By Nicholas A. Gravante Jr.
The U.S. Court of Appeals for the Federal Circuit was created in 1982 to hear appeals in all cases involving patents, trademarks and copyrights. It is, simply put, the nation’s intellectual property court.
Unfortunately, it is also what critics have feared it would become. As eminent federal jurists like Richard Posner and the late Simon Rifkind suggested, the court’s narrow focus on intellectual property cases has led to an unusually close relationship with the lawyers who regularly practice before it.
Because the court wants a staff with intellectual property experience, the judges often hire law clerks from law firms that have large appellate IP practices. When their clerkships are up, these lawyers often return to that same group of firms – firms that practice before the court where they just clerked. This revolving door creates the appearance that small companies and inventors without the resources to hire these large firms are at an unfair disadvantage.
Consider this: The Court of Appeals for the Federal Circuit consistently ranks at or near the top of the nation’s 13 federal appeals courts in terms of both the rate at which the U.S. Supreme Court accepts petitions for review of its decisions, and the rate at which the Supreme Court reverses, vacates or questions its decisions.
That’s the big picture. Now consider a specific example. It involves a case in which the jury found that multinational giant Samsung willfully infringed a patent granted to U.S. inventors for technology that is critical to the operation of the billions of cameras in mobile devices and personal computers.
Evidence at a week-long federal trial in Texas showed that Samsung used industrial espionage to obtain the technology and the related proprietary knowhow. Some $100 million that had been invested in the technology was lost as a result. The technology was not lost to America because we were out-innovated. It was stolen.
The jury found Samsung liable for willful patent infringement. The trial judge found that Samsung had abused the discovery and trial process, including by withholding documents and presenting witnesses who lied under oath to the jury. The judge entered a $22 million award plus $7 million in attorneys’ fees.
That should have ended the matter, but Samsung used its vast resources in a war of attrition. It went to another federal court, this one in Delaware, claiming it was licensed to use the patent – and appealed dismissal of that case which is still ongoing. It asked the Patent and Trademark Office to invalidate the patent – and lost. The Patent Office also rejected another attempt at invalidation brought by a purportedly disinterested third party.
Finally, Samsung got the case before the Court of Appeals for the Federal Circuit. There, an appellate panel with only the trial transcript before it decided, contrary to the jury, the trial judge and the Patent Office, that the patent claims were invalid because the jury was required to accept as credible the testimony to that effect from Samsung’s paid expert.
First, that ruling violates the Seventh Amendment of the Constitution which states that “. . . no fact tried by a jury, shall be otherwise re-examined in any Court of the United States. . . .”
Second, under both the Patent Act and Supreme Court precedent, duly issued patents can only be invalidated upon proof by “clear and convincing evidence” – not simply a preponderance of evidence. The effect of the Federal Circuit decision in the Samsung case, therefore, is to shift the burden of proof from the challenger, as the Patent Act requires, to the patent holder, who now is forced to disprove all the testimony of the challenger’s expert.
Finally, the net effect of the Federal Circuit’s overruling jury verdicts is to devalue all patents, particularly those of inventors who don’t work for major corporations and require large capital investments to commercialize their new technologies. Moreover, entrepreneurs and investors will become reluctant to back patents if, even after winning at trial and multiple reviews by the PTO, they still risk uncertain, seemingly arbitrary results on appeal.
The Samsung case is among the hundreds of petitions for certiorari review that the Supreme Court is considering for its new term starting next month. Taking the case would be an excellent opportunity for the High Court to lay out clear guidelines for protecting the intellectual property that America’s inventors and creators continually generate to the benefit of our nation and the world.
Nicholas A. Gravante Jr. is a partner at Boies Schiller Flexner LLP in New York. His firm has filed an amicus curiae brief in the Supreme Court, supporting the grant of certiorari in the Samsung case, on behalf of a dozen Silicon Valley luminaries including Carly Fiorina, Mark Ain, Gil Amelio and Kenneth Levy.