Patent Rights at Risk, En Banc Review Needed in Chrimar v. ALE

Jury verdicts are supposed to be sacrosanct. The biggest opposition to the ratification of our Constitution in 1788 was due to its lack of protection for jury trials in civil cases. The omission was corrected by adding the Seventh Amendment as part of the Bill of Rights.

So, when a patent holder wins a jury verdict, that should mean more than the paper the verdict is written on. Yet it does not, under recent decisions by the U.S. Court of Appeals for the Federal Circuit.

On behalf of Eagle Forum Education & Legal Defense Fund, I filed an amicus brief on November 4 in support of a petition for rehearing en banc by the full Federal Circuit to end the abusive authority of the Patent Trial and Appeal Board (PTAB) to overturn jury verdicts. Many other amicus briefs were subsequently filed in this case, Chrimar Systems, Inc. v. ALE USA, Inc. FKA Alcatel-Lucent Enterprise USA, Inc. (Fed. Circ. Case No. 18-2420), to make similar requests of the Federal Circuit [IPWatchdog will provide analysis shortly].

A Cruel Interference

Under an aberrational ruling in the case of Fresenius USA v. Baxter International in 2013, the Federal Circuit held that a verdict for a patent holder will be overturned if the PTAB subsequently decides against him or her on the underlying patent, an appeal related to the original verdict is still pending, and the PTAB decision is affirmed. The infringer can keep the case alive while waiting for the PTAB to invalidate the patent in an unrelated proceeding.

This cruel interference with patent rights happened to Chrimar on its brilliant patent for transmitting power over the ethernet without sacrificing bandwidth. It won a jury verdict on its patent, and there were no errors of law to overturn that verdict on appeal.

But Chrimar’s adversary, ALE USA, kept the case alive with an appeal of a minor issue while the underlying patent was being challenged by someone else at the PTAB.

Alas, the PTAB ultimately invalidated the underlying patent. The Federal Circuit affirmed the PTAB decision and then on the same day overturned the jury verdict in favor of Chrimar. All the victorious work by Chrimar in the federal trial court went out the window, not because of any error of law at trial, but based on interference by an agency with a judicial proceeding.

Respect Must Be Restored

Neither Congress nor agencies are allowed, by the Constitution, to interfere with judgments by the courts. Respect for the judiciary and the finality of its judgments requires that other branches of government do not interfere after a judgment is rendered.

Indeed, as explained once by Justice Antonin Scalia, a motivation for the Constitution was outrage at how legislatures in colonial America were reversing court judgments. The Constitution established a strict separation of powers to prevent that sort of interference, particularly post-judgment reversal of a verdict rendered by a court.

So why are patent holders being deprived of the value of jury verdicts rendered in their favor?

They should not be. In no other area of law can an agency override a jury verdict.

Patent rights should not be merely second-class property. A jury verdict for a patent should be as robust as a jury verdict about a contract.

When a federal jury renders a verdict in favor of a plaintiff on a contract, then that decision cannot later be reversed by the Commerce Department. Patent holders who win jury verdicts should not find them gone with the wind whenever the USPTO, in an agency proceeding lacking the rigor of a court of law, disagrees with the validity of the patent.

The Federal Circuit should restore respect for patent rights, separation of powers, and the right to a jury trial by overturning its mistake of Fresenius. Going en banc in the Chrimar case can right this wrong.

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