Right to Jury Trial: Not for Attorney Fees

JuryOfPearsAIA America v. Avid Radiopharma (Fed. Cir. 2017)

In a short opinion, the Federal Circuit has ruled that the factual basis an attorney fee award need not be decided by a jury — affirming a $4 million fee award that followed a jury trial on the sole issue of whether the plaintiff (AIA) owned the asserted patents. U.S. Patent Nos. 5,455,169 and 7,538,258.

The U.S. Constitution provides

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

The right to a jury of peers in civil cases is one of those fundamental principles designed to uphold the rights of property and contract but keep them in balance with community principles and values.  The limitation of the amendment is that it only applies to “Suits at common law.” The “common law” limitation implicitly refers to the distinction between “legal” and “equitable” suits that do not require a jury trial.  Further, the Constitution indicates that the right to jury trial shall be “preserved.”  This suggests that issues which were decided by judges (rather than juries) at common law are not transformed into jury questions by the Constitution. Rather, the provision appears designed to maintain the status quo requirements

The Constitution reference to “Suits” makes historic sense when suits were either filed before a common law court or a court of equity.  At the Federal level, those courts are merged and so we now look to particular issues within each lawsuit to determine whether those issues need be determined by a jury.  Thus, for instance, a case involving a patentee’s request for reasonable royalty damages and injunctive relief, the damages would require a jury (if requested) as an issue traditionally decided by common law courts while injunctive relief is an equitable question that does not require a jury.

Here, the question before the courts was whether an attorney fee award under Section 215 requires a jury. For its analysis, the court first looked historically and determined that common law judges (rather than juries) decided the fee award issue.  The Federal Circuit’s conclusion is that this “implies that attorney’s fees generally do not involve legal rights.”  I would draw a similar but slightly distinct conclusion – that there was no right to a jury to be “preserved” regarding the issue of attorney fees. Further, the appellate panel went on to look at the remedy – and found it is properly classified as equitable because it raises “issues collateral to and separate from the decision on the merits.” (quoting Budinich v. Becton Dickinson & Co., 486 U.S. 196(1988)).

With its conclusion that attorney fees under 35 U.S.C. § 285 are “properly characterized as an equitable remedy,” there is no need for a jury determination.

= = = =

A few notes here – Yes, you heard that right, a $4 million fee award for a 12-witness jury trial.  Avid had requested about $7 million. Yes, discovery and lawyering is expensive, but the discovery in the case was “targeted” toward only the ownership issue (that did admittedly involve allegation of conspiracy).

The trial issue: whether the plaintiff, the assignee of the patents in suit, has standing to prosecute this patent infringement action. Unless the plaintiff owns the patents, it has no standing. The defendants contend that the assignor of the patents was not the sole inventor of the invention; and, even if he was, ownership of the invention vested in his university-employer by operation of Florida law. If the defendants are correct, the plaintiff lacks standing.

This appears to be a super fascinating issue that would extend our knowledge of the ownership process when inventors assign their future invention rights.  Unfortunately, the Jury Verdict is SEALED, and the Federal Circuit’s decision on the merits of the case was issued as a R.36 Affirmance without Opinion.

An important element of the original district court decision here (that was affirmed without opinion) points out a Florida State Regulation that “An invention which is made in the field or discipline in which the employee is employed by the University or by using University support is the property of the University…” R. 6C4–10.012(3)(c) (emphasis added).  To be clear, this regulation is not a “contract” with the future inventor but instead a regulation in the Florida code that identifies ownership of the patent right — seemingly in conflict with the statement in Stanford v. Roche that “Since 1790, the patent law has operated on the premise that rights in an invention belong to the inventor.”

35 thoughts on “Right to Jury Trial: Not for Attorney Fees

  1. Dennis – thank you for the good succinct discussion of constitutional law. To often I find patent attorneys (for understandable reasons) don’t have a good grounding in constitutional law. You have consistently (though I sometimes disagree on your interpretation – but then I am a member of the federalist society) seemed to understand the issues and explained them well.

    Graduating recently I am close to my constitutional law class – and seeing 101 developing while in law school I made sure to pay close attention during.

  2. In Stanford v. Roche, 563 U.S. 776; 131 S. Ct. 2188; 180 L. Ed. 2d 1 , — Stanford claimed that Holodny had no rights to assign because the University’s HIV research was federally funded, giving the school superior rights in the invention under the Bayh-Dole Act. — The Supreme Court noted: The
    question here is whether the University and Small Busi-
    ness Patent Procedures Act of 1980—commonly referred to
    as the Bayh-Dole Act—displaces that norm and automati-
    cally vests title to federally funded inventions in federal
    contractors. We hold that it does not.
    Theoretically, Congress might have written Bayh-Dole differently, to displace the norm, and that would have been within the scope of Congressional powers. But, as you suggest, not likely within the scope of powers of Florida lawmakers. Or, is there an 11th Amendment/Florida Prepaid Postsecondary kind of issue?

    1. Theoretically, Congress might have written Bayh-Dole differently, to displace the norm, and that would have been within the scope of Congressional power

      Not likely. The allocation of power to Congress does not seem to indicate THAT scope of power.

      1. The allocation of power to Congress does not seem to indicate THAT scope of power.

        The Constitution prohibits Congress from passing a Federal law that would control where ownership of patent rights initially vest in the situation where the underlying invention was developed with Federal funds by an employee of the government?

        Gee, who knew.

        1. “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” This is an allocation of power for Congress to do pretty much what it wants. Congress decided “work for hire” exists in copyright but not patent. Could they “un-decide”?
          I was wondering if Florida lawmakers might have similar power for research done with Florida money.

            1. From oral argument in Eldred:

              CHIEF JUSTICE REHNQUIST: Well, you know, certainly what is happening in the country today in the way of congressional — under the Commerce Clause is totally different than what the Framers had in mind, but we’ve never felt that that was the criterion. What the Framers thought of, there weren’t steamboats, there weren’t railroads.

              MR. LESSIG: That’s right.

              CHIEF JUSTICE REHNQUIST: We’ve said there was a general grant, and that Congress was free to run with it in many respects.

              ***Also

              Where have you gone, Richard K. Lyon?, Int. Prop. Today, p. 20 (Dec. 2001) (discussing patent issues with CIPRO during the anthrax scare)

              The Impact of World War I on Present Day Patent Issues, Int. Prop. Today p. 35 (Feb. 2005).

              ***

              So, yes…

              ***
              And, when Lessig taught Con I at UC, he pointed out, that although the federal court system is authorized under the Constitution, nothing requires Congress to fund it, and noted what happened after Marbury v. Madison.

                1. As to Lessig, he lost Eldred but his statement about Congress not funding the Supreme Court (after Marbury) is correct.
                  Moving down the authority scale, can a federal magistrate, overseeing discovery, rule that the party is entitled to fewer than 25 interrogatories, in the absence of any bad act by that party (e.g., cumulative, vexatious, etc.)?

      2. Prior to Bayh-Dole, many government agencies were reluctant to relinquish their ownership of the government funded patents to universities or industry. Instead these agencies granted nonexclusive licenses to anyone who wished to produce the inventions.

        AND from a 1924 case:

        It is unthinkable that, where a valuable instrument in the war against disease is developed by a public agency through the use of public funds, the public servants employed in its production should be allowed to monopolize it for private gain and levy a tribute upon the public which has paid for its production, upon merely granting a nonexclusive license for its use to the governmental department in which they are employed.

        Not clear what the answer to Dennis’ question is…

          1. The actual question here is much narrower than that:
            “Can a state law or regulation define ownership of a US patent by an employee hired by that state with that regulation in place and on public notice when the employee was hired.”

            1. What about the statute that says that patents may be assigned in writing.

              Doesn’t this create a limitation on how patents may change hands?

              1. There must be an assignment; and
              2. That assignment must be in writing?

          2. Interesting – but only as a secondary measure to the Roche v Stanford primacy effect.

            Ownership cannot supplant who FIRST owns (by the nature of the Federal patent power).

            AFTER that first instance, certainly, as a matter of patents as personal property, state property laws vis a vis ownership of property may very well have their state by state effects.

            (by the way, this aspect was captured in discussion after the Roche case between myself and Ned, wherein I referenced Chisum on the topic to Ned – chapter 22, if I recall correctly traveling now and not having access to my Chisum).

            1. “there is nothing that limits assignment as the only means for transferring patent ownership…by operation of law,” Akazawa, 520 F.3d at 1356
              **
              The Tenth Circuit acknowledged that “states retain the power to ‘adopt rules for the promotion of intellectual creation within their own jurisdictions’ so long as those rules do not impermissibly interfere with the federal patent scheme.”

              174 F.3d 1104, 1108-9 (10th Cir. 1999).

                1. As to — Ownership cannot supplant who FIRST owns (by the nature of the Federal patent power). — AND
                  — “states retain the power to ‘adopt rules for the promotion of intellectual creation within their own jurisdictions’ so long as those rules do not impermissibly interfere with the federal patent scheme.” —
                  not clear that a state law saying that the state owns inventions by state employees working with state resources on state programs impermissibly interferes with the federal patent scheme. Opinions may differ. I would bet on the state law surviving, especially with the current Supreme Court. If substitute “federal” for “state,” been there, done that.

                2. Lawrence, I still think that a rule that vests ownership in the State by operation of law flies in the face of the federal requirement that assignments be in writing.

              1. 261:

                Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing. The applicant, patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States.
                Akazawa, 520 F.3d 1354
                patent ownership may be transferred by assignment, and section 261 addresses such a transfer–requiring assignments to be in writing. See 35 U.S.C. § 261. However, there is nothing that limits assignment as the only means for transferring patent ownership. Indeed, the case law illustrates that ownership of a patent may be changed by operation of law.

  3. The key point here is that standing was tried to a jury. The standing issue involved whether the plaintiff’s title was procured by fraud. At common law, all issue of title were tried to a jury, and that included validity.

    1. The SC nor any opinion from a Riding Circuit has never held that patent ownership correction is for jury issue!

      1. Jonathan, on further consideration, when the essence of the problem lies in fraud, the issue properly is determined by equity. See e.g., Atty. Gen. v. Vernon.

  4. In San Jose in Merck v. Gilead Sciences the judge post-trial has reversed the jury award and awarded accused infringer Gilead Sciences $13,857,106 in attorneys’ fees. [Beats this mere $4 mil attorney fee award hands down.] [When valuable pharmaceutical patents are at stake no expense may be spared – a billing paradise.]

    P.S. Isn’t a regulation like this a condition of the employment agreement accepted by the employee taking the job and its salary?

    1. In San Jose in Merck v. Gilead Sciences the judge post-trial has reversed the jury award and awarded accused infringer Gilead Sciences $13,857,106 in attorneys’ fees.

      Ouch.

    2. Paul, do you have more on the unclean hands of Merck? It’s in-house attorney apparently was guilty of repeatedly lying to the court. Ugh. That might tarnish one’s professional reputation a tad.

    3. I wonder if the Florida State regulation would be a State analog to the FAR (Federal Acquisition Regulations), that is, regulations that are read into contracts and even override conflicting provisions.

  5. Seems off. Did the panel address whether disputed factual questions had a jury trial right?

    One way or another, Oil States will clarify. This might be headed for SCOTUS.

    1. One way or another, Oil States will clarify.

      Oil States will clarify whether fee awards have a VII amendment jury trial right? How so? There are no §285 fee awards at stake in Oil States.

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