appears to be placing greater faith in the scientific expertise of its administrative patent judges. Likewise, given the higher rate of affirmance for claim-invalidating findings from the PTAB, the "death squad" narrative seems entirely misplaced, unless one accords the Federal Circuit the same appellation.

In contrast to scientific knowledge, pure legal specialization (as exemplified by the patent-heavy dockets among a handful of Texas and Delaware judges) appears to only have mixed results, at best, in terms of appellate outcome. Instead, it is findings made by jurors--the ultimate laypersons and generalists--that survive most easily on appeal.

These trends suggest that the Federal Circuit has perhaps begun to internalize the longstanding anti-exceptionalist messaging from scholars and the Supreme Court. (16) That is, the Federal Circuit is treating the patent space more and more like other areas of law. It is normalizing its relationship with the PTAB as one with more administrative deference. It is declining to recognize an extra-legal stratification among district court judges. And it is treating jury-made findings with the same level of extraordinary respect that they are afforded in less scientific and technical areas of law. Given the nuances of the PTAB data, the Federal Circuit may also have internalized the policy-oriented messaging behind Congress's most recent overhaul of patent law: bad patents need to go. (17)

The shape of patent litigation itself appears unlikely to change drastically in the near future. subsequent scholarship would be well served to examine comparable data in some years' time to determine the full durability of the results presented herein. They may turn out to merely reflect a transitory settling-in period after the full implementation of the AIA, but the Author suspects that they reflect an emergent status quo.

The remainder of the Article proceeds in four parts. Part II briefly outlines the recent changes to and overall trends in the patent landscape, chief among them the drastically increased role of the Patent and Trademark Office and the long-term concentration of district court litigation. Part III describes the data collection process and coding method, including particular challenges and solutions. Part IV presents various tabulations of the data, noting the most significant patterns and disparities of interest and addressing quantitative-level concerns or critiques. Finally, Part V concludes by contextualizing the empirical results among larger developments in patent law and the Federal Circuit as an institution.

  1. THE PATENT LANDSCAPE TODAY

    1. Administrative Overhaul: from the AIA to oil states

      It is difficult to overstate the magnitude of changes to the United states patent system over the past decade--starting first and foremost with the changes to its administrative apparatus: the U.S. Patent and Trademark Office ("USPTO").

      In 2011, Congress passed the AIA, (18) "the most significant overhaul to our patent system[] since the founding fathers." (19) Though historically considered a "weak agency" due to a lack of judicial deference or policymaking authority, (20) the AIA markedly enhanced the USPTO's role in shaping patent law. Most importantly, the AIA established a battery of new adjudicative proceedings before the PTAB: post-grant review (21) and inter partes review, (22) wherein third parties may challenge the validity of a recently issued patent; derivation proceedings, wherein multiple parties contest ownership of a single invention; (23) and supplemental examinations, wherein a patent owner may seek to correct errors made during prosecution. (24)

      Crucially, these proceedings are formal and "trial-like" (25)--including everything from pretrial discovery and witness testimony to cross-examination and oral argument--which bears on judicial deference for regulations or rulings resulting therefrom. (26) Indeed, the USPTO's entitlement to Skidmore deference for its interpretation of the AIA has become increasingly accepted. (27) And, at a minimum, the AIA explicitly granted rulemaking power to the USPTO over the "procedures" and "standards" applied in its new proceedings. (28)

      These proceedings have, moreover, proven quite attractive to litigants. More than 7,000 inter partes and post-grant review petitions have been filed since the AIA's implementation in September of 2012. (29) As recently as FY 2013, before these new proceedings began to generate appeals, there were fewer than 150 appeals per year from the USPTO to the Federal Circuit. (30) In FY 2016, there were nearly 650. (31) This drastic, steady increase has caused USPTO appeals, once among the smallest share of the Federal Circuit's docket, to supplant district court appeals as the leading source of cases before the Circuit. (32)

      At the same time, there has been vocal pushback against the USPTO's expanded role. Former Chief Judge of the Federal Circuit, Randall R. Rader, once labeled the PTAB a patent "death squad," (33) referring to the PTAB's high invalidation rate: nearly 70% of all final written decisions in inter partes review invalidate the patent-at-issue in full and a further 16% invalidate at least some patent claims. (34) Patent owners and academics have broadly criticized the new...

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