Supreme Court hears patent case with broad ramifications for industry

Supreme Court hears patent case with broad ramifications for industry

The Supreme Court on Monday heard oral arguments in a case that could change the way patents are challenged at the U.S. Patent and Trademark Office (PTO).

The justices appeared divided over the case, which centers on the trial-like proceedings at the PTO that were set up in 2011 to provide a quick and inexpensive way for anyone to challenge a patent. 

ADVERTISEMENT

The high court is debating whether these new reviews at the PTO are more like a court appeal or more like the initial review that a patent examiner goes through to determine whether an invention is worthy of a patent. The ruling could determine how strict the patent evaluation process should be, which is important when determining whether a patent lives or dies.

"It is a little of one, a little of another," Justice Ruth Bader Ginsburg said Monday.

The case is being closely watched by some in the technology industry, including Dell and Apple, which filed friend-of-the-court briefs. 

The case harkens back to stalled patent reform legislation in Congress that is meant to limit the reach of "patent trolls" — companies that do not manufacture anything but instead use their patents to extract financial settlements from alleged infringers. Critics of broad patent reform in Congress had pressed lawmakers to include language in the bill to settle the question presented Monday to the court.  

Back in 2011, Congress set up the Patent Trial and Appeal Board as an alternative to the courts. It was seen as a way to combat a perceived increase in the number of low-quality patents in the market that should have never been approved in the first place, which are often exploited by trolls.

As Justice Stephen Breyer summed up, Congress attempted to tell patent examiners, "You've been doing too much too fast."

But patent holders, including some in the biotechnology and pharmaceutical industries, have branded these new patent reviews as "death squads," saying they are tilted too far against patent holders. 

The PTO currently treats the reviews similar to an initial examination, evaluating the patent on the "broadest reasonable interpretation." 

But critics believe that construction encourages the PTO to strike down more patents. They want the PTO reviews to mirror district courts, which determine whether a patent is valid by looking at the "ordinary and customary" meaning — a reading that is generally more sympathetic to patent holders. 

Cuozzo Speed Technologies, which has a patent to determine whether a driver is speeding, brought Monday's case. Portions of its patent were struck down by the board in 2013. 

Chief Justice John Roberts seemed most sympathetic to the company's argument. He said the PTO appeals board is a "hybrid entity" meant to be a substitute for judicial action. Because the PTO appeals are supposed to mirror the court, he appeared to suggest they should use the construction the court uses. 

Noting the different constructions can produce different results than the district court and the PTO, he said it was a "bizarre way" to construct a legal question. 

But the PTO argued that its own reviews are different than the district court in a number of ways. The most important factor is that patent holders can amend their claims during a PTO review but not in court. However, those amendments are rarely successful. 

There are different evidence and burden-of-proof standards as well when compared to the courts, PTO lawyers argued Monday.