The Federal Circuit's Licensing Law Jurisprudence: Its Nature and Influence

Article excerpt

Abstract: The Federal Circuit serves as the central appellate court for U.S. patent law appeals. Outside of patent law, scholars have noted the Federal Circuit's distinct lack of influence on the law. Thus, unnoticed, the Federal Circuit has become one of the most influential actors in the creation of intellectual property licensing law. Its influence reaches across all areas of intellectual property, industries, and all federal circuits and state courts. But the Federal Circuit's influence on licensing law is more than just a matter of academic interest: licensing is critical to innovation in the information economy. Licenses underlie the creation and distribution of ideas, information, inventions, and works. Products as diverse as open source software and soybean seed rely on licensing.

The Federal Circuit's influence emerged out of failed attempts to create uniform statutory licensing law, which has left licensing law to develop as common law. Since its creation in 1982, the Federal Circuit has decided more cases involving licensing law than any other state or federal court. Many courts have looked to and followed the Federal Circuit's decisions. The Federal Circuit's general approach has been to uphold modern licensing models, which fosters both technological and business model innovation. This approach is consistent with the approach taken by most other courts, including the Supreme Court. At the urging of the U.S. Solicitor General and others, the Supreme Court probed the Federal Circuit's licensing law jurisprudence in a recent case, Quanta Computer, Inc. v. LG Electronics, Inc. While the Supreme Court reversed the Federal Circuit in a unanimous decision, upon close inspection, the reversal actually amounts to an affirmation of the Federal Circuit's core licensing-law jurisprudence.

INTRODUCTION

Congress created the Court of Appeals for the Federal Circuit in 1982 to decide patent-law appeals.1 Congress hoped that the Federal Circuit would improve the climate for innovation2 by giving inventors a uniform body of judicial interpretations of patent law decided by judges with patent expertise.3 Recently, scholars have debated whether the net effect of the Federal Circuit's jurisprudence has been positive or not.4 Adding fuel to that debate, lately the Supreme Court has decided an unusually large number of patent cases,5 reversing the Federal Circuit each time,6 and causing some observers to speculate that the Supreme Court is unhappy with the Federal Circuit's tendencies.7

The cases decided by the Federal Circuit typically involve familiar patent law issues such as patent validity8 or the scope of patent claims.9 Although other issues arise from time to time, the Federal Circuit's role is unremarkable except in one significant area of modem law - licensing law.10 Unnoticed, even in the recent hot spotlight focused on the Federal Circuit, is the fact that the Federal Circuit has become one of the most influential forces in the creation of licensing law.11 On one level, this is not surprising; one would expect the court to handle cases involving patent licenses.12 However, the Federal Circuit's influence now reaches beyond patent licensing, across all areas of intellectual property and industries, and across all federal circuits and state courts.

The Federal Circuit's influence emerged out of failed attempts to create uniform statutory licensing law. In the wake of these failed efforts, licensing law has developed as common law. Since its creation in 1982, the Federal Circuit has decided more cases involving licensing law than any other state or federal court. With licensing law evolving through the common law, other courts have looked to the Federal Circuit's case law for guidance in deciding licensing-related cases. More will undoubtedly do so in the future.

The Federal Circuit's licensing-law jurisprudence is more than just a matter of academic interest. Licensing is a critical transaction model in the information economy because it enables innovation. …