My Thirty-Five-Year Perspective on Intellectual Property, and Where We Stand Now

Innovation has been the driving force behind our country since its inception. So much of our nation’s success has flowed from U.S. ingenuity and innovation. Yet much remains to be done on this front. Indeed, in a few short years, we will be celebrating the Semiquincentennial (also called the Sestercentennial)—250 years since the signing of the Declaration of Independence. We need the same approach moving forward, and we have the opportunity to do so with pending legislation, which brings me to a chance to reflect on some important questions of intellectual property and innovation policy.

If you had asked a young Paul Michel if he would end up spending so much of his professional life with patents, you probably would have received a resounding “no” for an answer. But I’ve had the great fortune to make it here today. I started in the Philadelphia DA’s office, working under Arlen Specter, who was then the District Attorney. I worked for him later, when he became a U.S. Senator. Along the way, I had great opportunities as an assistant Watergate special prosecutor (including the rare opportunity to depose President Nixon); an assistant counsel for the Senate Select Committee on Intelligence (Church Committee) from 1975 to 1976; then Deputy Chief of the Public Integrity Section and lead prosecutor in the Koreagate scandal from 1976 to 1978; and associate deputy U.S. attorney general from 1978 to 1981; and then counsel and administrative assistant to Senator Specter.

That experience was not heavy on intellectual property, yet it led to the opportunity of being appointed to the U.S. Court of Appeals for the Federal Circuit in 1988. At the time, the court was still a “new” court. It was only six years old and still working to accomplish the mandate that Congress had set for it—to bring more uniformity and certainty to patent law, among other things. And the court quickly became one of the most important courts in the country. From 1988 to 2010, I had the pleasure and honor of being a member of the court, with the last five years being the Chief Judge.

Since 2010, as you likely know, I’ve continued my journey in intellectual property law. I continue to work on patent cases, as a consultant, mediator, and sometimes arbitrator. I have also written articles and amicus briefs, urging the Federal Circuit, the Supreme Court, and Congress to improve patent law, some of which are discussed below. I’ve also testified before Congress on ways to improve the law. The most recent 13 years have allowed me to continue my IP-related work, advocating for the U.S. innovation system.

Overall, all that experience amounts to at least 35 years of work closely involved with intellectual property issues. And it gives me great pleasure to share some of my perspective with you. We are just past 41 years since the Federal Circuit began, on October 1, 1982, and it is the perfect time to provide some perspective, so that we understand how patent law needs to be improved. Of course, given space constraints, my brief recounting will necessarily focus on the highlights.

The Early Years of the Federal Circuit

The decades before the Federal Circuit were problematic times for intellectual property, and patents in particular. Different courts of appeals made very different rulings on patent-law issues, creating strong incentives to forum-shop. Those years were also animated by antitrust fervor that viewed patents to be nefarious “monopolies.” That view was wrong, of course, since patents ordinarily do not confer “market power,” the touchstone of the definition of “monopoly.”  Alternative design-arounds and alternative new technologies normally abound. It is one of the best features of the American patent system that it not only shares technology developments, but also stimulates further developments and technological progress.

Congress wanted the Federal Circuit to fix these problems, and, through the 1980s and 1990s—and even the first half of 2000—the Supreme Court generally left the newly created court alone. Congress had charged the Federal Circuit with the job of imposing some uniformity in patent law. And it was doing so. The court was working to accomplish Congress’s mandate. It had steadily strengthened patent rights and remedies. That reversed the prior trend of at least four decades, which had shown a steady decline in patent strength.

During those years, the uniform opinion was that the Federal Circuit was a resounding success. Indeed, the Markman decision is one such example. There, the court held that claim construction—perhaps the most important issue to be decided in any patent case—was an issue for the judge, not the jury. And that decision was affirmed by a unanimous Supreme Court, and the decision was intended to add uniformity to patent law.

Among other areas, the Federal Circuit was also granted jurisdiction over trademark appeals from the U.S. Patent and Trademark Office (USPTO). Unlike patent law, the trademark litigation in the federal district courts would still be heard by the regional circuits (except of course if the case also included patent claims, which would then go to the Federal Circuit). Nonetheless, the Federal Circuit worked to recognize the role that trademarks played in the business marketplace.

And of course, design patents became part of the Federal Circuit’s caseload. As you might be aware, the court currently has an en banc design patent case pending, discussed briefly below.

The Creation of the Patent Troll Myth

The 1990s were a period of great innovation in computer technology and networking, leading quickly to an entirely new experience called the Internet and the World Wide Web. While the basic technology of the Internet was developed years earlier, online communications, searching, and content grew exponentially in the 90s, eventually leading to online marketplaces, e?commerce, and numerous advances in computing technologies. But it also led to the Dot-com Bubble.

In that environment was born the “patent troll” myth.  In 2002, Peter Detkin, then an attorney at Intel, is said to have thought of the term to describe patent owners who don’t practice the inventions in the patents. The “patent troll” pejorative went on to become an effective and damaging rhetorical tool, wielded over the ensuing years—and even today—to advance the efforts to weaken intellectual property rights. Of course, we know that some of the greatest innovators in history—including university researchers—fall within the base definition of a “patent troll.”

Around the same time, the Federal Trade Commission and the National Research Council weighed in with notably anti-patent views. From 2002 through 2004, both agencies conducted hearings and issued lengthy reports. The takeaway from these reports was generally that the Federal Circuit was supposedly hampering competition and stifling competition. Congress also held hearings during this period, at which many notable academics advanced their criticism of intellectual property. The law professors, for some reason, started to assemble as a cadre of opponents who would challenge the Federal Circuit, regardless of the fact that the court was making legal decisions that advanced innovation and consistency in patent law .

The Supreme Court Awakens—But Not for The Good of Patents

After those early years of judicial independence, the Federal Circuit started to experience an increased level of scrutiny from the Supreme Court. And the scrutiny generally went down the path of limiting patent rights.

The Supreme Court’s interventions on patent law’s basic doctrines began in 2006 with its eBay decision limiting injunctions, followed the next year in 2007 by KSR v. Teleflex, which rejected the Federal Circuit’s test for obviousness and made it easier to invalidate already-issued patents. Those two decisions by themselves caused enormous damage to patent rights.

District courts and the USPTO proceeded to apply KSR broadly, raising the bar for showing that inventions are nonobvious and creating massive uncertainty for thousands and thousands of already-issued patents.

The Court’s eBay decision was equally, if not more, damaging. Availability of injunctions for owners successful in infringement suits declined, gradually but steadily, particularly from 2012 onward, as the decision (and in particular Justice Kennedy’s concurrence) gradually gained impact in the district courts. Only directly competing product producers can expect permanent injunctions. Out of a couple hundred infringement verdicts per year, only 10-25 injunctions are issued.

The grant rate for injunctions did not change, however, because litigators filed far fewer motions and only in clearly winning cases. Critics, however, continued to assert that the pattern on injunction grants had not changed, citing the unchanged grant rate, while ignoring absolute numbers and declining filings of motions for a permanent injunction. Until eBay fully settled in, injunctions were routine here; they remain so in most of Europe and the major jurisdictions in Asia, including China.

The Supreme Court’s most aggressive and disruptive interventions occurred in 2010-2014, in a series of cases addressing patentable subject matter under 35 U.S.C. § 101. These cases—Bilski, Mayo, Myriad, and Alice—all added confusion and uncertainty to what types of inventions are patent-eligible under 35 U.S.C. § 101. The Supreme Court’s decision made vast swaths of innovation—including life-saving medical diagnostics—now ineligible for patent protection, regardless of how innovative the technology was. Many of those same inventions remain eligible in all of Europe and most of Asia, including our country’s now-arch-rival, China.

(It is also interesting to note that former Justice Kennedy’s opinions in eBay, KSR, and Bilski strongly influenced the thinking and voting of other Justices. And his opinion in eBay was merely a minority concurrence!) Justice Breyer took over the lead subsequently.

Unpredictable and weakened rights and remedies, and instability are the hallmarks of the new patent-law reality.  Thus, from 1988 to 2010, the Federal Circuit had steadily strengthened patent rights and remedies. That reversed the prior trend of over four decades. But in a matter of a few years, the Supreme Court reversed the reversal, returning the nation to that prior, anti-patent pattern.

Moreover, the Court increasingly treated patent law as if it were common law, not statutory law. No Constitutional rationales were clearly stated in any of its landmark decisions. Mayo, however, did allude to Constitutional concerns, expressing the worry, really assuming, that patents on certain types of inventions “tend” to more “impede” than “promote” “progress in Science and the useful Arts.”

Media articles, particularly in the Wall Street Journal, may have influenced the Court. Academics, like Mark Lemley, did too. He filed innumerable amicus briefs, often joined by dozens of other patent academics, and is quoted in most of the High Court’s landmark patent decisions. As the special interest campaign against robust patent rights increasingly focused on Congress, the policy debate degenerated further into non-factual slogans rather than being based on hard facts, pertinent documents and expert analysis.

Another notable point is how the Supreme Court has generally been more generous with protecting copyrights rather than patents over the years. For instance, shortly before the Court weakened patent rights with its eBay and KSR decisions, the Court had ruled that Congress can retroactively extend copyright terms in Eldred v. Ashcroft (reviewing the Sonny Bono Copyright Term Extension Act aka the “Mickey Mouse Protection Act”) (2003) and had unanimously affirmed liability for peer-to-peer file-sharing software in Metro-Goldwyn-Mayer Studies Inc. v. Grokster, Ltd. (2005).  Both of those cases ruled in a manner that acknowledged the benefits of strong protection for authors and copyright owners—in contrast to the Court’s notable antipathy toward patent protection.

A Final Blow

The ensuing history and role of the Federal Circuit were radically altered in 2011, when Congress passed the Leahy-Smith America Invents Act—a law that should be categorized as a prime example of unintended consequences. Thirty years after it created the Federal Circuit, Congress enacted a law that effectively undid its earlier efforts of increasing certainty and predictability in national patent law. We’ll have more on that in the second half of this article, where we examine how the USPTO’s Patent Trial and Appeal Board (PTAB) delivered the next—and, perhaps, hardest—blow to the patent system.

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Author: mstanley
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