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CQ WEEKLY
March 27, 2006 – Page 824

Courts & The Law: Patent Rights, Public Interest

Millions of BlackBerry users breathed a sigh of relief this month when the Canadian manufacturer Research in Motion (RIM) agreed to pay $612.5 million to settle a patent infringement suit that had threatened to shut down the popular wireless e-mail service. But technophiles can’t breathe easy yet. Just around the corner is a possible showdown in a similar patent dispute that could, conceivably, shut down eBay, the even more popular online auction company.

Patent law, once an obscure legal specialty, is suddenly very hot. Patent cases are making front-page news and sending shudders through the economy. The Supreme Court and Congress are both giving unaccustomed attention to the field.

What gives? There’s no simple answer nor any simple solution for whatever problems may (or may not) exist. But many patent law experts, along with the Federal Trade Commission and the National Academy of Sciences, believe that current law gives patent holders too much legal protection at the expense of a wider application of the fruits of patented inventions and discoveries.

The Constitution gives Congress the power to grant patents to inventors for a specific purpose — “to promote the progress of science and useful arts.” The potential conflict between patent rights and the public interest was recognized by no less an authority than Thomas Jefferson, a sometime inventor himself.

Jefferson helped write the country’s first two patent statutes even while harboring doubts about the need to give patent holders a monopoly and fears of abuse of frivolous patents. Administrative problems and legal disputes arose almost immediately — a foretaste in the agrarian era of the bigger bureaucratic burdens and higher-stakes litigation of the high-tech era of the late 20th century.

Through most of its history, the Supreme Court seemed to share Jefferson’s doubts. It changed course, however, with two pivotal 5-4 decisions, in 1980 and 1981. One ruling allowed a patent on biogenetically engineered organisms, the other on computer software.

Separately, Congress acted in 1982 to promote uniformity in the field by creating a new tribunal —the Court of Appeals for the Federal Circuit — with exclusive jurisdiction over appeals in patent cases from lower federal courts.

The combination of events ushered in a patent law boom that generally tilted toward the interests of patent holders — including, for example, big pharmaceutical companies and the start-up biotech industry. Now, the question is whether the pendulum has swung too far in their favor, according to David Berry, a patent law expert at Thomas M. Cooley Law School in Michigan. “Is it too easy to get patents?” he asks. “And once you have them, do they give too much control?”

The BlackBerry case — which had some puzzling aspects — moved this debate to the front pages. RIM had been found guilty of patent infringement even though the Patent and Trademark Office was reviewing — and had expressed doubts about the validity of — the patents at issue. Threatened with a court injunction that could have shut down the service, however, RIM concluded it was best to negotiate a settlement.

Now, the Supreme Court is reviewing a pair of cases that similarly risk disrupting the widespread use of patented processes. In one case, a medical lab says doctors are infringing on its patent on a widely used diagnostic test for a vitamin deficiency — even if they use a different method — simply by completing the diagnosis. Several justices suggested in arguments last week that the company was overreaching by, in effect, trying to patent a law of nature. But procedural problems may prevent the court from reaching the main issue.

In the second case, to be argued this week, eBay is trying to avoid a court injunction in an infringement suit brought by MercExchange, a patent-holding company that owns the rights to some of the technology used in online auctions. A jury found eBay liable for willful infringement, but the judge trimmed the jury award from $35 million to $29.5 million and — more significantly — refused to enjoin eBay from further use of the patent at issue.

Patent lawyers generally argue — and the Federal Circuit ruled — that injunctions are a customary remedy for infringement. But eBay’s lawyers say that shouldn’t be an automatic rule. And the eBay and BlackBerry cases illustrate one reason why not: the risk of disrupting social and economic progress.

The concerns about patent overreaching stem also from problems at the Patent and Trademark Office itself. Deluged with applications, overworked examiners often grant dubious patents. But the existing patent law makes it hard to challenge a patent’s validity without first risking an infringement action.

A broad bill by Republican Rep. Lamar Smith of Texas would deal with that and other problems; a hearing is set for early next month. The high court’s rulings are due by the end of June. For both Congress and the Supreme Court, the priority in dealing with these issues should not be the narrow interest of patent holders but the broader public interest that the patent system is intended to serve.

Kenneth Jost is the Supreme Court editor for CQ Press.

Source: CQ Weekly
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