CAFC: The Rogue Patent Court, Captured By The Patent Bar, Needs To Go Away

Patents

from the make-it-stop dept

Back in 2004, when I first read the book Innovation and Its Discontents, I was convinced that the Court of Appeals for the Federal Circuit, better known as CAFC, or the “patent appeals court” was a huge part of the problem with the patent system. It was the special court that had been set up in the early 80s to handle all patent appeals, based on the totally misplaced notion that because patent issues were so technical, regular appeals courts wouldn’t be able to handle the nuances. What we got instead was a court that became “patent specialists” in that they spent much of their time with the patent bar — who tended to be lawyers who profited handsomely from an ever expanding patent law. It didn’t help that one of the original CAFC judges was Giles Rich, a former patent attorney who almost single-handedly wrote the Patent Act of 1951. Rich more or less made it his lifetime goal to expand the patent system to cover “everything under the sun made by man,” and he came close to succeeding.

In fact, some important research pointed out that the structure of the court means that it’s really designed to only expand what is patentable, and never to contract it.

Two years ago, Tim Lee had a fantastic expose on CAFC and how it turned patents into a megabusiness by expanding them massively (often ignoring the Supreme Court to do so) and had become way too chummy with the patent bar. It appears that others are catching on as well. Over at the Cato Institute, Eli Dourado has a good article discussing just how “the patent bar captured a court and shrank the intellectual commons.” It’s a good read, going back over much of the territory that Lee and others have covered previously, but doing it in a nice succinct fashion. It also has a nice empirical summary of just how broadly the CAFC expanded patent law:

The creation of the court has significantly altered the law. Using a dataset of district and appellate patent decisions for the years 1953?2002, economists Matthew Henry and John Turner find that the Federal Circuit has been significantly more permissive with respect to affirming the validity of patents. They estimate that patentees are three times more likely to win on appeal after a district court ruling of invalidity in the post-1982 era. In addition, following the precedents set by the Federal Circuit, district courts have been 50 percent less likely to find a patent invalid in the first place, and patentees have become 25 percent more likely to appeal a decision of invalidity.

With patents more likely to be upheld in the Federal Circuit era, the incentive to patent has increased. Bronwyn Hall finds a highly significant structural break in patent applications occurring between 1983 and 1984. The number of patents granted by the U.S. Patent and Trademark Office also increased, from 63,005 in 1982 to 275,966 in 2012?a quadrupling of the rate in only 30 years.

This is important, in part, because one of the suggestions that’s been floated to “fix” the problems of the patent system is actually to create another specialized patent court, this time at the district court level, with the claim being that this would stop things like the rush to bring patent lawsuits in east Texas, or unsophisticated juries deciding big patent cases. Except that, as we’ve pointed out, this would just exacerbate the problem.

Dourado’s article — as did Lee’s — quotes the astounding blog post by patent attorney (and unabashed patent system cheerleader) Gene Quinn after the Supreme Court struck down medical diagnostic patents in the Promethus v. Mayo Labs case (a precursor to later striking down or massively limiting gene and software patents), in which Quinn happily awaits CAFC “overruling” the Supreme Court:

How long will it take the Federal Circuit to overrule this inexplicable nonsense? The novice reader may find that question to be ignorant, since the Supreme Court is the highest court of the United States. Those well acquainted with the industry know that the Supreme Court is not the final word on patentability, and while the claims at issue in this particular case are unfortunately lost, the Federal Circuit will work to moderate (and eventually overturn) this embarrassing display by the Supreme Court.

There is, of course, some hope that maybe things are actually changing. The number of cases in which the Supreme Court has smacked down the CAFC grow each year, and in some of the more recent ones the Supreme Court’s impatience with CAFC and its inability to properly interpret patent law have become clear. On top of that, CAFC is under new management, due to an ethics scandal involving the former chief judge. And the most recent few decisions have suggested that, perhaps, finally, CAFC is changing and getting the message.

That said, it still makes no sense at all to have a specialized court like CAFC for patent appeals. Like nearly all other kinds of cases, patent lawsuits should go up through the circuit courts. There, those courts will be more likely to actually listen to the Supreme Court, rather than think they can “overrule” the Supreme Court — and on difficult cases there’s more likely to be a circuit split where different opinions are discussed. And, most importantly, it means that the patent bar can’t so aggressively lobby just a small group of “friendly” judges that they see over and over and over again.

Filed Under: cafc, circuit splits, giles rich, judicial system, patent bar, patents