KSR - The disruption question
A number of people, in both news stories and blog posts, have highlighted Justice Souter’s questions about a possible disruption problem.
For example, on p. 21, lns. 10-12, Justice Souter asks Deputy S.G. Hungar, “No but — if we see it your way, are there going to be 100,000 cases filed tomorrow morning?”
Reflecting on it a bit, I don’t think that a Supreme Court rejection of the Federal Circuit’s suggestion test (as a necessary element in any successful obviousness attack, which it is today) - a holding that seems even more likely after the oral argument than before - will produce a significant increase in patent infringement litigation.
Here are some of the things that I think would happen to pending patent applications and existing patents were the Supreme Court to reject the suggestion test:
- Many applicants at the PTO will drop / give up on the broader claims they drafted before KSR.
- Fewer applicants at the PTO will drop their applications altogether (although I’m sure some will (and should)).
- Some current licensees will conclude that they should no longer pay royalties because the (likely) broad claim that covers them is no longer valid, and the narrower claims in the patent don’t cover them at all. A subset of these licensees’ former licensors will litigate rather than give up the royalty stream. Other licensors, however, will give up. (In other words, licensors and licensees will make the same decisions they make today, but under a different framework for assessing the probability that a given patent claim will survive court scrutiny.)
- Some infringement litigation that is going on right now will settle more quickly than it otherwise would, and on terms more favorable to the accused infringer, because the plaintiff-patentee will determine that its probability of success has fallen too far to keep litigating.
These strike me as some of the most likely effects. What do you think would happen?
I think the big question is whether the Supreme Court poses a new test and what that test would be. There was no indication that I could discern from the oral argument that the justices had an alternative formulation. If a new test is uncertain or ambiguous, it seems that the number of disputes could increase.
Comment by Bert Krages — November 29, 2006 @ 12:54 pm
Bert,
I think one alternative, which the SG urged in its brief and at the argument, is simply to reemphasize that Graham v. John Deere controls. Evidence of a teaching in the prior art is persuasive evidence that the invention would have been obvious, but is not the only basis for concluding it would have been obvious.
Another alternative, which I think IBM tried to advance in its amicus brief in support of neihter party, is that Graham controls and that there’s a new presumption structure that helps organize the analysis a bit better (much as the Supreme Court tried to do with the Doctrine of Equivalents in Warner-Jenkinson and in Festo).
In either event, there is more uncertainty in some respects. But I think it’s also fair to say that, because one necessary component of a successful obviousness attack will have been removed, it will be easier to make a successful obviousness attack (all other things being equal).
Perhaps in the short term, the increase in disputes due to increased uncertainty over how the legal rule works in practice will dominate. I hope not, though.
Joe
Comment by Joe — November 29, 2006 @ 9:16 pm
People worried about the same thing with Festo, but the doomsday scenario never materialized. The cost of litigation will not encourage 100,000 suits to be filed. That would take up a huge chunk of the GDP.
Comment by Jude — November 30, 2006 @ 9:31 am
The first article in the current JPTOS Journal explains how scope of protection of a claim of a US patent has nothing to do with reality. If obviousness is unknown till the CAFC decides, well then the two questions:
1) does his claim cover what I do?
2) is the subject matter of that claim obvious?
that determine the amount of litigation are both impossible to answer with any degree of confidence. Can the CAFC find a single line that gives industry confident answers to those two questions? Until it can, the number of threats of patent litigation will continue to rise, no?
Comment by MaxDrei — December 7, 2006 @ 12:53 am
Max,
I think the two questions you state play a big role in determining whether two parties wind up litigating (or licensing). I suppose the third question is, how far apart are the two parties in their respective, confidently-believed answers to questions #1 and #2? If both parties agree that the patentee is likely to prevail, why fight? Enter a license. If both parties agree the patentee has a weak position, why fight? Move on. It’s when the patentee is confident he’ll win, and the accused infringer is also confident that he’ll win instead, that the likelihood of litigation increases dramatically … because it’s much harder for the two to find an overlapping range of mutually agreeable licensing values.
This leads to your end point: Until we find a way to implement patent law that gives both sides of a dispute a reliable way to assess the patentee’s likelihood of success, and the assessment is about the same by lawyers on both sides, there will be more litigation than otherwise.
Joe
Comment by Joe — December 7, 2006 @ 8:07 am
Joe, maybe the prospect of serious financial loss is something that can concentrate a mind. Without a “loser pays” principle, wishful thinking prospective litigants delude themselves that they are going to win in court. When the law is unclear, the effect gets worse, but it will still be there even when the law is crystal clear.
In English patent litigation, the loser pays, und wie. In Germany (where litigation is inherently much cheaper) the loser pays, but in an amount that one finds on a Court Table of Fixed Fees (by no means as painful as losing in England). In England 95% of cases settle prior to trial, but in Germany only 20%.
However, I understand that, in the USA, “loser pays” is unconstitutional. So, that’s that then.
Comment by MaxDrei — December 8, 2006 @ 12:34 am
Max,
The “loser pays” rule can have a strong sorting effect, that’s true.
I’m not aware of any reason why it would be unconstitutional here in the U.S. And I know that versions of “loser pays” have been implemented in various statutes for specific types of litigation. Finally, in the Senate version of the recently proposed patent reform legislation, there is an amendment that would make U.S. patent infringement litigation a “loser pays” system.
So, let’s keep an eye out for it.
Joe
Comment by Joe — December 8, 2006 @ 7:49 am