Six Predictions for the 2018 Patent Environment

Fractured Federal Circuit en banc decisions resolving who bears the burden of proof on motions to amend in an inter partes review (IPR) proceeding and wading into the Apple-Samsung wars, and U.S. Supreme Court decisions on patent exhaustion, design patent damages, the fairly untested Biologics Price Competition and Innovation Act (BPCIA), and venue. And there’s still more coming, with outstanding opinions from the Federal Circuit on the reviewability of the Patent Trial and Appeal Board’s (PTAB) time bar decisions and from the Supreme Court on the constitutionality of IPRs and the PTAB’s authority to institute proceedings partially. Coming off such a blockbuster year, what comes next? Here are six predictions:

1. The Supreme Court will grant review of fewer patent cases.

The Supreme Court had a lot to chew on last year, in part because so many issues were percolating at the Federal Circuit. In addition, the Supreme Court tends to reach consensus (or something closer to consensus) in patent cases, making them great issues for the court to consider when it sat with a vacancy last year. But based on our look at what’s sitting before the Federal Circuit now, there simply aren’t as many “big picture” issues warranting high court attention. And so, despite the high reversal rate, we doubt that the Supreme Court will show too strong an interest in taking patent cases for the following term.

2. The Federal Circuit will decide en banc to resolve lingering questions about the proper weight of secondary considerations.

Particularly since the Federal Circuit’s 2012 In re Cyclobenzaprine decision, courts have struggled with the framework for weighing secondary considerations (or, if you prefer, “objective indicia of nonobviousness”) when determining whether a patent is obvious under Section 103. The question is one of burdens and timing; many courts (including Federal Circuit panels) refer to the prior art analysis as a “prima facie” obviousness determination, for which a patentee bears the burden to prove that secondary considerations overcome the prima facie analysis. Others treat obviousness as a veritable melting pot, where all factors must be analyzed together.

On this conflict, the dissents are piling up. Just this year, Judge Newman stated that “[i]t is time to remedy our inconsistent treatment of the procedures and burdens in applying the evidentiary factors of obviousness.” Merck Sharp & Dohme Corp. v. Hospira, Inc., 874 F.3d 724, 731 (Fed. Cir. 2017) (Newman, J., dissenting). She is hardly alone; Judge Reyna said, again just this year, that “this court has turned a blind eye to what [he] consider[s] to be a grave concern: the application of a prima facie test that necessarily achieves a legal determination of obviousness prior to a full and fair consideration of evidence of objective indicia of non-obviousness.” Intercontinental Great Brands LLC v. Kellogg North America Co., 869 F.3d 1336, 1353 (2017) (Reyna, J., dissenting). And in dissent to the Federal Circuit’s Apple en banc decision, Judge Dyk wrote extensively on the limited role of secondary considerations—an opinion that Judge Prost agreed with in a separate dissent. See Apple Inc. v. Samsung Elecs. Co., Ltd., 839 F.3d 1034, 1063-64, 1068, 1076, 1080-82 (2016) (en banc). There too, Judge Reyna noted that “the court disagrees over the role objective indicia play in the court’s analysis of the ultimate determination of obviousness,” and implored the court to take up “(1) whether an obviousness analysis involving secondary considerations (or objective indicia of non-obviousness) is a one or two step process and (2) how much weight to accord secondary considerations in the obviousness analysis.” Id. at 1089. We expect those two questions are likely to show up for en banc consideration this year.

3. The PTAB’s process for conducting IPRs is likely to change.

It goes without saying that if the Supreme Court determines that IPRs are unconstitutional, it would be a sea-changing victory for patentees. But even if IPR is upheld, we expect that the decision may have an effect on how the PTAB conducts its IPR proceedings, especially with respect to judge selection. At oral argument, the government came under heavy fire based on the possibility that panels could be “stacked”—a power that some might argue implicates due process concerns.

Even outside the courtroom, the PTAB’s practices regarding motions to amend have been heavily criticized. For example, former Federal Circuit Judge Paul Michel suggested that the review process would benefit from an “off-ramp” procedure—i.e., a return to examiners for patents subject to a motion to amend. Under new leadership, these kinds of suggestions may ultimately have some legs.

4. Sovereign immunity in the patent arena is a topic likely to receive greater attention.

With patentees seeking creative solutions to protect their patents and with state universities increasingly recognizing the value of their intellectual property portfolios, it is no surprise that the doctrine of sovereign immunity is increasingly implicated in patent litigation. In just the last half year or so, the courts and PTAB are seeing an increasing number of assertions—and some would argue, abuses—of the doctrine. Perhaps the most famous is Mylan Pharm. v. Allergan, Inc., IPR2016-01127 et seq., where the patentee sold the patents to an Native American tribe (which possesses sovereign immunity), but received a license back to itself. And just a few weeks ago, the PTAB concluded in Ericsson Inc v. Regents of the University of Minnesot., IPR2017-01186 et seq., that a state university that asserted claims of patent infringement in district court had waived the defense of sovereign immunity before the PTAB. There, one administrative law judge on the seven judge panel went so far as to claim that the mere act of seeking a patent was itself a waiver of sovereign immunity. We expect that in the coming year, the Federal Circuit will have a chance to weigh in on this.

Of course, this is an issue that has also received congressional attention, and it will be interesting to see whether Congress has an appetite to close the perceived abuses that arise in cases like Allergan. In 2017, Senator McCaskill introduced legislation seeking to abrogate tribal sovereign immunity in patent cases. Whether Congress passes such legislation, and whether it withstands court scrutiny as a proper abrogation, will be an issue to watch.

5. Patentees will be more open to bringing due process challenges to district court case management tools.

In the interests of judicial economy, district courts have sometimes required patentees to limit the number of patents and claims that they assert at trial. Increasingly though, patentees are claiming that such limitations violate their right to a trial on each patent claim, as they represent separate and distinct inventions. It’s unclear whether those complaints have merit, but we expect that they might become more frequent going forward—particularly as biologics litigation, which often puts large numbers of patents in play—becomes more commonplace.

6. The Federal Circuit is not done issuing guidance on venue in patent cases.

Back when the regional circuits heard appeals in patent cases—i.e., before the Federal Circuit existed—where a patent case was heard was frequently outcome determinative. In perhaps a touch of irony, one of the main issues likely to confront the Federal Circuit over the next year is where patent cases are properly brought. Though the Supreme Court’s decision in T.C. Heartland and the Federal Circuit’s decision in In re Cray offered a roadmap to start from, we expect that the Federal Circuit will be tasked with examining venue challenges with widely differing factual scenarios—an environment likely to produce precedential opinions that will reshape the landscape. As a result, if patent suits become less concentrated in a few courts, the possibility of multidistrict litigation—a sparingly used tool in patent cases—will also increase. What effect that will have on outcomes is far from certain.

Read the article on IPWatchdog here.