Supreme Court Watch – Patents Under The Microscope

March 25, 2014

By: Eric G. Soller

The United States Supreme Court has decided to review 6 patent cases during this term, which is more than it reviewed in the entire decade of the 1990’s. This increased scrutiny may bring dramatic changes to how patent infringement cases are litigated over the next few years.

On January 22, 2014, the United States Supreme Court issued an opinion in Medtronic, Inc. v. Mirowski Family Ventures, LLC, Case No. 12-1128 (Breyer, Justice). The Supreme Court reversed the United States Court of Appeals for the Federal Circuit, holding that when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee. This conclusion rested upon settled case law establishing that: (1) a patentee ordinarily bears the burden of proving infringement; (2) the operation of the Declaratory Judgment Act is only procedural, leaving substantive rights unchanged; and (3) the burden of proof is a substantive aspect of a claim.

The Supreme Court heard oral argument on February 26, 2014 on two cases dealing with attorney fee awards in patent infringement cases. In Octane Fitness, LLC v. Icon Health & Fitness, Inc., Case No. 12-1184, the Supreme Court must decide whether the Federal Circuit’s rigid two-part Brooks test for determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly appropriated a district court’s broad discretionary authority to award attorney fees, based on equitable considerations, to prevailing accused infringers in contravention of statutory intent and Supreme Court precedent. Section 285 provides that a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” The Federal Circuit’s decision in Brooks Furniture Mfg. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005) held that absent litigation misconduct or patent procurement fraud, sanctions may be imposed against the patentee only if it can be established by clear and convincing evidence that both (1) the litigation is brought in subjective bad faith (i.e., actually know that its claim has no objective foundation); and (2) the litigation is objectively baseless (i.e., so unreasonable that no reasonable litigant could realistically believe that it would succeed on the merits).

In Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., Case No. 12-1163, the Supreme Court will decide whether a district court’s determination that a patent infringement suit is objectively baseless and the case is “exceptional” under § 285 is entitled to the well established deferential standard of review for clear error, or subject to a non-deferential de novo standard of review. This follows closely on the heels of the Federal Circuit’s recent opinion upholding the de novo review standard for claim construction decisions from the federal district courts in Lighting Ballast Control LLC v. Phillips Electronics North America Corporation, (Fed. Cir. February 21, 2014).

In April 2014, the Supreme Court will hear oral argument on two additional patent cases. InLimelight Networks, Inc. v. Akamai Technologies, Inc., Case No. 12-786, the Supreme Court will hear oral argument on whether one can be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has been found to have committed direct infringement under 35 U.S.C. § 271(a). The Federal Circuit held that although neither Limelight nor customers using Limelight’s service directly infringed Akamai’s patented method claim involving redirecting requests for internet content and selecting optimal servers, Limelight can nevertheless be held liable for inducing infringement if: (1) Limelight knew of Akamai’s patent; (2) Limelight performed all but one of the steps of the method claimed in the patent; (3) Limelight induced its customers to perform the final step of the claimed method; and (4) the customers actually performed the final step.

In Nautilus, Inc. v. Biosig Instruments, Inc., Case No. 13-369, the Supreme Court will consider whether the Federal Circuit’s legal standard for indefiniteness, which currently is “a claim is indefinite only when it is ‘not amendable to construction’ or ‘insolubly ambiguous,’” defeats the requirement under 35 U.S.C. § 112, second paragraph, that claims particularly point out and distinctly claim the subject matter which the applicant regards as his invention. The Supreme Court will also consider whether the presumption of validity dilutes the requirement of particular and distinct patent claiming.

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