Administrating Patent Litigation

• Publication year: 2021

ADMINISTRATING PATENT LITIGATION

Jacob S. Sherkow(fn*)

Abstract: Recent patent litigation reform efforts have focused on every branch of government-Congress, the President, and the federal courts-save the fourth: administrative agencies. Agencies, however, possess a variety of functions in patent litigation: they serve as "gatekeepers" to litigation in federal court; they provide scientific and technical expertise to patent disputes; they review patent litigation to fulfill their own mandates; and they serve, in several instances, as entirely alternative fora to federal litigation. Understanding administrative agencies' functions in managing or directing, i.e., "administrating," patent litigation sheds both descriptive and normative insight on several aspects of patent reform. These include several problems inherent in patent litigation generally, and ways of fixing them that focus less on the identities or characteristics of litigants and more on agencies' (and courts') institutional incentives. This Article synoptically describes the functions of administrative agencies in patent litigation, elucidates several problems with agencies' operation of those functions, and provides several cheap, easy, and politically viable solutions to better administrating patent litigation.

INTRODUCTION ................................................................................ 206

I. THE FUNCTIONS OF ADMINISTRATIVE AGENCIES IN PATENT LITIGATION ................................................................ 213

A. Litigation Gatekeeping ...................................................... 213

B. Scientific and Technical Expertise .................................... 220

C. Post-Adjudicatory Review ................................................ 224

D. Alternative Fora ................................................................ 229

II. PROBLEMS WITH AGENCY ADMINISTRATION OF PATENT LITIGATION ................................................................ 232

A. Regulatory Gamesmanship ............................................... 233

B. Industry Capture ................................................................ 237

C. Political Capture ................................................................ 241

D. Settlement Uncertainty ...................................................... 244

E. Inconsistent Judgments ..................................................... 248

III. BETTER ADMINISTRATING PATENT LITIGATION ............. 250

A. Enhancing Substantive Oversight ..................................... 250

B. Utilizing Expertise ............................................................ 254

C. Diminishing Alternative Fora ........................................... 259

1. Narrowing Claimants ................................................. 259

2. Strengthening Estoppel ............................................... 264

3. Streamlining Litigation Stays ..................................... 267

CONCLUSION .................................................................................... 268

INTRODUCTION

Recent efforts to reform patent litigation have involved every branch of the federal government. Congress, after repeated calls to action,(fn1) passed the 2011 Leahy-Smith America Invents Act, the largest and most expansive overhaul to the patent statute in almost sixty years.(fn2) The White House, an office not well known for influencing patent policy,(fn3) announced a multipart executive initiative aimed at curbing some of the abuses of the patent system.(fn4) And the federal judiciary-especially the Supreme Court-has been busy crafting new doctrines and modifying old ones in an attempt to shape patent litigation.(fn5)

But despite this wide marshalling of federal resources, one branch remains curiously absent from the chorus of patent litigation reform: administrative agencies. The U.S. Patent and Trademark Office (PTO), while admirably vocal in its efforts to improve patent issuance, has largely disclaimed a role in reforming patent litigation.(fn6) Non-PTO administrative agencies, meanwhile, have remained mostly silent on the issue.(fn7) And the recent legislative, executive, and judicial efforts in the area have largely ignored the variety of roles administrative agencies- especially agencies other than the PTO-play in patent litigation.(fn8)

This silence is not because administrative agencies have little invested in patent law. To the contrary, agencies have recently been playing increasingly important roles in patent policy debates.(fn9) And there has also been an increase in several specialized species of patent litigation that directly involve non-PTO agency adjudication.(fn10) How agencies function-and should function-in patent litigation is consequently becoming an increasingly important area of patent litigation reform.(fn11)

To that end, this Article provides an account of administrative agencies in patent litigation missing from patent reform proposals and current scholarship. It provides a synoptic view of the functions that administrative agencies currently play in patent litigation; it describes some of the problems with this involvement; and it provides several cheap, easy, and politically available tools to solve them. Specifically, this Article provides a framework for when and how agencies should- and should not-become involved in patent litigation, either as parties, as experts, or as traditional rule-making authorities. This prescription ultimately seeks to better "administrate" patent litigation.(fn12)

Indeed, administrative agencies currently have a variety of roles in administrating patent litigation. From "litigation gatekeepers" with the authority to "oversee and manage private litigation efforts,"(fn13) to scientific and technical experts,(fn14) to bodies of post-adjudicatory review,(fn15) to alternative venues,(fn16) administrative agencies appear to have wide-ranging functions in a broad number of patent disputes. Furthermore, these administrative proceedings take place over a broad stretch of a patent dispute's life cycle, from the initial complaint, through trial and settlement, and even beyond. This descriptive account of agency functions in patent litigation challenges the widely held notion that federal courts alone have the authoritative say over who may sue for patent infringement, where, and how.(fn17)

Unsurprisingly, agency administration of patent litigation is not without its own set of problems. As with other private interactions with agencies, agency administration of patent litigation suffers from "regulatory gamesmanship,"(fn18) industry and political capture,(fn19) adjudicatory uncertainty,(fn20) and inconsistent judgments.(fn21) These problems, to be sure, are neither new nor unique to patent litigation. But patent litigation-given the putatively regulatory nature of the patent right itself(fn22)-gives these problems a texture all their own. Poor agency administration of patent litigation affects patent holders as well as accused infringers,(fn23) delays litigation,(fn24) slows investment,(fn25) and makes settlement problematic.(fn26) Parties facing patent lawsuits where agencies are involved frequently get more than they bargained for.(fn27)

Despite these complexities, administrative agencies possess-and can make better use of-a number of discretionary tools, currently at their disposal, to better administrate patent litigation. The first, perhaps ironically, is to become more involved in patent litigation ex ante . Some of the problems raised by agency administration of patent disputes, namely regulatory gamesmanship, settlement uncertainty, and inconsistent judgments, could be ameliorated through greater and more forceful oversight of private patent disputes before they arise.(fn28) Administrative agencies currently possess a variety of mechanisms to do precisely this: to delay regulatory review during the pendency of a patent suit,(fn29) to control the timing of parallel district court litigation,(fn30) and to use "march in rights" to control the direction of unfavorable litigation.(fn31) Tailoring these powers in certain, limited circumstances would limit many of the problems associated with the current regime.(fn32)

The second tool at agencies' disposal is their own expertise. A number of agencies involved in patent litigation possess special scientific or technical expertise, often at the cutting-edge of scientific and legal development.(fn33) Sometimes, however, such expertise can get co-opted or captured by industry forces or political opportunism.(fn34) By publicly and repeatedly deploying such expertise-either as litigants, counsel to other government agencies, or by issuing reports on developing areas of science and technology-agencies could demonstrate their independence and stave off later attempts at industry and political capture.(fn35)

Lastly, where patent litigation proceeds in parallel between federal courts and administrative agencies-such as section 337 patented import proceedings before the International Trade Commission (ITC) and "post-issuance proceedings" before the PTO-agencies (and courts) should use their discretionary power to narrow potential claimants, strengthen estoppel between the two fora, and streamline litigation stays. This would principally avoid inconsistent judgments, but may even provide a check against regulatory...