Supreme Court and top patent court rarely see eye to eye

[June 20, 2017]  By Andrew Chung

WASHINGTON (Reuters) - The U.S. Supreme Court's unanimous backing on Monday of a ruling by the country's top patent court was a rare instance of agreement with a body whose decisions in that specialized area it regularly overturns.

Tellingly, Monday's decision related to trademarks, not patents. Since its term began last October, the Supreme Court has thrown out all six patent-related decisions by the U.S. Court of Appeals for the Federal Circuit, which was set up to handle such cases.

Since 2014, the high court has upheld the patent court in only two of 16 patent cases, a Reuters review showed.

The lack of agreement between the high court and the patent court reflects a basic conflict at the top of the U.S. legal system over intellectual property rights, which are critical to many industries.

The high court's pattern on patent law is part of a wider trend, under Chief Justice John Roberts, of the court siding with business in legal disputes that come before it.

Business interests have won a string of victories in the current term, which is scheduled to end next week.

Through its repeated reversals of the patent court, the Supreme Court is making it harder to sue companies using patents. That helps major technology firms such as Google, Apple and Samsung, all frequent targets of patent infringement lawsuits by "patent trolls."

Other industries, including drug and medical diagnostics companies, have warned against weaker patent rights.

"The patent system has been weakened, and as far as I'm concerned the Supreme Court is unaware of that," said Paul Michel, who retired as Federal Circuit chief judge in 2010.

Michel said the high court's decisions had created huge uncertainty for companies and investors over patent rights and could affect research and development and innovation.

Reached by Reuters, a representative for the Federal Circuit declined to comment.

The Supreme Court's patent cases this term have been significant, including one involving Apple and Samsung over smartphones. In that case, the justices said the Federal Circuit misinterpreted the law on design patents.

In another major case, the Supreme Court repudiated a 27-year-old Federal Circuit precedent and tightened where patent lawsuits may be filed, a blow to the "trolls," or entities that generate revenue by suing over patents.

"It’s pretty safe to say that it's one of the most impactful decisions of the term," said Allyson Ho, a business lawyer, at a U.S. Chamber of Commerce event on Friday.

A general view of the U.S. Supreme Court building in Washington, U.S., November 15, 2016. REUTERS/Carlos Barria

In an exception that perhaps proves the rule, the high court on Monday upheld the Federal Circuit's decision to strike down a law that prevents disparaging names from being trademarked. The Federal Circuit also handles some trademark cases.

CONDESCENDING TONE

The justices have sometimes adopted a condescending tone toward the Federal Circuit's patent rulings.

During arguments in a 2014 case, Roberts suggested the Federal Circuit was failing at streamlining patent law, one of the reasons for its creation in 1982.

Supreme Court Justice Samuel Alito wrote in an opinion that same year that the Federal Circuit "fundamentally misunderstands what it means to infringe" certain patents.

When the patent court was founded, the judges "saw their mission as making patents stronger, and the Supreme Court thought it went too far and started to reel them in," said Rochelle Dreyfuss, a professor of law at New York University who has studied the court. "Now the question is whether the pendulum has swung too far in the other direction."

She said the patent court was doing a better job explaining its rulings. It recently seated several new judges, and Sharon Prost, viewed as less pro-patent than her predecessor, became chief judge in 2014.

Duke University law professor Arti Rai said the high court seemed to disapprove of treating patent law differently from other areas of law.

The situation could spark further debate over the future trajectory of the specialist court, Rai said. For several years, attorneys, judges and professors have sparred over whether the court should retain exclusive control over patent cases.

Some observers note that other appeals courts also go through periods of high reversal rates.

Carter Phillips, who frequently argues patent cases, said that since the Federal Circuit was the sole appeals court to decide patent issues, the Supreme Court was more likely to review only those rulings it thinks are wrong.

(Additional reporting by Lawrence Hurley; Editing by Kevin Drawbaugh and Peter Cooney)

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