This Article explores the largely overlooked relationship between claim construction and patent assertion entities (patent "trolls"), finding that claim construction problems and trends benefit patent assertion entities. First, the Federal Circuit's deep divide over the proper approach to claim construction creates uncertain patent scope, which is widely recognized as a core reason for the success of patent assertion entities. Second, case law and commentary increasingly endorse an approach to claim construction that relies on the "general meaning" in the technical field with limited reliance on the patent itself, which benefits patent assertion entities by increasing the breadth and uncertainty of patent scope. Third, the Supreme Court's recent adoption of a more deferential standard of review for claim construction in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. increases the benefits patent assertion entities receive from filing in favorable district courts, like the Eastern District of Texas, as well as their incentives to do so.
If patent assertion entities are as problematic as widely thought, these claim construction problems and trends warrant reconsideration. Current claim construction rules and trends may be warranted despite their positive impact on patent assertion entities. And other means may exist for combatting patent assertion entities without altering claim construction rules or trends. But the positive effects for patent assertion entities must at least be factored into any cost-benefit analysis of claim construction rules. Moreover, the fact that current claim construction rules and trends produce the conditions under which patent assertion entities thrive suggests that patent assertion entities may be a symptom of larger problems with claim construction doctrine.
Patent claim construction--the interpretation of the short paragraphs (or "claims") at the end of the patent that define the scope of the patentee's rights--is "overwhelmingly the most critical patent issue in litigation." (1) It is also one of the most problematic and controversial. As one commentator explained:
Debates over whether the fundamental inquiry of patent law is broken, and what to do if it is, engross not only observers of the patent system, but also the judges of the U.S. Court of Appeals for the Federal Circuit, the appellate court entrusted with the control of patent law. (2) Patent assertion entities--also known as non-practicing entities or, more pejoratively, patent "trolls" (3)--are also one of the most important, controversial, and arguably problematic issues in modern patent litigation. The debate over patent assertion entities has divided academics, (4) led Congress to debate major patent reform for the second time in less than five years, (5) and even caught the attention of the popular media, including an eleven-minute segment on Last Week Tonight with John Oliver, (6)
Yet, the intersection of what are two of the most important, controversial, and problematic aspects of modern patent litigation has been largely overlooked. Unexplored are the related questions of how claim construction has contributed to the rise and/or viability of patent assertion entities and what concerns about patent assertion entities mean for the claim construction debates. Frankly, this is surprising. Problems with patent scope--both uncertainty and overbreadth of patent scope--are frequently identified as contributing to the rise and success of patent assertion entities. (7) And "claim construction is fundamental to determining a patent's scope." (8) The potential link between claim construction and patent assertion entities is, well, patent.
This Article tackles the overlooked connection between patent assertion entities and claim construction. In broad strokes, the Article develops three major themes. First, problems with claim construction are significant contributors to the uncertainty and breadth of claim scope, which fuel patent assertion entities. Second, current trends in claim construction, both in the courts and the academy, will benefit patent assertion entities. Third, the problems and trends in claim construction undermine other efforts to combat patent assertion entities by making it easier for patent assertion entities to assert a non-frivolous litigation position supportable under current law.
More specifically, an outcome-determinative split within the Federal Circuit as to the proper approach to claim construction creates significant uncertainty about claim scope that cannot be resolved without litigation. (9) Uncertain claim scope is widely seen as fueling patent assertion entities. Yet, courts and commentators are increasingly ignoring or downplaying the claim construction split when discussing patent notice problems. Some even suggest, contrary to empirical evidence, that the split has been resolved. (10)
Second, a claim construction approach that emphasizes the general meaning in the technical field and permits only limited resort to the disclosure in the patent itself continues to garner precedential and scholarly support. This approach undermines ex ante predictability of claim scope because it depends on testimony of expert witnesses and other evidence created or identified by the parties ex post in litigation, rather than on the publicly available and static patent document. Moreover, even its proponents acknowledge that it produces broader claim scope. Uncertain and broad claim scope are conditions in which patent assertion entities thrive, and, unsurprisingly, they tend to rely on the general meaning line of cases. (11) Yet, even as general trends in patent law seek to constrain patent assertion entities, case law and scholars increasingly endorse the general meaning claim construction approach. (12)
Finally, the standard of appellate review for claim construction has long been the focal point of claim construction debates, with widespread calls in the academy and the bar for more deferential review. The Supreme Court's recent decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. heeded those calls, rejecting the Federal Circuit's de novo standard and providing greater deference to district court claim constructions. Teva largely has been lauded by the patent community, even though it is likely to help patent assertion entities. (13) After Teva, district judges have incentives to place greater reliance on expert evidence and other external evidence, and less reliance on the patent document itself, which will tend to create broader claims and greater uncertainty. Moreover, patent assertion entities overwhelmingly file in the U.S. District Court for the Eastern District of Texas, which tends to favor patentees in a variety of ways, likely including claim construction. More deferential review means more power for district courts, which accentuates patent assertion entities' advantage from choosing the forum and incentivizes districts that cater to patent assertion entities to adopt pro-patentee claim constructions. (14)
Having described the connection between claim construction problems and trends and patent assertion entities, the obvious question is what does it all mean? For those untroubled by patent assertion entities, perhaps not much. But for the majority of the patent community that worries, to varying extents, about the consequences of patent assertion entities for innovation, competition, and patent litigation, this Article suggests that the current direction of claim construction is far from optimal. (15) Claim construction trends also indirectly undermine other efforts to combat patent assertion entities. A variety of current proposals--pleading standards, Rule 11 sanctions, fee shifting--attempt to punish patent assertion entities for bringing frivolous, meritless, or weak claims. However, the uncertainty and breadth of potential claim scope created by the claim construction issues addressed in this Article make it easier for a patent assertion entity to identify a reasonable litigation position, undermining efforts to weed out claims based on their merits. (16)
Of course, there may be ways to address patent assertion entities without altering the direction of claim construction, such as venue reform, restricting functional claiming, or improving patent examination. And some may believe that current claim construction rules and trends are warranted despite (or except for) their effect on patent assertion entities. At the very least, however, claim construction should be part of the patent assertion entity debate and the consequences for patent assertion entities should be part of the claim construction debates. (17) Moreover, the fact that current claim construction rules and trends produce the conditions in which patent assertion entities thrive suggests that patent assertion entities may be a symptom that reveals underlying problems with claim construction doctrine. (18)
Interestingly, and perhaps unsurprisingly, while courts, scholars, and most other commentators have overlooked the relationship between claim construction and patent assertion entities, the most popular targets for patent assertion entities--large technology companies like Google, Amazon, Yahoo!, Dell, and Twitter--have not. In amicus briefs in the Federal Circuit and Supreme Court, these companies reached conclusions similar to this Article's: the claim construction split results in uncertain patent scope; a patent-focused approach better promotes public notice than the "general meaning" approach; and deferential appellate review undermines public notice and benefits patent holders. (19) These technology companies were clearly motivated by their experience with patent assertion entities, though they left the link largely implicit. (20) This Article makes that link explicit.
Part I provides an overview of the parallel debates over patent assertion entities and claim construction...