Top Tens in 2016: Patent, Trademark, Copyright and Trade Secret Cases

By McJohn, Stephen | Northwestern Journal of Technology and Intellectual Property, January 1, 2017 | Go to article overview

Top Tens in 2016: Patent, Trademark, Copyright and Trade Secret Cases


McJohn, Stephen, Northwestern Journal of Technology and Intellectual Property


I. PATENT

A. Halo Elecs., Inc. v. Pulse Elecs., Inc.1

Several notable recent Supreme Court cases in patent law tend to weaken the power of patent holders. Alice,2 along with this term's Cuozzo and Apple decisions cut back on patentable subject matter. Halo, by contrast, strengthens patents by reducing the showing required to recover treble damages. The Federal Circuit had followed a test requiring "objective recklessness," meaning that there would not be enhanced damages if there was a substantial question as to validity of the patent or infringement by the defendant.3The Supreme Court rejected that test as too rigid. The Court agreed that treble damages should be granted only in egregious cases, but held the determination of whether a case was egregious should be leftto the discretion of the trial court, guided by the factors identified in the case law, not the strict determination of objective recklessness.4 As in several cases discussed below, the Supreme Court was less concerned than the appellate court that trial judges would unfairly use hindsight to second-guess the decisions of parties in intellectual property litigation. The Halo effect5 on litigants may be to discourage litigation for better (where clear infringers abandon meritless defenses) or worse (where non-infringers settle litigation or agree to licenses for fear of treble damages). Without enhanced damages, a defendant with a weak case nevertheless has a strong bargaining position. A party facing a likely loss (the defendant) is likely to be risk-seeking (amenable to taking chances to avoid liability), where a plaintiffwith a strong case is likely to be riskavoiding (amenable to settling for a lower amount than its expected gains, to avoid even the small chance of losing).6 The second scenario would seem less likely. Even if Halo lowers the bar for treble damages, the standard is still egregiousness, and few possible infringers will think themselves likely to fit that standard.

B. Cuozzo Speed Techs., LLC v. Lee7

The 2011 America Invents Act (AIA) introduced post-grant challenges to the United States patent system. Before the AIA, litigation was the only route to invalidate a patent, by raising invalidity, in an infringement case or by filing a declaratory judgment action. The AIA allowed anyone to file an administrative proceeding before the USPTO, seeking a declaration that a patent was invalid (although the grounds available are narrower than those in litigation). The Patent Trial and Appeal Board (PTAB) has invalidated numerous patents. The hundreds of postgrant proceedings that were initiated are now yielding many appeals to the Federal Circuit followed by petitions to the Supreme Court. Cuozzo, was the Supreme Court's first opinion in a post-grant proceeding. The Court upheld key aspects of the PTAB's implementation of post-grant procedures. First, the PTAB may use the broadest reasonable construction of patent claims, an approach which tends to help challengers. Broader claims are more likely to be anticipated by earlier technology. Second, the Court affirmed the PTAB's application of the statue to hold that decisions to initiate proceedings are not appealable. Implicitly, the Court rejected the view of post-grant proceedings stated by the dissent below, which compared them to substitutes for trial in district court. Rather, the Court treated them as a different creature, proceedings within an administrative agency. That makes it more likely post-grant proceedings will survive the challenge that they represent an unconstitutional delegation of Article III judicial powers. The Court had ruled that Congress had impermissibly vested judicial power in bankruptcy courts by allowing them to resolve state law tort claims. By contrast, the PTAB is strictly limited to reviewing decisions of patentability, which would seem well within the recognized exceptions.

C. Coalition for Affordable Drugs VI, LLC v. Celgene Corporation8

Congress created the post-grant proceedings as exemplified in Cuozzo partly as a response to what some term "patent trolls," parties extracting licensing fees by wielding patents of dubious validity. …

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