Statutory and Constitutional Problems With Judicially-imposed Patent-claim Limitations

• Jurisdiction: United States,Federal
• Citation: Vol. 28 No. 1
• Publication year: 2021

Statutory and Constitutional Problems with Judicially-Imposed Patent-Claim Limitations

Sloane Kyrazis

University of Georgia School of Law

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STATUTORY AND CONSTITUTIONAL PROBLEMS WITH JUDICIALLY-IMPOSED PATENT-CLAIM LIMITATIONS

Sloane Kyrazis^*

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Table of Contents

I. Introduction..............................................................................................189

II. Background................................................................................................190

A. In re Katz.............................................................................................190
B. In re Katz in District Courts.....................................................191
C. Due Process........................................................................................192
D. Patents as Property Under the Constitution..................193
E. The Patent Clause and the U.S. Patent Act.......................194
F. Modern Patent Litigation.........................................................196

1. Patent Claims..................................................................................196
2. Explosion of Patent Litigation....................................................196
3. Judicial Solutions to the Patent Explosion................................198
4. Claim Preclusion.............................................................................198

III. Analysis.........................................................................................................199

A. Institutional and Statutory Tensions.................................199

1. Institutional Power to Grant Patent Rights..............................199
2. Tensions with Specific Provisions of the U.S. Patent Act.....201

a. Contradiction of Plain Language of the Statute...............202
b. Contradiction of Courts' Ongoing Interpretation of the Statute...........................................................................203

i. The Burden of Proof and Interpretation of 'Presumption'.............................................................203
ii. Claim Construction........................................................204
iii. Doctrine of Equivalents................................................205

B. Does the Safety Valve Standard Violate Due Process?......................................................................................206

IV. Conclusion..................................................................................................210

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I. Introduction

In 2011, the U.S. Court of Appeals for the Federal Circuit handed down a decision, In re Katz Interactive Call Processing Patent Litigation, upholding the practice of judicial claim limitation as non-violative of the due process rights of a patentee.¹ There, the plaintiff, or patentee, asserted 1,975 claims for 31 patents.² The district judge presiding over the case arbitrarily limited the patentee to 64 claims, with the provision that additional claims could be brought if they raised issues of infringement or validity not duplicative of the claims already brought.³ The provision allowing additional claims was a constitutional safety valve, designed to mitigate the potential of the claim limitation practices to trample on a patentee's due process rights. On appeal, the patentee in In re Katz made this exact argument—that claim limitation is a government-sanctioned deprivation of property rights that are irrationally protected under the Constitution without the requisite process.⁴

The In re Katz decision has been questioned in its conformity with a patentee's due process rights, especially as the standard is applied in district courts throughout the country. In addition, after a judgment on the merits of an infringement claim, federal courts refuse to allow patentees to assert any nonrepresentative claims that were limited at the outset of the original litigation as precluded by the doctrine of res judicata.

This Note will first establish the principles of due process upon which the patentees' arguments about due process violations are founded. Additionally, the Note explains the rise of complex patent litigation and the dilemma that district court judges face in presiding over such voluminous and complex cases.

This Note will argue that due process is not necessarily the most effective framework under which to criticize the In re Katz safety valve standard. The more convincing argument is the safety valve's contention with the provisions of the U.S. Patent Act. Even if due process is not the best vehicle for criticizing the safety valve standard, this Note will nonetheless perform a full procedural due process analysis. Additionally, this Note will acknowledge that the real due process violation likely occurs at the stage of refusal, based on principles of res judicata, to allow a patentee to bring claims that were classified in preceding litigation as nonrepresentative, thus not individually litigated.

Finally, this Note provides potential solutions that balance the interests of a district judge in conducting their matters in a just and speedy manner and the property interest that a patentee has in his or her patent claims. The solution will include a call for Congress to act in directives to limit the power of the United

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States Patent and Trademark Office (USPTO) to issue patents that become problematic in litigation, amend the U.S. Patent Act, or revise the current treatment of patent rights as on parity with real or personal property.

II. Background

A. IN RE KATZ

The final decision of In re Katz by the Federal Circuit was the conclusion of a highly complex patent case on appeal from the United States District Court for the Central District of California.⁵ The plaintiff, Ronald A. Katz Technology Licensing LP ("Katz"), owned several patents on interactive call-processing systems and call-conferencing systems.⁶ "Between 2005 and 2006, Katz filed 25 separate actions in the federal district courts in the Eastern District of Texas and the District of Delaware."⁷ All those cases were transferred to the Central District of California for pretrial proceeding before Judge R. Gary Klausner, who presided over a previous case involving Katz and the asserted patents.⁸ In total, Katz asserted 1,975 claims from thirty-one patents.⁹

At the outset of the proceedings, several defendants asked the court to limit the number of claims asserted in the action.¹⁰ Katz responded with a proposed assertion of fifty claims per defendant group, which could then be narrowed to twenty after discovery.¹¹ The court mandated that only a total of sixty-four claims could be brought.¹² This mandate opened a safety valve by allowing additional claims if a patentee raised issues of infringement or validity that were not duplicative of the claims already brought.¹³

In response to the court's mandate, Katz moved to sever and stay the non-selected claims.¹⁴ The motion was denied by the court.¹⁵ The appeal at the Federal Circuit was largely a result of the district court's refusal to sever and stay Katz's non-selected claims.¹⁶ Katz claimed that, by entering final judgment without severing and staying Katz's non-selected claim, the district court

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destroyed Katz's right to its unselected claims without due process.¹⁷ The Federal Circuit rejected Katz's due process arguments, holding that the trial court properly imposed a burden on Katz to show that any of the unselected claims raised issues of infringement or validity that were not duplicative of the selected claims.¹⁸ The Federal Circuit found that since Katz was in the best position to narrow the dispute, "allocating the production burden to the claimant will benefit the decision-making process and therefore will not offend due process . . . ."¹⁹ Furthermore, the Federal Circuit announced that the district court's due process analysis was valid "[b]ased on its initial determination that the asserted patents contained many duplicative claims."²⁰

The Federal Circuit left open the possibility that a trial court's claim selection decisions in such a case are reviewable.²¹ However, such a review is appropriate only if the moving party could demonstrate that some of its "unselected claims presented unique issues as to liability or damages" related to the accused infringement claims or defenses to invalidity.²² The Federal Circuit reaffirmed its rule in Stamps.com Inc. v. Endicia, Inc., upholding the lower court's refusal to allow additional claims beyond those litigated, because the patentee "did not file a motion to add claims with the requisite showing of need."²³ In Stamps.com, the plaintiff "conceded the court's authority to impose a limit on the number of claims," but they still asserted due process violations for refusal to bring those claims that were not litigated.²⁴ The Federal Circuit focused heavily on the plaintiff's lack of attempt to "make a good cause showing" in its application of the In re Katz standard.²⁵

B. IN RE KATZ IN DISTRICT COURTS

Since the Federal Circuit handed down its decision in In re Katz in 2011, several district courts have applied its articulated standard.²⁶ Notably, in Masimo Corp. v. Philips Electronics North America Corp., the court applied the In re Katz standard to litigation between two entities where the plaintiff asserted seventeen

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independent claims with seventy-eight related dependent claims, all of which represented innovative features.²⁷ In limiting the representative claims to thirty, the Federal District Court for the District of Delaware alluded to the In re Katz court's finding that early reduction was permissible based on the "common genealogy of Katz's patents."²⁸ Additionally, like In re Katz, the court purported to leave open the possibility that additional claims could be added with a good cause showing.²⁹ No application of the In re Katz safety valve standard has yielded a result where the court found a good...