Academic journal article Notre Dame Law Review

(In)valid Patents

Academic journal article Notre Dame Law Review

(In)valid Patents

Article excerpt

ABSTRACT

Increasingly, accused infringers challenge a patent's validity in two different forums: in litigation in federal court and in post-issuance review at the Patent and Trademark Office (PTO). These parallel proceedings have produced conflicting and controversial results. For example, in one recent case, a district court rejected a challenge to a patent's validity and awarded millions of dollars in damages for infringement. The Federal Circuit initially affirmed those rulings, ending the litigation over the patent's validity. In a subsequent appeal about royalties owed by the infringer, however, the Federal Circuit vacated the entire judgment--including the validity ruling and damages award it had previously affirmed--because the PTO had since decided that the patent was invalid. The Federal Circuit reasoned that only "final" court judgments are immune from the effects of PTO review and, because of the open issue about royalties, no final judgment existed when the PTO rendered its conflicting decision on patent validity.

The Federal Circuit's stringent conception of finality, which this Article terms the "absolute finality rule, " raises serious questions of judicial economy, fairness, and separation of powers. Among other things, it allows accused infringers multiple opportunities to defeat liability, permits an administrative agency to effectively nullify decisions of Article III courts, and incentivizes courts to abstain from hearing patent cases altogether, at least until the PTO reconsiders the patent's validity. That said, some inefficiency or unfairness is inevitable when two different government bodies can evaluate the validity of the same patent, and the absolute finality rule, if nothing else, provides a relatively bright-line test. But it is not the only way to mediate disagree merits between the courts and the P'TO. This Article, in addition to identifying, describing, and critiquing the absolute finality rule, explores several other options for providing greater certainty about patent validity.

INTRODUCTION

In 1935, the physicist Erwin Schrodinger illustrated a paradox in quantum theory with a thought experiment. (1) Imagine, Schrodinger suggested, a closed box containing radioactive material, poison in a glass bottle, and a live cat. If an atom of the radioactive material decays while the cat is in the box, a mechanism breaks the bottle, releasing the poison and killing the cat. In our everyday world, the cat, while in the box, exists in one of two states: it is either alive or dead, depending on whether or not atomic decay has occurred. According to quantum theory, however, one cannot know for certain whether decay has occurred without observing it. Thus, until the box is opened, the cat seems to exist in an indeterminate state, both alive and dead. Yet, in reality, it must be one or the other.

Like Schrodinger's cat, some U.S. patents seem to exist in an indeterminate state because of conflicting decisions about their validity. The PTO may issue a patent only if, in its view, the patent satisfies the requirements of the federal Patent Act. (2) In a subsequent lawsuit involving that patent, however, a court can declare the patent to be invalid, which happens in nearly half of all patent cases litigated to a final judgment on the issue of validity. (3) When a court finds a patent to be invalid, there is no indeterminacy about the patent's legal status. The Supreme Court has held that a court ruling of invalidity precludes the patent holder from ever again enforcing the patent. (4)

Litigation, however, is not the only way the validity of an issued patent can be reviewed. The PTO offers several proceedings through which an accused infringer can ask the agency to reconsider a patent's validity. These post-issuance proceedings have become very popular in the past few years, due largely to the America Invents Act (AIA), which Congress passed in 2011. …

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