Federal Circuit Rejects Reduced-Deference for AIA-Trial Decisions

by Dennis Crouch

En banc denials in Merck & Cie v. Gnosis (Fed. Cir. 2016) and S. Alabama Medical v. Gnosis (Fed. Cir. 2016)

The Federal Circuit has denied en banc review of decisions in four inter partes review proceedings brought by Gnosis. Federal Circuit had previously affirmed the Patent Trial and Appeal Board’s IPR determination that the challenged Merck and SAMSF patent claims were invalid as obvious.[1]

The petitions focused on the standard-for-review of factual findings made by the PTAB. The appellate panel applied the “substantial evidence” standard that requires affirmance of challenged factual findings when those conclusions are based upon “more than a mere scintilla” of evidence.  The Supreme Court has restated this standard only requiring that “a reasonable mind might accept [the evidence] as adequate to support [the] conclusion.”  In the appeal, the patentees agreed it is appropriate that PTAB factual conclusions be given deference. However, the patentees argued that the standard should be “clear error” – a lower level of deference.  A way to think about the difference between the two of these is to consider that factual findings by a jury are generally reviewed for substantial evidence (higher deference) while a judge’s factual findings are reviewed for clear error (lower deference).

In most administrative law areas, agency factual determinations are reviewed for substantial evidence.  However, the patentees here argued that the litigation-like setup in this case calls for a litigation-like standard of review, i.e., clear error.  Thus, the primary question presented:

Should PTAB factual findings be reviewed for “clear error” or “substantial evidence” in an appeal of a final written decision in an inter partes review?

In an 11-1 split, the Federal Circuit has denied en banc rehearing on this issue.  Judge O’Malley (joined by Judges Wallach and Stoll) offered her opinion explaining the denial.  Judge Newman dissented.

Judge O’Malley’s opinion appears to be designed to set-up Supreme Court review (if Cuozzo wins its case) or Congressional action.  She writes:

I agree that application of the substantial evidence standard of review is seemingly inconsistent with the purpose and content of the AIA. This court is bound by binding Supreme Court precedent—Dickinson v. Zurko, 527 U.S. 150 (1999)—and this court’s own—In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000)—to apply the substantial evidence standard of review to factual findings by the Board, however. Because Congress failed to expressly change the standard of review employed by this court in reviewing Board decisions when it created IPR proceedings via the AIA, we are not free to do so now. I, thus, concur in the denial of en banc rehearing in this case because there is nothing that could come of our en banc consideration of the question posed. I write separately, however, because I agree with the dissent to the extent it argues that a substantial evidence standard of review makes little sense in the context of an appeal from an IPR proceeding. But the question is one for Congress.

Judge Newman argues that the trial-like setup of the AIA proceedings allows for an important distinction from the Zurko and Gartside decision that requires a full reconsideration of the standards applied to PTAB determinations.

= = = = =

[1] Merck owns U.S. Patent No. 6,011,040; and SAMSF owns U.S. Patent Nos. 5,997,915, 6,673,381, and 7,172,778 that are licensed to Merck.  The patents relate to methods of using folate to lower a patent’s homocysteine level.

71 thoughts on “Federal Circuit Rejects Reduced-Deference for AIA-Trial Decisions

  1. Post caught in filter, let’s try this:

    Taking a slightly different angle, let’s analyze this statement:

    This court is bound by binding Supreme Court precedent—D1ckinson v. Zurko, 527 U.S. 150 (1999)—and this court’s own—In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000)—to apply the substantial evidence standard of review to factual findings by the Board, however.” (emphasis added)

    In particular, the entity referred to as “the Board.”

    Would that be the Patent Trial and Appeal Board, or…
    Would that be the USPTO Board of Appeals?

    Now the lineage of the PTAB is clear, but less clear is the (apparent) as sumption that nothing has changed to that entity because of the AIA (or to paraphrase the words of the court: nothing has explicitly been changed with how the courts treat the changed entity).

    But that is rather merely as suming the answer, is it not?

    Should not the court have taken the opportunity to constrain the pre-AIA relationship to the then existing facts (read that as powers and abilities) of the pre-AIA “Board?”

    Is not the real question here (for which the answer was merely as sumed “no change”), “Did the changes by the AIA necessarily – or even merely possibly – change also the relationships and protocols for dealing with an executive agency entity that has in fact changed?

    To make a short story long, the court may be correct in that precedent dictates how a previous entity had to be treated, but is the court correct in stating that the new entity, while exercising new powers, falls under the old precedent?

    Should it?

    Or, more precisely put: Should the court make that as sumption?

    1. If I understand the question correctly, I think the answer is no.

      The question is, could or should the Federal Circuit have distinguished Dickinson v. Zurko on the ground that Zurko applied to the BPAI, not the PTAB.

      As I read Zurko, it essentially holds that when a court reviews an agency action, the APA standard of review (5 USC 706, the “court/agency” substantial evidence standard for factual questions) applies unless some other source of law says that it doesn’t.

      The Federal Circuit had previously held that (a) because the CCPA had previously applied the court/court “clearly erroneous standard,” and (b) the APA contained a provision saying that its provisions did not “not limit or repeal additional requirements . . . recognized by law,” (5 USC 559), then (c) the CCPA’s old practice and stare decisis amounted to an “additional requirement” that was not displaced by the APA.

      The Supreme Court rejected that argument, (a) finding that the CCPA’s practice wasn’t as consistent as the Federal Circuit said it was, and (b) in any event, the court should not “too readily permit[] other agencies to depart from uniform APA requirements.”
      link to scholar.google.com

      The reasoning of Zurko applies at least as strongly to the PTAB as it did to the BPAI. The argument for applying a clearly erroneous standard to the BPAI (historic CCPA practice, stare decisis, and 5 USC 559) doesn’t exist for the PTAB. And there’s no other statute that would take the PTAB out of the court/agency standard of review. As much as some judges might think that Congress should have made the PTAB’s decisions reviewable under the court/court standard, Congress didn’t and under Zurko that’s almost certainly the end of the matter.

      1. Thanks for the cogent response.

        I take it that you think that the Congress action in broadening powers (not just a name change) has no effect on the calculus.

        Saying such would have been better than saying nothing though, as it is, we cannot be sure that this “thinking” even occurred to the court.

  2. The PTAB isn’t a court, and this distinction is illusory in practice.

    “There are really only two standards of appellate review: plenary and deferential. Conventionally there are four basic standards (with many variants), which in ascending order of deference to the trial court or administrative agency are de novo, clearly erroneous, substantial evidence, and abuse of discretion. But the last three are, in practice, the same, because finer distinctions are beyond judges’ cognitive capacity. The multiplication of unusual distinctions is a familiar judicial pathology.”

    ― Richard A. Posner

    link to goodreads.com

    “The court/agency standard, as we have said, is somewhat less strict than the court/court standard. But the difference is a subtle one—so fine that (apart from the present case) we have failed to uncover a single instance in which a reviewing court conceded that use of one standard rather than the other would in fact have produced a different outcome.”

    Dickinson v. Zurko, 527 US 150, 162-63 (2000)

    1. “But the last three are, in practice, the same, because finer distinctions are beyond judges’ cognitive capacity.”

      Amen, J. Posner.

      I would submit, though, that for some judges, perhaps too many judges, there is only one standard of review: de novo. There are some judges that are going to decide the case the way they think it should have originally been decided, standard of review be d#mned.

      Oh yeah, one more thing: FREE TOM BRADY!!!!!!

      1. “There are some judges that are going to decide the case the way they think it should have originally been decided, standard of review be d#mned.”

        The same thing with SPE’s and other agency personnel actually.

    2. Posner: the last three are, in practice, the same, because finer distinctions are beyond judges’ cognitive capacity.

      Don’t tell that to Judge Newman! 😉

    3. At times, Posner is a little too full of himself.

      The arrogance of “this does not apply to me, but only to the lesser “folk” is a bit reminiscent of certain sAme ones here…

      😉

      1. idk about that, they do ok. The thing that happens is though that there are like a dozen things to construe and then they get one out of all of them wrong.

      2. “Beyond judges’ cognitive capacity” is perhaps an unnecessarily provocative way of making the point, and I don’t actually know the source that “goodreads” draws from. But I think the point is sound. Judge Posner makes the same point more diplomatically in an ERISA case from 1982:

        It is easier to multiply standards than actually to differentiate among them-to keep them from overlapping-in the setting of a particular case. …. The fundamental difference in the depth or penetration or exactingness of judicial review is between deferential and nondeferential review, that is, between reversing a tribunal’s decision because it is unreasonable and reversing it merely because it is wrong. Sometimes even this difference blurs.

        Van Boxel v. Journal Co. Employees’ Pension Trust, 836 F.2d 1048, 1052 (7th Cir. 1987).
        link to scholar.google.com

        1. Posner: The fundamental difference in the depth or penetration or exactingness of judicial review is between deferential and nondeferential review, that is, between reversing a tribunal’s decision because it is unreasonable and reversing it merely because it is wrong. Sometimes even this difference blurs.

          “Depth or penetration or exactness” is an interesting way of looking at it. What can result in blurring is the situation when the reviewing court has less expertise with respect to the underlying subject matter than the lower tribunal, and when some expertise is needed (or extremely helpful) for interpreting/understanding what the “facts” actually are. In that instance, the reviewing court will end up deferring to the lower tribunal by default because it will be able to reliably detect only “unreasonable” mistakes. “Garden variety errors” are won’t be appreciated or understood, even when they are pointed out.

          Looking at it that way, the point of establishing the level of deference legally is to keep the reviewing court from first spending too much time trying to acquire the necessary expertise that is expected from the lower tribunal, and then using that expertise to second guess that tribunal.

      3. Dennis, I agree. I still think Lourie was right in Phillips. The only structured disclosed for the claimed term “baffle” were oblique-angled. Every one. No exceptions. There were no descriptions of other structures. One reading the specification would only think, given the requirement to particularly point out, that the claim term “baffle” was referring to the unique structure disclosed as a baffle.

        But, no. That was not the construction given. The construction given read on a broader topic, baffles that were perpendicular. Not one example of perpendicular baffles was disclosed. No one reading the specification would even consider that anything but oblique-angled baffles were being claimed. No one.

        So what happened in that case was simply bizarre. The claims cover an invention not even disclosed. How in the fricken world is that allowed to happen?

        That is why Philipps is so confusing. First they set a standard, look at the spec first, then ignore it.

    4. Again anonymous commentator, when the issue has a higher burden of proof in the first place, the reviewing court must look to whether the proof below meant that higher standard. Thus review is in fact more searching.

      One reviewing patentability decisions from ex parte examination, where the burden is on the office to prove its case by a preponderance of evidence, the ordinary review whether by clear error or by substantial evidence would provide a similar outcome. But when one is reviewing validity decisions from the results of a validity trial, where in court the burden of proof would be by clear convincing evidence, the standard of review makes quite a bit a difference. However again, perversely, Congress provided that IPRs be conducted according to preponderance of evidence. By this single action, Congress has severely damaged the patent system.

      1. I see that you are inching closer to grasping the right question to be asked.

        I doubt that you will reach that point of understanding in time, and that your submission this Friday will thus fall short.

        1. So we will await your superior arguments as presented in your amicus brief supporting both pending IPR unconstitutionality cert petitions.

      2. Yes, the standard of review necessarily incorporates the standard of proof that the factfinder applied. See, e.g., Abbott v. Syntron, 334 F.3d 1343, 1347 (Fed. Cir. 2003) (burden on appealing defendant is “to prove that, in light of the presumption of validity, no reasonable jury could have decided that [defendant] failed to prove by clear and convincing evidence that the claims are invalid…”).

        But I don’t see how that affects the choice between the two standards offered here — either way the question is whether the PTAB’s decision to find the claims patentable or unpatentable (by a preponderance) is [a] clearly erroneous or [b] unsupported by substantial evidence… right?

        1. Good point. When invalidity is decided in a district court trial, the same clear and convincing standard of proof applies for both jury trials and bench trials. But the appellate standard of review is different depending on whether the jury or the trial court decided the validity issue.

    5. Thanks for that reminder from Zurko on the APA that “we have failed to uncover a single instance in which a reviewing court conceded that use of one standard rather than the other would in fact have produced a different outcome.”

      As argued in some of the Cuozzo amicus briefs, the same could be said of most IPR decisions re BRI v. Phillips. The Court seemed to get the clear message that “prosecution history” DOES apply to IPR BRI, unlike un-completed application prosecution history. Nobody even argued for the original Cuozzo erronious argument that the “plain meaning” test does not normally apply in BRI. Nor did the Court exhibit sympathy for applying to IPRs the Phillips BRI distinguishing argument that a claim element with two possible interpretations [ambiguous] should be interpreted to save the claim in litigation. So where is the basis for a holding that BRI causes large numbers of patent owners to lose IPRs that would win with Phillips claim interpretation?
      Oh well, these are just tea leaves, wait for the actual decision.

      1. …and once again, the rejoinder Paul is that if this does not matter, change it to non-BRI and be done with it.

        (Note how Malcolm blew a gasket the last time the “b-b-but they are the same” was floated. – Why do you think he did that?)

        1. if this does not matter, change it to non-BRI and be done with it.

          Or just leave it like it is because it works just fine.

          Which is easier for the PTO? Answer: BRI.

          End of analysis.

          1. Except not, since one side is NOT happy with it.

            The logic that your side is the side that keeps insisting “same,” yet refusing to actually live up to that conviction rather goes over your head, eh pumpkin?

            1. one side is NOT happy with it.

              One side will need to learn to live with it unless it can convince the Supremes or Congress that it deserves to be happier.

              1. You are again missing the point here Malcolm.

                Obtuse. Is it deliberate? (said in the best Andy Dufresne tones)

                This is just not a matter of that one side doing anything – it is a matter that the other side continues to make a “they are the same” argument, but continues to NOT want to actually treat them the same; that that side does not even want to consider them to be actually the same.

                (and you left out the executive branch, which can simply change the standard it has chosen to use)

    6. There might not be a distinction for Posner and the Supreme Court, but because of the way the Federal Circuit performs its “substantial evidence” review of agency decisions, there is in fact a difference between “substantial evidence” and “clearly erroneous” reviews.

      For “clearly erroneous” review, the court reviews the entire record to determine if it has a “definite and firm conviction” a mistake has been made. But for “substantial evidence,” the Federal Circuit in practice seems to only consider the evidence supporting the agency decision. If there is any evidence to support the decision below, then the CAFC will affirm, regardless of the evidence going the other way.

      This practice is not correct, as even under the “substantial evidence” standard, the record as a whole must be weighed – including both the evidence that supports the decision and the evidence that detracts from it.

      Because the Federal Circuit does not seem to do that, then there is a big difference whether the court is reviewing for “substantial evidence” or “clear error.”

  3. I apologize if this question is remedial but could someone please explain to me how clear error is a lower deferential standard of review than substantial evidence? I would have thought the opposite. Doesn’t clear error require a definite and firm conviction that a mistake has been committed? Both standards seem the same to me.
    Thanks,

    1. It’s a good question. This is what the Supreme Court had to say about that question in In re Zurko (basically that it wont make much of a difference unless the reviewing court misunderstands that it should make a difference):

      This Court has described the APA court/agency “substantial evidence” standard as requiring a court to ask whether a “reasonable mind might accept” a particular evidentiary record as “adequate to support a conclusion.” Consolidated Edison, 305 U. S., at 229. It has described the court/court “clearly erroneous” standard in terms of whether a reviewing judge has a “definite and firm conviction” that an error has been committed. United States v. United States Gypsum Co., 333 U. S. 364, 395 (1948). And it has suggested that the former is somewhat less strict than the latter. Universal Camera, 340 U. S., at 477, 488 (analogizing “substantial evidence” test to review of jury findings and stating that appellate courts must respect agency expertise). At the same time the Court has stressed the importance of not simply rubber-stamping agency factfinding. Id., at 490. The APA requires meaningful review; and its enactment meant stricter judicial review of agency factfinding than Congress believed some courts had previously conducted. Ibid.

      The upshot in terms of judicial review is some practical difference in outcome depending upon which standard is used. The court/agency standard, as we have said, is somewhat less strict than the court/court standard. But the difference 163*163 is a subtle one—so fine that (apart from the present case) we have failed to uncover a single instance in which a reviewing court conceded that use of one standard rather than the other would in fact have produced a different outcome. Cf. International Brotherhood of Electrical Workers v. NLRB, 448 F. 2d 1127, 1142 (CADC 1971) (Leventhal, J., dissenting) (wrongly believing—and correcting himself—that he had found the “case dreamed of by law school professors” where the agency’s findings, though “clearly erroneous,” were “nevertheless” supported by “substantial evidence”).

      The difficulty of finding such a case may in part reflect the basic similarity of the reviewing task, which requires judges to apply logic and experience to an evidentiary record, whether that record was made in a court or by an agency. It may in part reflect the difficulty of attempting to capture in a form of words intangible factors such as judicial confidence in the fairness of the factfinding process. Universal Camera, supra, at 489; Jaffe, Judicial Review: “Substantial Evidence on the Whole Record,” 64 Harv. L. Rev. 1233, 1245 (1951). It may in part reflect the comparatively greater importance of case-specific factors, such as a finding’s dependence upon agency expertise or the presence of internal agency review, which factors will often prove more influential in respect to outcome than will the applicable standard of review.

      These features of review underline the importance of the fact that, when a Federal Circuit judge reviews PTO factfinding, he or she often will examine that finding through the lens of patent-related experience—and properly so, for the Federal Circuit is a specialized court. That comparative expertise, by enabling the Circuit better to understand the basis for the PTO’s finding of fact, may play a more important role in assuring proper review than would a theoretically somewhat stricter standard.

      164*164 Moreover, if the Circuit means to suggest that a change of standard could somehow immunize the PTO’s fact-related “reasoning” from review, 142 F. 3d, at 1449-1450, we disagree. A reviewing court reviews an agency’s reasoning to determine whether it is “arbitrary” or “capricious,” or, if bound up with a record-based factual conclusion, to determine whether it is supported by “substantial evidence.” E. g., SEC v. Chenery Corp., 318 U. S. 80, 89-93 (1943).

      link to scholar.google.com

      1. the basic similarity of the reviewing task, which requires judges to apply logic and experience to an evidentiary record, whether that record was made in a court or by an agency.

        Judges using logic and their own experiences as human beings to reach a decision?

        Golly, it sounds almost too rational to be true. Everybody knows that you need “a cite” for a logical proposition or else that proposition is worthless. Or so some commenters here would have it.

        1. …says the guy who automatically clamors for “proof” when anything against his desired ends is stated…

          Maybe he will call someone else a hypocrite again… (but in his “grown-up” way)

          Sorry you cannot see the sarcasm sign I am holding up – it’s really pretty.

      2. One has to also consider on review the level of proof – the standard of proof – required below. If the trier of fact was required to resolve reasonable doubts in favor of one party, which is the case with regard to patent owners and validity, and it is clear that the lower court did not resolve reasonable doubts in favor of validity, then the reviewing court can reverse. But when the only question is whether there was substantial evidence to support the conclusions of the PTO, then the reviewing courts hands are substantially tied.

  4. What doesn’t make sense is that there is deference to the PTO for factual findings, but at what step of the process? So, the entire judicial world is supposed to defer to the PTO for factual findings, but then the PTO can re-do their work and not give any deference to their previous work? That doesn’t make sense.

    1. There is a certain amount of logic to differentiate the two (and of course, that logic leads to a path that will be quickly rejected).

      The first time through, you have an agency who is not held accountable to do their Fn job.

      The second time though, you have a patent deemed enough trouble by the (typically monied) infringer groups to spend more extensive time and effort for a “better” out-of-Office examination.

      The logical step on this path is to question why the H the patent office is supported by innovator funds – to the tune of several BILLION – for a “first pass” if they first pass is so worthless.

      A registration system could be set up for pennies on the dollar of this worthless “first pass” system that we have currently. An extensively smaller group of Office “experts” could be retained and used as stewards to the courts (both PTAB and proper Article III), and the fees that innovators pay in could be pennies and do a far better job than what we have now.

  5. And 11 to 1 vote of the Fed. Cir. is not what one would normally think of as a “split” decision. Judge Newman is increasingly the current Court’s outlier. That does not bode well for getting the Sup. Ct. to take cert to on her views.

    1. Meh, newman’s always been the outlier. She’s got a strong pro-“anything that is good for a patentee must be the lawl if there is any significant question” viewpoint. And after having heard her speak, and spoken to her a bit I can understand a bit of why she has it. I get where she comes from, but she could tone it down a notch.

      1. Frankly, I don’t understand Newman. She favors inventors over infringers, but she (and Don Dunner) brought us reexaminations. She is the one who began collapsing the patent system.

        1. Ned, that is not my own recollection from many years ago of who convinced Congress to pass the first reexamination statute, and Newman has certainly not expressed any love for reexaminations in her judicial opinions.
          But we all tend to forget that an original intended major use for reexaminations was to let patent owners take their patent claims back to the PTO to have their original, or amended, claims re-allowed over prior art cited against them by others, thus improving both litigation and licensing strength of the patents. I suspect that some younger patent attorneys do not even know that the patent owner can initiate an ex parte reexamination, not just an adverse party, unlike subsequent post-grant proceedings.

          1. Paul, you may be right there, as reexaminations were first proposed in 1966 it appears. Bauz, N. Thane. “Reanimating US Patent Reexamination: Recommendations for Change Based Upon a Comparative Study of German Law.” Creighton L. Rev. 27 (1993): 945. link to dspace.creighton.edu.pdf?sequence=1

            Janis, Mark D. “Rethinking reexamination: Toward a viable administrative revocation system for US patent law.” Harv. JL & Tech. 11 (1997): 1. link to repository.law.indiana.edu

            But the promise to Congress that reexaminations would strengthen the patent system. Just the opposite. Mercado, Raymond A. “Use and Abuse of Patent Reexamination: Sham Petitioning before the USPTO, The.” Colum. Sci. & Tech. L. Rev. 12 (2011): 92. http://scholar.google.com/scholar_url?url=http%3A%2F%2Facademiccommons.columbia.edu%2Fdownload%2Ffedora_content%2Fdownload%2Fac%3A133509%2FCONTENT%2Fmercado.pdf&hl=en&sa=T&oi=gga&ct=gga&cd=0&ei=PR0hV8j4OJTxjAGqqZTAAw&scisig=AAGBfm0hBnRdj-_m6q2o1qY0Zgq-V4Hwww&nossl=1&ws=1412×599

          2. Paul, you may be right there, as reexaminations were first proposed in 1966 it appears.

            Bauz, N. Thane. “Reanimating US Patent Reexamination: Recommendations for Change Based Upon a Comparative Study of German Law.” Creighton L. Rev. 27 (1993): 945.

            Janis, Mark D. “Rethinking reexamination: Toward a viable administrative revocation system for US patent law.” Harv. JL & Tech. 11 (1997): 1.

            But the promise to Congress that reexaminations would strengthen the patent system. Just the opposite.

            Mercado, Raymond A. “Use and Abuse of Patent Reexamination: Sham Petitioning before the USPTO, The.” Colum. Sci. & Tech. L. Rev. 12 (2011): 92.

            Paul, a reply with links was blocked by the filter.

          3. The original congressional purpose was, in fact, to strength patent rights against the interests of accused infringers:

            “A new patent reexamination procedure is needed to permit the owner of a patent to have the validity of his patent tested in the Patent office where the most expert opinions exist and at a much reduced cost. Patent office reexamination will greatly reduce, if not end, the threat of legal costs being used to “blackmail” such holders into allowing patent infringements or being forced to license their patents for nominal fees.”

            20 H. Rep. No. 96-1307, 96th Cong., 2d Sess. (1980) (discussing H.R. 6933, which became ex parte reexamination).

              1. Mr. Morgan,

                Why does it seem that your recollection always seems to omit the power and choice of the patent holder in your comments on this blog?

                The point that the purpose seems corrupted is when the system is turned against the patent holder. This type of anti-patent holder mindset reverberates in your posts, and beckons the question of what is being confirmed…

      2. She seems to have some kind of contrarian streak which makes things interesting at the CAFC level. At the same time, she appears content to roll with what the Supremes hand down. In the oral arguments, for example, I don’t notice her complaining too much about the law (e.g., “I think it’s bad policy but that’s what we have been told to do”) once the specific issue has been taken upstairs and decided.

  6. We have many wonderful traditions in the good old U.S. of A.:

    (1) Singing “Take Me Out to the Ballgame” at the seventh inning stretch;
    (2) Fireworks on 4 July;
    (3) Presidential election contests that begin as soon as the newly elected president is sworn in.

    Now we have yet another:

    (4) The Supreme Court throws a spanner in the works of the patent system, and then when everyone and their brother starts to notice that the system is no longer functioning, the court of appeals that has been charged with the unique task of overseeing the patent system throws up its hands and says “we cannot do anything.”

    This is becoming as regular as spring in March. First Sequenom, now Merck. Needless to say, I think that Judge Newman had the better argument in both of these en banc petition denials.

    1. …happens when that selfsame court “charged with the unique task of overseeing the patent system” has been brow-beaten into submission by the Supreme Court who will not let that court oversee that patent system.

      Cmon Greg, let’s not see you take aim at the wrong target too.

      1. Fair enough. I certainly agree that the SCotUS deserves more of the blame for giving us KSR or Mayo in the first place than the CAFC are to blame for not sufficiently cabining those two clunkers. Nevertheless, I am disappointed by the lack of spirit shown by most of the CAFC (thank heavens for Judge Newman, however).

        The SCotUS used to browbeat the CCPA as well, but the CCPA never let that get them down. Think of Judge Rich’s opinion in In re Diehr, 602 F. 2d 982, 987 n.6 (C.C.P.A. 1979). When faced with a dog of an opinion (e.g., Flook), he just finds a way to distinguish it and moves on, keeping the law moving in its right channels. This drove the SCotUS nuts (see, Diamond v. Diehr, 450 U.S. 175, 198–99 (1981)), but the CCPA did not care. They just kept plugging away, trying to keep the patent system sane, functional, and administrable within the constraints of lived reality.

        In other words, I guess I am holding the CAFC to the same standards as its distinguished forebear, and it is not measuring up (Judge Newman very admirably excepted).

        1. That may have worked fine for the CCPA, when the Supremes rarely took patent cases. Now they take several every year.

          1. I would posit that if the CAFC has someone as knowledgable and as unafraid of the Supreme Court as Judge Rich, the Court would not be in such a hurry to brow beat the CAFC.

            Instead, we have the classic simians in a cage trained by firehouse to beat up any other simian reaching for a banana.

            What we need is both of the following:

            Congress to employ their Constitutional prerogative as to jurisdiction str1pping and remove the non-original patent appeal jurisdiction from the Supremes and

            To appoint a new (innovation savvy and unbeaten) Article III court to actually hew to the law as written by Congress and keep the fingers out of the nose of wax.

    2. Greg, Zurko controls. It was Congress’s duty (Kappos’s duty) to assure that the IPR standard of review was for clear error if it was Congress’ intent, and it was, to move validity litigation from the courts for cost purposes.

    3. Greg: when everyone and their brother starts to notice that the system is no longer functioning the system is no longer functioning

      LOL

      You really need to get out more, Greg. Or maybe just read what’s put in front of your face?

      This year is may break a new record in terms of patent grants. Applications are being filed at record breaking levels. Patent litigation is alive and well — patent law firms are raking it in (even you have a job, apparently — that says a lot).

      And uncountable numbers of licenses to granted patents are being taken every day.

      There is a big difference between “no longer functioning” and “some patents are worth a bit less than they used to be, others are worht a lot less”. I know it’s really hard for the typical patent maximalists to tell the difference, or admit it. After all, it’s so much easier to just grab those pom-poms and cheerlead for your self-interest 24-7.

      1. What “says a lot” is that once again the item earning the tag remains and the tag itself is removed.

        Great job Prof – way to reinforce those perceptions.

        Happy Decade of Decadence.

  7. This also should send a signal to the Supreme Court for those situations that the Supreme Court won’t be decisive and wants the lower court to draw its policy lines – (for example, defining “Abstract” or “significantly more”) when those very things are (rightfully) outside of the CAFC’s (and Supreme Court, but who wants tell the emperor he is not wearing clothes) proper authority to write the statutory law that is patent law…

    Would love to see Judge O’Malley not only hold a tough line on that, but be able to also sway the other judges who are a bit too cavalier for following authority and inserting their own philosophical viewpoints (like Dyk, who recently had no problem of trying to elevate a minority view into controlling law).

  8. DC: A way to think about the difference between the two of these is to consider that factual findings by a jury are generally reviewed for substantial evidence (higher deference) while a judge’s factual findings are reviewed for clear error (lower deference).

    Can someone remind me of the reasoning giving greater deference to a jury’s “factual findings” versus the findings of a judge? Everything else being equal, is it because there is one judge versus 12 “lay people”? Or is there something else?

    1. “The jury test is more deferential—based on the policy judgment that bench trial findings are less sacrosanct on review than are jury verdicts.” Kevin casey, Standards of Appellate Review in the Federal Circuit: Substance and Semantics, 11 Fed. Circuit B.J. 279, 308 (2002).

      1. Am I missing something or is that completely circular?

        “The test is more deferential because someone decided that jury verdicts are worth more deference.”

        Sounds like one of those legal “just so” stories …

        At some point someone must have dug up a tiny granule of rational basis for this “policy judgment”. “12 lay people’s heads are better than one judge’s head” would be some kind of attempt.

        Regardless, if the PTAB is using multiple people with relevant technical backgrounds and/or people who are continually exposed to the state of the art (and who are therefore going to be far more familiar with it than a typical jury) it seems reasonable to give the PTAB quite a bit of deference.

    2. MM, 7th Amendment.

      Jury verdicts themselves cannot be overturned. One must file a JMOL before a jury decides and then one must renew the motion afterwards. The judge then may grant it if the judge finds that there is no substantial evidence to upon which a jury might decide an issue in favor of the opponent of the motion.

      Do you want me to cite the Supreme Court cases on point?

      1. Do you want me to cite the Supreme Court cases on point?

        I’m not looking for the legal authority here; I’m looking for the rational explanation upon which the legal authority (hopefully) rests.

    3. I would think that if 12 people agreed that the evidence established some fact, by whatever burden was present, that that is entitled to more deference than a single judge determining that the evidence was sufficient to establish the fact.

      Just a guess.

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