Wednesday, October 3, 2012

Patent Court Part Of Problem

Ars Technica, via Ritholtz:
The Federal Circuit was able to reshape patent law in part because the Supreme Court took a hands-off approach to the subject during the new court's first two decades. The high court rarely reviewed Federal Circuit decisions and most of the cases it did take were focused on jurisdictional questions rather than the substance of patent law.
But by the turn of the millennium, the Federal Circuit's patent-friendly stance had begun to generate a wave of patent litigation and bad press so large that it couldn't be ignored. Research would eventually find that by the turn of the century, patent litigation had become so expensive that the patent system was actually acting as a net disincentive to innovation outside of the pharmaceutical industry. The same researchers estimated that patent trolls cost the economy between $29 billion and $83 billion per year.
So, under newly-appointed Chief Justice John Roberts, the Supreme Court stepped up its oversight of the Federal Circuit's work. The justices did not like what they found. Between 2006 and 2008, the Supreme Court decided at least four major patent cases. In all four cases, the high court overruled a patent-friendly decision from the Federal Circuit. Three of the rulings were unanimous; the fourth was decided 7-1.
In one decision, the Supreme Court reiterated the need to use common sense when evaluating the obviousness of a patent. Another ruling made it harder for a patent holder to get an injunction against an infringing product. A third decision prohibited patent holders from "double dipping" by demanding patent licenses from two different firms in the same supply chain (say, a memory maker and the computer company who used that memory in its products). The final decision limited the reach of patent law over software installed on a computer overseas.
After that judicial beat-down, the Federal Circuit took some token steps to bring its decisions in line with Supreme Court precedents. In 2008, in an apparent bid to mollify the Supreme Court, the Federal Circuit overturned its own State Street decision, which had launched the software patent gold rush a decade earlier. But the Federal Circuit has continued to exhibit a strong pro-patent bias, which has forced the Supreme Court to continue overturning pro-patent rulings from the court.
Interesting.  You don't often see too much analysis of the patent court of appeals.

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