Tag Archives: SCOTUS

Reactions to Oil States show that patent due process is not dead

Two days before World IP Day, on April 24, the Supreme Court of the United States relinquished significant judicial authority for patents to the executive branch in Oil States Energy v. Greene’s Energy.   

This decision upheld the constitutionality of the Patent Trial and Review Board. The Wall Street Journal stated in a thoughtful and uncharacteristically nuanced commentary, “This process [the inter partes review] was intended to discourage frivolous patent litigation, but is susceptible to political bias.”

Oil States overturns 200 years of judicial precedent and allows the federal government to revoke patents. Dissenting were Justice Gorsuch, President Trump’s appointee, and Chief Justice John Roberts.

” …the purpose of patents, which is to encourage innovation and reward investment, will be undermined if they can be nullified without due process and hearing before an Article III judge,” the WSJ concluded.

The WSJ’s editorial page got it right, even if SCOTUS did not.

Sin of Omission

James Carmichael and Brad Close writing in IP Watchdog, Despite Oil States, IPRs May Still be Unconstitutional,” reminds patent holders that the Court, by its own admission (or should that be “omission”?), ruled on a very narrow area of law and may have left the door open to further decisions that will strengthen patents.

“What was unfortunately never addressed in Oil States, and which the court specifically left the door open for, was that patents rights are still property rights for the purpose of Due Process–the inference being that IPRs may fail under the Due Process or Takings Clause.  Indeed the court seemed to lament that Oil States did not challenge the retroactive application of IPRs and their constitutional sufficiency on a broader basis.”

Carmichael and Close cite the justices tone in their written decision:

We emphasize the narrowness of our holding. We address the constitutionality of inter partes review only… our decision should not be misconstrued as suggesting that patents are not property for the purpose of the Due Process Clause or the Takings Clause.

Justice Gorsuch wrote that until recently, most everyone considered an issued patent a personal right—no less than a home or farm—that the federal government could revoke only with the concurrence of independent judges.

Dig In

Oil States did not go well for patent holders, but that was no surprise. What was somewhat unexpected was a strong stance from the US’ leading business periodical, the Wall Street Journal, about the shortsightedness of the Court’s decision, and that the Chief Justice and another member of SCOTUS also were not in favor of constitutionality for PTAB reviews.

Further judicial review of patents and patentability, if not the PTAB and IPRs, is order. If nothing else, Oil States puts a greater burden on USPTO Director Iancu to step-up and de-politicize PTAB administrative procedures and judges.

Despite the obvious loss, Oil States may prove to be the best reason for patent holders to dig in.

Image source: yahoo.com; law.com

High Court’s ruling on damages may re-invigorate patent licensing

The Supreme Court of the United States is in the position to make patent licensing meaningful again. 

At least that is what some experts believe. SCOTUS has agreed to hear a case relating to willful patent infringement that could be a game changer for some businesses attempting to license. Over the past several years the environment for patent licensing has become increasingly contentious as the system adjusts to lack of judicial consistency and new laws intended to root out dubious patents.

Opinion is less divided on the likely outcome of the decision than its ultimate impact.

“While predicting the outcome of a Supreme Court decision is always speculative, this case should be one of the easiest outcomes to predict ever,” says Gene Quinn on IP Watchdog.

“Unless the Supreme Court fundamentally alters its statutory interpretation from the Octane Fitness case, supreme_court_buildingarbitrarily creating a distinction without a difference, the Supreme Court will grant district courts the same broad discretion on enhanced damages that they have been given with respect to awarding attorneys fees.”

Those familiar with enhanced-damages awards are aware that the Federal Circuit has created complex, somewhat arbitrary tests for determining when they can be granted.

A damages expert for a leading consulting firm told IP CloseUp that a decision to lower the bar for willfulness, or, at least, clarify it, could be a game changer not only for operating companies whose sales can be materially harmed by patent infringement, but NPEs, who will likely benefit from the more risk-adverse posture that many businesses will assume.

“Willfulness has been too hard to prove for a long time,” the expert said. “For it to have any real meaning, the criteria and application need to be less arbitrary, and the Supreme Court appears to be willing to provide more definition. That will give some licensors more negotiating leverage and many patents and portfolios greater value.”

An non-practicing entity told IP CloseUp, that he did not think that a Supreme Court ruling making willfulness easier to establish will have any effect much less a significant impact. “It’s so damn hard to prove willfulness, and even if you can get jury award, judges don’t usually along with them.”

Halo’s lawyers argue (PDF) that just as the Supreme Court created a more flexible test for awarding attorneys’ fees when it decided the Octane Fitness case last year, reports Ars Technica, the test for when willfulness awards should be granted should be loosened up as well.

The high court will hear cases from Halo Electronics Inc and Stryker Corp, consolidating them to consider the companies’ arguments that the willfulness standard as set out by the U.S. Court of Appeals for the Federal Circuit is too rigid and should be relaxed. The case is scheduled for oral arguments in early 2016.

Image source: biospectrumasia.com; adweek.com

 


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