In Defense of the Federal Circuit: A Response to Judge Wood

By Edward Reines --

Edward Reines (at right), a partner at Weil, Gotshal & Manges, frequently argues before the Federal Circuit and is chair of the court's Advisory Council.  Prepared remarks for Judge Wood's Sept. 26 talk at the Illinois Institute of Technology Chicago-Kent College of Law can be downloaded here.

The Chief Judge of the U.S. Court of Appeals for the Seventh Circuit, Diane Wood, recently delivered a speech provocatively titled "Is It Time to Abolish the Federal Circuit's Exclusive Jurisdiction in Patent Cases?"  While it is trendy to criticize the patent system, Judge Wood's prominence and her colorful critique have raised eyebrows.  Frequently mentioned as a potential Supreme Court nominee, Judge Wood's far-reaching proposal deserves close consideration -- and honest rebuttal.

The judge's focus on the Federal Circuit is understandable.  Although historically patent law was considered an esoteric backwater, it is now recognized as a dynamic legal field involving fascinating subjects and great financial stakes.  Our world is filled with amazing new inventions that improve the way we work, how we are entertained, and our healthcare.  Patent appeals now attract the finest advocates and garner national media attention.  In many ways, the Federal Circuit's patent docket has become the envy of the system.

Judge Wood did not mince words in advancing her proposal to redistribute patent appeals back to the regional circuits.  In her live remarks, she critiqued the Federal Circuit for a lack of "intellectual ferment," highlighted the frequency of Supreme Court review, and described the court as too "specialist."  She proposed a dual jurisdiction system, allowing appellants to elect between the Federal Circuit and the regional circuits, with the Judicial Panel on Multidistrict Litigation resolving conflicts by lottery.

The meteoric rise of technology, to be sure, has tested the patent system.  The Patent Office's inability to cope with the deluge of applications is well documented.  Patent assertion abuses, especially by so-called trolls, plague the system.  But are Judge Wood's criticisms of the Federal Circuit itself valid?

Judge Wood suggests that having eleven regional circuits join the Federal Circuit in addressing patent law would add intellectual heft and avoid group think.  She theorizes that the Federal Circuit's culture of consistency stifles the freedom the regional circuits would have to make "big mistakes" that might advance patent law.

The Federal Circuit was created in 1982, after studies showed that the regional circuits' handling of patent appeals was dysfunctional.  Renowned Second Circuit Judge Henry Friendly criticized the "mad and undignified" race to the courthouse stemming from regional circuit management of patent appeals.  A study cited by Judge Wood reported that patents in the Eight Circuit suffered an 88.8 percent invalidity rate -- meaning virtually all patents were ruled invalid.  It is doubtful that a return to such a free-for-all would raise the quality of discourse.

In contrast to Judge Wood's concerns about Federal Circuit unanimity, the bar of the court often complains that each judge holds independent views, creating too much panel-to-panel variability.  If those from afar consider a court's jurisprudence too uniform, and those up-close consider it too diverse, the likelihood is that the court has struck about the right balance.

Judge Wood's critique of the Federal Circuit based on the rate of Supreme Court review is in tension with her suggestion that it deserves a worthy counter-weight.  On the big issues, such as whether genetic tests may be patented, the Supreme Court has not been shy about its role.  And although the Supreme Court has historically heard as many as 20 Federal Circuit cases per term, more recently it has only decided a handful per term.  It is capable of addressing any perceived Federal Circuit bias.

The portrayal of the Federal Circuit as too "specialist" overlooks the varied docket of the court, which includes veterans' appeals and trade disputes.  It also underrates the rich diversity and high caliber of the judges on the court.  This includes generalists with backgrounds as respected Supreme Court advocates and high-performing federal trial judges.  Of President Obama's six Federal Circuit appointees, only one is a patent expert, former Patent Office star Ray Chen, who would elevate the performance of any circuit.

Judge Wood's proposal to reintroduce the regional circuits to patent appeals is, respectfully, impractical.  It would give litigants an incentive to race to appeal to obtain their preferred circuit law.  Trial courts would not know if they were governed by Federal Circuit or regional circuit patent law when they made decisions.  Simply put, adding the option of regional circuits to the Federal Circuit would worsen the unacceptable pre-1982 forum shopping.

Finally, the idea of using the MDL panel to select the appeal court by lottery is dubious.  Judge Wood cites existing uses of this scheme.  But it has only been sparsely used in niche areas.  One real-world example provides a cautionary tale:  In an attempt at forum shopping, appeals were filed in 11 different regional circuits including the D.C. Circuit.  The MDL panel selected the Eighth Circuit by lottery.  The Eighth Circuit then transferred the appeal back to the D.C. Circuit.  Given the fast pace of patent litigation, such appellate roulette would be intolerable.

In the end, calls to return patent appeals to the regional circuits cannot survive study of the pre-Federal Circuit mess.  A hybrid system with the Federal Circuit and the regional circuits competing for jurisdiction, while imaginative, would be a big mistake.  The Federal Circuit has presided over a technology boom like no other.  We know from hard-worn experience that the grass is not greener on the other side.

The above article was originally published on October 7, 2013 in The Litigation Daily, and is being reprinted here with the author's permission.

Comments

[Elizabeth]

Yes, but isn't the problem that if one panel decides a case a certain way, the next panel is bound? Therefore, even if individual judges disagree, there is no way to get competing approaches from opinions. Additionally, some judges will write opinions that are not consistent with prior opinions and then the precedent gets muddled because instead of competing views, the attorneys have to reconcile the approaches between cases from the same court.

[PaulGammond1]

"The meteoric rise of technology, to be sure, has tested the patent system."

Meteoric rise in "technology"? Relative to when? How are you measuring this "rise"?

To be sure there has been a "meteoric rise" in the number of patent applications being filed and granted by the USPTO. But there's no indication that this increase is related to any "rise of technology". It seems more likely that the increase is due to the perception that patents can be lucrative, particularly when the subject matter increasingly being pursued requires that nothing need be created by the applicant to obtain the patent except for the patent application itself.

[EG]

Dear Ed,

Thanks for your rebuttal. What Chief Judge Wood proposes would make what is already a chaotic situation in patent law even more chaotic. I started practice prior to the formation of the Federal Circuit, and it was "forum shopping" to the extreme in patent cases, the 8th Circuit, as you note, being a patent graveyard.

The current technological and patent law ignorance of SCOTUS doesn't help the situation either. So adding more technologically and patent law ignorant appellate judges (there's enough of those on the Federal Circuit already) to the mix will make this already bad situation just that much worse.

[Igor]

Very effective answer to Wood's dubious proposal.

What Wood calls group-think is actually consistency, which was and remains the chief rationale for creating CAFC.

Moreover, it's precisely because of the lack of "group think", in other words lack of intellectual and expertly consistency of the circuit courts, that led to forum shopping.

Instead of returning to the dark days, perhaps it would even make sense to create one patent trial court, at least on some limited basis, to enhance still further consistency in patent cases.

[GD]

EG's comments are spot on. Chief Judge Wood does not understand what she is suggesting.

Is it maybe time to think about going in another direction? Setting up specialist trial courts for patents and/or setting practical limits on the supreme court's ability to upset the CAFC's work might inject some badly needed tranquility and logic into the irrational chaos.

[6]

"Judge Wood suggests that having eleven regional circuits join the Federal Circuit in addressing patent law would add intellectual heft and avoid group think."

For the love of god, this. Please this.

[6]

"The Federal Circuit was created in 1982"

That's funny, me and the federal circuit were created at the same time.

[6]

"If those from afar consider a court's jurisprudence too uniform, and those up-close consider it too diverse, the likelihood is that the court has struck about the right balance."

Or else they are talking about different aspects of the court's jurisprudence and making too broad of a generalization.

[6]

"Simply put, adding the option of regional circuits to the Federal Circuit would worsen the unacceptable pre-1982 forum shopping."

On that I think I would agree with you about.

I don't rightly know what the solution is, but perhaps you are right that what she is proposing is not it. One way or another though the federal circuit needs, desperately, to end its lack of intellectual ferment and its setting of absurd precedents that vary wildly from the law as previously set down, and the law as set forth in the statute in some cases. Another way of putting it is that they need to end their tunnel vision that they were supposedly handed back in the day to bring oneness to patent law. If that can be accomplished with the sitting judges then fine, but if not, chuck em and start over, or enlarge the judiciary at the federal circuit to dilute the old members.

[6]

"The current technological and patent law ignorance of SCOTUS doesn't help the situation either. "

You know EG, if that is the case, and if it is also the case that they used to take 20 cases per term from the patent arena compared to 2 nowadays, then it is no wonder they're supposedly "patent law ignorant". And that is setting aside of course that it is them of course that ultimately set the law, and thus whoever disagrees with them is the ignoramus...

[6]

I'll be honest GD, if we hadn't already seen what setting up a specilist court in miniature does after having set up the Fed Circuit and seen it grown to love itself and its constituency of patent holders as well as patent holding itself overmuch then I might agree. As is, the situation is more or less a catastrophe waiting to eventually explode. It may be that the court itself is starting to take note of its "more outlandish" decisions needing to be revised as Prost noted the other day, but frankly I don't see that happening quickly, which is of course what is needed in such situations. The government moves so sllloowwly.

Btw, does anyone know if the CAFC is closed due to the shutdown?

[Curmudgeon]

If pre-82 forum shopping gave us an unacceptably dysfunctional appellate system, then outside of the FedCir, we have an unacceptably dysfunctional appellate system, since the FedCir is a unique exception to regional circuits.

I am troubled by a defense of the FedCir that is simultaneously an indictment of the rest of the federal judiciary.

[EG]

" And that is setting aside of course that it is them of course that ultimately set the law, and thus whoever disagrees with them is the ignoramus..."

So you subscribe to the old "might makes right" theory, eh 6? That doesn't hold water in my book. Yes, SCOTUS is the highest court in this land, but that makes them far from infallible. And they're very fallible when it comes to understanding technology, much less patent law. Even Scalia admitted as much in Myriad.

Also, SCOTUS doesn't "ultimately set the law"; Congress does that as the Patent Clause clearly says they're supposed to do. Instead, SCOTUS is supposed to interpret the "law" that Congress enacts. But when it comes to the patent statutes, SCOTUS too often simply ignores those statutes, or at best gives them lip service. Again 6, "might doesn't make right."

[6]

"So you subscribe to the old "might makes right" theory, eh 6? "

I wouldn't say it makes "right". But I would say that when it comes to law, which only has any meaning because of the power behind it, then power absolutely makes law.

That's the way dad did it, that's the way Merica does it, and it's worked out pretty well so far.

"but that makes them far from infallible. "

Oh I totally agree. I totally agree. That doesn't magically mean that the law isn't what they say it is.

"Also, SCOTUS doesn't "ultimately set the law"; Congress does that as the Patent Clause clearly says they're supposed to do. "

They set what it means, which is practically better than ultimately setting it, especially considering how few judges there are compared to how many members of congress there are and how you need to garner "votes" to do anything in either body.

"Again 6, "might doesn't make right.""

Again EG, might does make law. In this country at any rate.

[Skeptical]

"It's worked out pretty well so far"

You like to ignore history, don't you 6?

[EG]

"I would say that when it comes to law, which only has any meaning because of the power behind it, then power absolutely makes law."

Ok 6, but you obviously need a lesson in what legislative power is and who our Constitution gives that power. Legislative power is the power to make, amend, and repeal law; that's not the judicial power which is the power to interpret what that law means (i.e., does not make, amend or repeal that law). And guess what: Article I, Section 1, of our Constitution gives the legislative power solely to Congress, not to the federal judiciary, including SCOTUS. The federal judiciary can interpret what Congress has enacted as law and can declare unconstitutional laws enacted by Congress, but the federal judiciary, my dear 6, cannot make (or amend) the laws of this country.