“The Times They Are a-Changin’”

By Michael Zoller, Esq.
mzoller@pashmanstein.com

The system for obtaining a patent in the United States is in and of itself one giant machine.  The idea for protecting intellectual property dates all the way back to the writing of the Constitution and the first federal patent act was passed in 1790.  As time has passed and technology has evolved the need to update the “patent machine” has arisen.  Change, as one can expect, has generally been slow.  Until recently that is.  In the last three years the United States patent machine has undergone several significant changes.

The changes first started in September 2011 when President Obama signed into law the America Invents Act.  With all of the Acts provision in effect as of early 2013, President Obama continued to work on changes by sending seven proposals to Congress that intended to limit patent trolling.  At the same time, the President also announced five executive actions aimed at the same goal.  Now with its recent decisions in the companion cases of Highmark, Inc. v. Allcare Health Management Systems, Inc. and Octane Fitness, LLC v. Icon Health & Fitness, Inc., the Supreme Court has gotten in on the act as well.

In the cases, the Supreme Court took aim at patent trolls, by making it easier for them to be forced to put their money where their mouth is.  Patent trolls gum up the patent machine by hoarding patents they have no intention of utilizing just so they can file law suits when any new idea might in the slightest most tangential way have a hint of infringing on one of their patents.  The trolls then usually use the high cost of defending a suit to force a settlement.  One defense to this type of action is to award attorney’s fees to a successful defendant and section 285 of the patent statute has always authorized the awarding of such fees in “exceptional cases.”  The problem has been that the Federal Circuit has applied the “exceptional cases” language so rigidly that fees were rarely shifted.

In its Octane Fitness decision, the Supreme Court aims to loosen the reins.  Instead of the rigid test previously utilized, the Supreme Court has instructed that courts should determine whether a case is exceptional “in the case-by-case exercise of their discretion, considering the totality of the circumstances.”  Moreover, in its Highmark, Inc. decision, the Court declared that the District Court’s decision to shift fees should be reviewed utilizing the abuse of discretion standard.  The idea is that the Highmark, Inc. decision will make it harder for the rigid Federal Circuit to overturn fees that are awarded by the District Courts under the new Octane Fitness approach.  Now that patent trolls know that it should be easier for defendants to be awarded attorney’s fees for defending frivolous patent infringement lawsuits, the hope is that we will see fewer such suits and the “machine” will better able to deal with serious patent infringement actions.

Even with the Octane Fitness and Highmark, Inc. decisions, the Supreme Court may not yet be done in attempting to affect change on the patent machine.  On April 28th the Court heard oral argument in the case of Nautilus, Inc. v. Biosig Instruments, Inc.  At the heart of the case is a dispute over how much detail needs to be in a patent so that it is not “indefinite” and thus invalid.  If the Court rules in such a way as to raise the bar on the specificity required in a patent it could be a major strike to patent trolls because it would potentially make it harder for them to pursue litigation on a lot of the patents they currently hold.

Only time will tell what effect the Supreme Court’s recent and future decisions will have on the US patent machine.  But as Bob Dylan once sang, “The Times They Are a-Changin’” so stay tuned to find out what comes next.

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