“US Inventor contends that that the CAFC is effectively rewarding ‘adjudged copyists’ for their perseverance in litigation instead of for their innovative capabilities.”
Today, the U.S. Court of Appeals for the Federal Circuit (CAFC) invited ALE USA Inc. to respond to Chrimar System Inc.’s petition for rehearing en banc. Five amici consisting of inventors and intellectual property advocates have now filed amicus curiae briefs in support of Chrimar and the petition for rehearing.
In September, the CAFC affirmed a Patent Trial and Appeal Board (PTAB) decision in Chrimar Systems, Inc. v. ALE that rendered a previously affirmed jury verdict null and void. The heavily contested decision found the PTAB, an executive administrative agency, vacating the judicial verdict of an Article III court.
According to FedCircuitBlog, there are currently 17 pending petitions for en banc rehearing with the Federal Circuit, while 22 petitions have been denied between August and November 2019. Of the 22 petitions denied, nine included a call for response, or 41% of denied petitions. Thus, while not a sure indicator that the court will grant the petition, the court’s invitation for response in Chrimar is at least a necessary step toward that goal.
Here is what the amici are saying.
The Eagle Forum Education & Legal Defense Fund
As Andy Schlafly outlined in a guest post for IPWatchdog earlier this week, the Eagle Forum Education & Legal Defense Fund (Eagle) argues in its brief that Supreme Court precedent prohibits the PTAB’s actions as unchecked executive interference with the judicial process. Eagle also argues that the panel’s decision abrogates property rights previously determined by a jury in violation of the 7th Amendment, in which even judges have limited authority to interfere. The PTAB, Eagle argues, is a federal agency that is not held directly accountable to the electorate, and therefore the invalidation of a federal judicial proceeding is unconstitutional. Eagle contends that “decisions by Article III courts should not be like houses built on straw in a flood plain, standing only until the next weather change.” Citing Justice Ginsburg in the recent Bank Markazi decision, Eagle argues that any interference in the finality of judiciary judgments is unconstitutional if it “directs, in Smith v. Jones, that Smith wins.” Eagle emphasizes that the jury verdict is “sacrosanct,” and because Congress cannot take away patent rights by repealing a patent statute, neither should an agency be able to take away patent rights that are vested in Article III judgment.
US Inventor, Inc. (USI), a nonprofit association of inventors dedicated to protecting the intellectual property rights of individuals and small businesses, argues that the Chrimar outcome, in addition to the outcome in Fresenius USA v. Baxter Intern., conflicts with “the uniform view of finality consistently applied by all other federals Courts of Appeals.” USI contends that that the CAFC is effectively rewarding “adjudged copyists” for their perseverance in litigation instead of for their innovative capabilities. The brief claims that the CAFC has failed to follow its own precedent set in Laboratory Corp. v. Chiron Corp. in completing a choice of law analysis, to determine whether to follow the law of the CAFC or of another circuit. The CAFC’s decision in this case and a host of others, argues USI, exemplifies the problems associated with inconsistent judgments between the PTAB and the courts. The CAFC has adopted a “flawed line of its own precedent” and continues to cite to this going forward, “untethered to any legitimate choice of law analysis,” contends USI. This directly contradicts both Congressional and Judicial goals of increased uniformity in the US patent system.
Fourteen Nonprofit Inventor Associations in Support of Petitioners
A brief in support of the plaintiff’s request for a rehearing en banc was also submitted on behalf of 14 nonprofit inventor associations (FIA) whose members “have brought innovative and commercially successful products and services to the market.” Citing the Fresenius preclusion principle as applied to Chrimar, the FIA argue that the principle is being incorrectly applied to unconstitutionally nullify Article III judgments, in allowing infringers to engage in “dilatory maneuvers” to unravel the district court judgment against them while in front of the PTAB. The FIA argue that allowing this behavior will disincentivize innovation and investment in promising technologies, essentially stunting economic growth. Unlike Fresenius, the court did not leave any aspect of the district court’s judgment unresolved, therefore the FIA argue that under the preclusion principle final judgment was achieved upon remand, thus the case was immune to a subsequent agency action. Therefore, argues FIA, based on these inconsistencies an en banc rehearing is needed to determine the scope of the Fresenius preclusion principle in determining finality.
Twenty Inventors in Support of Petitioners
A brief also was filed by a group of 20 inventors who enforced or attempted to enforce their patents in Article III courts and had their patents challenged under an inter partes review (IPR), post grant review (PGR), or covered business method (CBM) review by the PTAB. The inventors, who have collectively spent more than $74 million and 175 years litigating their patents, argue that an en banc rehearing is necessary because the Chrimar decision contradicts the doctrine of issue preclusion, which prevents an issue from being litigated twice in order to increase verdict consistency and minimize expenses. The court held that the Chrimar I, II, & III decisions were separate decisions, and therefore because the later decisions in the case affected earlier CAFC decisions, Federal Circuit law, and not Fifth Circuit law, governed on issue preclusion. The inventors contend, however, that this analysis is incorrect because the Chrimar decisions were entered contemporaneously on the same day, and therefore the later decisions in the case had no effect on previous CAFC decisions. Additionally, argue the inventors, had Fifth Circuit law been correctly applied, finality would have been determined at the judgment of the case, even where an appeal had been filed. The inventors further argue that “issue preclusion outcomes should not be a creature of the court’s internal docket management.” The inventors also argued that Fresenius was misapplied, and additionally argued that the America Invents Act (AIA) estoppel provision for civil actions should have been analyzed by the panel.
Five IP Organizations in Support of Petitioners
Lastly, five other intellectual property rights organizations (USIJ: The Alliance of U.S. Startups and Inventors for Jobs, the Innovation Alliance, the Small Business Technology Council, the Center for Individual Freedom, and Conservatives for Property Rights) filed a brief advocating for an en banc rehearing, also on the grounds of issue preclusion. The amici here argue that the Federal Circuit’s approach to this matter in patent law contradicts that of all other areas of U.S. law in applying issue preclusion on a case-wide basis opposed to an issue-by-issue basis, and as such, inequitably allows issues to be relitigated and influenced by administrative agency decisions. The amici also argue that under Fresenius, even if a patent holder 1) receives monetary damages for infringement from a jury; 2) receives a monetary judgment from a judge based on the jury’s findings; and 3) convinces a panel of CAFC judges to affirm the monetary judgment, in opposition to the issue preclusion doctrine, the claims at issue are still exposed to attack if the case is remanded, even where the remand has nothing to do with those particular claims. The amici argue that this improper resolution of the law creates a national conflict where district courts are now forced to follow unpredictable, CAFC-created doctrine, and therefore its application to Chrimar is unconstitutional.
They also agree with previous notions that the Chrimar decision is unconstitutional by allowing administrative agencies to usurp the role of the Article III judiciary. In allowing this, they argue that infringers are incentivized to keep even just a fraction of the case alive as long as possible in hopes that the PTAB will invalidate the patent before a CAFC-mandated final judgment is entered. Lastly, the amici argue that the Fresenius preclusion principle has been heavily criticized by judges experienced in patent litigation. It has also been criticized by patent practitioners and scholars and has not been defended in the regional circuit courts. Therefore, in harmony with the other petitioners, the amici argue that an en banc rehearing should retire this misguided legal principle.