This past year has been full of important patent cases before the US Supreme Court (SCOTUS), the Court of Appeals for the Federal Circuit (CAFC), and the Supreme Court of China. In 2022, several noteworthy case decisions are expected from the US court system, along with changes in personnel at the US Patent and Trademark Office, the US Senate Judiciary Committee, and the CAFC. Further, next year, we will see advancements in the patent systems in many European countries and China.
US Patent Cases in 2021
In US v. Arthrex, the question of Patent Trial and Appeal Board administrative patent judges (APJs) constitutionality under The Appointments Clause was raised before SCOTUS concerning the Inter Partes Review (IPR) system adopted by The Leahy-Smith America Invents Act of 2012. SCOTUS ruled in a 5-4 decision that under the Leahy-Smith Act, as originally enacted, PTAB APJs were not “inferior officers” whose appointment could be conferred without the advice and consent of the Senate. However, SCOTUS also ruled that portion of the Leahy-Smith Act which insulated PTAB decisions from review by the Director of the Patent and Trademark Office was unconstitutional. Therefore, all PTAB judicial decisions are to be subject to review by the Director of the US Patent Office, who is appointed through the Appointments Clause of the Constitution and on that basis, the constitutionality of the PTAB regime was sustained. The US v. Arthrex case is notable because it is the first meaningful constitutional challenge to the AIA before SCOTUS. Most importantly, it will reinforce the AIA’s IPR system administered by the PTAB going forward.
In PerDiemCo LLC v. Trimble, the CAFC clarified the requirements for exercising personal jurisdiction in a declaratory judgment (DJ) action based on demand/cease and desist letters. PerDiemCo sent numerous licensing communications to Trimble. In response, Trimble sought a DJ action in the Northern District of California (NDCA). PerDiemCo successfully argued before the NDCA that the court lacked personal jurisdiction over it. The CAFC overturned the NDCA’s ruling, concluding that while simply notifying a party suspected of infringement doesn’t give rise to personal jurisdiction, the extensive communications from PerDiemCo empowered Trimble to file a DJ action in NDCA with personal jurisdiction on the PerDiemCo.
A petition for writ of certiorari was filed in American Axle & Manufacturing v. Neapco Holdings LLC raising two issues. First, SCOTUS is asked to consider the question of what standard determines whether a patent claim is “directed to” a patent-ineligible concept under 35 USC § 101. SCOTUS also is asked to consider the issue of whether patent eligibility is a question of law based on the scope of the claims or an issue of fact for the jury based on the state of art at the time of the patent. In May of 2021, SCOTUS invited the acting solicitor general to file a brief expressing the views of the United States Government. The American Axle & Manufacturing case is essential for a better understanding of SCOTUS’ views on patent eligibility under § 101 and whether eligibility is for the bench or the jury to decide. It is uncertain whether SCOTUS will take up this case.
A petition for writ of certiorari was filed in PersonalWeb Technologies, LLC v. Patreon. Should cert be granted, SCOTUS will face whether the CAFC correctly interpreted Kessler v. Eldred case (1907) to create a freestanding preclusion doctrine that may apply even when a claim and issue preclusion do not. The Kessler case addresses the circumstance of whether a manufacturer, prevailing in an infringement suit brought against by the patentee, can prevent the impairment of the rights under the final judgment but enjoin the patentee from prosecuting claims against his customer. The Kessler doctrine effectively bars patent infringement litigation against systems found not to infringe in a prior action but sold subsequent to the litigation, even though claim and issue preclusion do not. Much like in the American Axle & Manufacturing v. Neapco Holding case, SCOTUS has invited the acting solicitor general to file a brief expressing the views of the United States Government. The PersonalWeb case is important for understanding to what extent liability is expunged if a manufacturer succeeds in proving non-infringement and whether the SCOTUS’ Kessler doctrine is still good law.
DePuy Synthes v. Double Medical Ruling from China’s Supreme Court
This year, a Johnson & Johnson subsidiary, DePuy Synthes, was victorious in enforcing its Chinese patents against a Chinese infringer, Double Medical. China’s Supreme Court agreed with the finding of infringement and multiplied the damages awarded to DePuy Synthes to 20 times the amount handed down by a lower court. China’s Supreme Court effectively awarded DePuy Synthes 20M Rmb plus 100K Rmb in costs instead and above the lower court’s statutory limit. This case illustrates the prospect that an ex-China patent holder’s ability to enforce their rights against a Chinese infringer may increase along with much more materially impactful financial damages – a historically challenging fact pattern.
What Will 2022 Bring Us?
New Director of the US Patent and Trademark Office
In October of 2021, President Biden nominated Kathi Vidal as the Under Secretary for Intellectual Property and Director of the US Patent and Trademark Office at the Department of Commerce. Ms. Vidal is a managing partner in Winston & Strawn’s Silicon Valley office with extensive IP litigation experience.
Change In Senate Judiciary Committee
Senator Patrick Leahy of Vermont has announced he will be retiring in 2022. Senator Leahy is the most senior member of the Judiciary Committee and Chair of the Senate’s Judiciary Subcommittee on Courts, Intellectual Property & the Internet. Senator Leahy has also been a staunch supporter of the AIA and has advanced the “Restoring the America Invents Act.” Senator Leahy’s bill includes several measures, including addressing the discretionary denial practice by the PTAB under the precedential Apple v. Fintiv decision sets out a list of factors that the PTAB evaluates in deciding to discretionarily deny instituting a petition due to parallel district court litigation. Senator Leahy’s bill would clarify the bases for IPRs by ensuring that the PTAB can institute review.
Change at the CAFC
In July of 2021, CAFC Judge Kathleen O’Malley announced she would retire from the bench in March of 2022. Judge O’Malley decided to retire instead of going on senior status. Judge O’Malley stated that she purposefully chose full retirement to regain her 1st Amendment right to speak out about problems with the US patent system. Upon hearing of Judge O’Malley’s forthcoming retirement, Judge Leonard Stark of the District of Delaware was selected as her successor. Judge Stark has been a sitting trial judge in DE since his appointment in August 2010 and Chief Judge from July 2014 through June 2021. Judge Stark has presided over more than 2500 patent cases on the bench, which will serve the CAFC well as it navigates challenging issues. While there appears to be strong bipartisan support for Judge Stark, the federal administrative process may not conclude before Judge O’Malley’s retirement in March of 2022.
Launch of the Unitary Patent and United Patent Court (UPC)
Moving beyond the US, there is great hope that the Unitary Patent and United Patent Court (UPC) in Europe will be up and running by the Fall of 2022. This boost came with Germany’s ratification of the UPC Agreement – an idea that originated in early 2013 in Brussels. There have been constitutional challenges threatened to upend the UPC, but with Germany’s ratification, the UPC preparatory committee appears confident that a smooth transition to launch. The UPC is intended to enable a single court common to 24 member states. The UPC’s ambition and charter to have exclusive competence for European patents and European patents with unitary effect.
Fourth Amendment to The Chinese Patent Law
On the heels of the Fourth Amendment to The Chinese Patent Law on June 1, 2021, many changes are expected in the coming year. Notably, the amendment introduced punitive damages for willful infringement, enabling monetary damages of up to five times (quintuple) the losses incurred by a patent holder. Similarly, the Fourth Amendment raised the statutory damages to a maximum of 5M Rmb. Another important aspect of the Fourth Amendment is shifting the burden from the plaintiff to the defendant, after best efforts, to provide certain types of evidence relating to the infringement.