Key Patent Law Decisions Of 2014

The U.S. Supreme Court has granted certiorari in more and more patent law cases over the last several years and is on pace to hear twice as many patent-law cases this decade as in any decade since the 1982 founding of the Federal Circuit — the exclusive court of appeals for patent cases. During an eventful 2014, both the Supreme Court and the Federal Circuit ruled on a number of significant cases, including the claim-construction standard of review, patentable subject matter, joint and induced infringement, remedies, and other key areas of patent law.

INTRODUCTION

Since the creation of the United States Court of Appeals for the Federal Circuit almost three decades ago, the number of U.S. Supreme Court cases addressing patent law issues has steadily increased. As the Federal Circuit enters its fourth decade, the Supreme Court is on pace to consider twice as many patent law decisions as in any preceding decade. On its face, it would seem the only pattern behind the Court's decisions is that it continues to overturn the Federal Circuit. But a closer look reveals that the Court is molding this body of law using two distinct philosophies: (i) patent law does not exist in a silo and must conform to the same rules of practice as the rest of federal law, and (ii) rigid, bright-line rules are not faithful to the flexible, "all circumstances" principles underlying the U.S. patent statutory scheme.

This White Paper provides an overview of the latest patent law decisions, which show the Supreme Court's two philosophies in action. Following this introduction (Section I), Section II discusses the Supreme Court's interest in patent law, starting from the creation of the Federal Circuit and leading up to the year 2014. Section III summarizes the key decisions of 2014, which cover a wide range of patent law issues, from the standard of review for claim construction to attorneys' fees.

THE SUPREME COURT'S PATENT LAW JURISPRUDENCE

Prior to the year 1982, like all other areas of federal law, patent law decisions were appealed to regional circuit courts of appeals. The various circuit courts had differing attitudes toward patent rights, with some circuits acting generally in a "patent-friendly" manner and others ruling in mostly a "patent-hostile" fashion. This led to a non-uniform body of law, with patent litigation outcome dependent largely on the venue. Thus, one of the goals behind creating the Federal Circuit was fostering uniformity in patent law.

In recent years, the Federal Circuit has been criticized as not being able to fulfill this goal, with conflicting decisions coming out of the different panels of the court, much like the various regional courts in the pre-1982 era. This growing criticism against the Federal Circuit runs concurrently with the Supreme Court's heightened interest in patent law issues in the past decade. Perhaps the most telling statistic demonstrating the Supreme Court's attitude toward patent law is this: In the present decade, the Supreme Court is on pace to double the number of patent law decisions issued in any previous decade. Figure 1 shows how many cases the Supreme Court has considered in each decade since the creation of the Federal Circuit.

The high reversal rate of Federal Circuit decisions by the Supreme Court may be explainable by the latter's twopronged philosophy to patent law jurisprudence. First, patent cases must conform to the rest of federal law in general. As discussed in Section III, this principle is seen at play in Teva v. Sandoz, where the Court altered the Federal Circuit's claim construction standard to bring it into conformity with Federal

Rule of Civil Procedure 56.1 Second, the Court does not look favorably upon "bright-line" rules promulgated by the Federal Circuit. As with earlier cases, this year, in Octane Fitness and Highmark, the Court rejected rigid, "bright-line" rules in favor of case-by-case, "all circumstances" tests to resolve questions of patent law. Figure 2 exhibits some of the cases where the Court acted upon this principle.

2014: KEY PATENT LAW DECISIONS

Claim Construction Review Standard

In 1996, in Markman v. Westview Instruments, Inc., the Supreme Court held that "the construction of a patent, including terms of art within its claim," is "exclusively" for "the court" to determine.2 This was held to be true even where the construction of a term of art has "evidentiary underpinnings."3 However, Markman did not address an important question: What is the standard for appellate review of evidentiary determinations that inform a court's construction of a patent term? In Cybor Corp. v. FAS Technologies, Inc., the Federal Circuit announced that it would "review claim construction de novo on appeal including any allegedly fact-based questions relating to claim construction."4 In 2014, this standard of review was reconsidered by both the Federal Circuit and the Supreme Court.

Lighting Ballast Control LLC v. Philips Elec. N. Am. Corp.

In Lighting Ballast, the en banc Federal Circuit considered whether it should overrule Cybor and alter the standard of review for claim construction.5 Applying stare decisis, the Federal Circuit confirmed the Cybor standard of de novo review for claim construction.

After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman, and that the criteria for departure from stare decisis are not met.6

The majority opinion identified three distinct positions on the proper standard of review: (i) that Cybor should be overruled as it contradicts Federal Rule of Civil Procedure 52 (a)(6)7; (ii) that a mixed or hybrid review of claim construction on appeal is appropriate8; and (iii) that Cybor was correctly decided and claim construction should be subject to de novo review.9 Relying on the doctrine of stare decisis, the Federal Circuit took the third position because, according to the court, there was no compelling justification to overturn the Cybor precedent.10 However, this decision did not stand for long, as the Supreme Court granted certiorari in Teva v. Sandoz on the same issue soon after the Federal Circuit issued its en banc Lighting Ballast decision.

Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.

Teva Pharmaceuticals owned a patent on a multiple sclerosis drug, and Sandoz attempted to market a generic version.11 In response to Teva's suit for infringement, Sandoz argued that the patent was invalid because it was indefinite; the claim at issue used the term "molecular weight," which Sandoz contended was ambiguous. After hearing testimony from experts, the district court ruled for Teva. The Federal Circuit reversed, applying de novo review to the construction of the claim term "molecular weight."

In a 7-2 opinion, the Supreme Court vacated the Federal Circuit's decision. Relying on Federal Rule of Civil Procedure 52 and Markman, it held that the Federal Circuit should review fact-finding in claim construction as in any other case, taking such findings as correct unless they are clearly erroneous12:

When describing claim construction [in Markman] we concluded that it was proper to treat the ultimate question of the proper construction of the patent as a question of law in the way that we treat document construction as a question of law. But this does not imply an exception to Rule 52(a) for underlying factual disputes.13

Rule 52(a)(6) states that a court of appeals must not reject a district court's factual findings unless they are clearly erroneous. The Court explained that because Rule 52 does not "exclude certain categories of factual findings," patent cases are not to be treated differently.14 Deviating from the rule, noted the Court, "would tend to undermine the legitimacy of the district courts" while contributing "only negligibly" to accuracy.15

Patentable Subject Matter (35 U.S.C. § 101)

Section 101 establishes four clear categories of inventions eligible for a patent: "process, machine, manufacture, or composition of matter."16 While these categories encompass "anything under the sun that is made by man[,]"17 the Supreme Court has limited the scope of Section 101 using judicially created exceptions to the categories laws of nature, physical phenomena, and abstract ideas. In recent years, the Court...

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