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Chief Judge Michel weighs in on two aspects of the Patent Reform Act of 2007

May 23, 2007
Post by Blog Staff

In a letter to Senators Patrick Leahy and Orrin Hatch, Chief Judge Paul Michel of the Federal Circuit expresses concern with two provisions of the Patent Reform Act of 2007 (H.R. 1908 and S. 1145). The letter, dated May 3 (two weeks after the bills were introduced), addresses what Chief Judge Michel perceives to be the practical concerns raised by two provisions in the proposed legislation: interlocutory appeals of claim construction and apportionment of damages.

More detail regarding Chief Judge Michel's letter after the jump.

Interlocutory appeals

Chief Judge Michel believes that permitting interlocutory appeal of claim construction as a matter of right is a bad idea for several reasons. One would directly affect him: according to one study, the number of appeals filed with the Federal Circuit would increase from 500 to 1000. These increased filings would also cause increased delays in patent litigation, because in the current draft of the legislation, further proceedings at the district court are stayed until resolution of the appeal. As a result, Chief Judge Michel is concerned that adding another appeal to already complicated patent cases will only lengthen the already long period of time it takes to resolve patent infringement cases.

In addition, he notes that initial claim construction rulings often construe many claim terms that may, through the course of the litigation, end up becoming noncontroversial. As a result, if the Federal Circuit reviews these early claim construction orders, it is likely that substantial judicial resources would be wasted on reviewing construction of terms that ultimately are not contested by the parties.

Finally, his concern is a practical one. Currently, the majority of claim construction appeals come to the Federal Circuit on appeal from summary judgment, meaning that the claim construction order has resolved the case, and is already appealable as a matter of right. As a result, he believes that the current system works efficiently, taking into account the concerns over judicial resources at both the district and appellate court level.

Apportionment of damages

Chief Judge Michel also believes the current proposal that damages be limited to the economic value of the patent as an improvement over the prior art. According to Chief Judge Michel, this provision

would require courts to adjudicate the economic value of the entire prior art, the asserted patent claims, and also all other features of the accused product or process whether or not patented.

Chief Judge Michel is concerned about the practicality of courts engaging in this extensive analysis:

This is a massive undertaking for which courts are ill-equipped. For one thing, generalist judges lack experience and expertise in making such extensive, complex economic valuations, as do lay jurors. For another, courts would be inundated with massive amounts of data, requiring extra weeks of trial in nearly every case. Resolving the meaning of this novel language could take years, as could the mandating of proper methods.

His concern is that this requirement would end in a battle of "hired-gun" experts opining regarding this economic data.

He closes with a statement that he is only opining on the practical considerations of the proposed reforms, and is not expressing a view on the wisdom of the various proposals (no doubt for judicial ethics reasons), and that if the senators want more detail, he'd be pleased to provide it.

It is not surprising that Chief Judge Michel would be opposed to interlocutory appeals on claim construction from a practical standpoint. As he rightly points out, it would almost certainly increase the Federal Circuit's docket. He also raises very valid concerns with regard to the practicality of the apportionment of damages as defined in the current version of the bill. It will be interesting to see whether Congress considers these practical concerns in the legislative process.

To read the full letter, click here. Hat tip to the Patent Prospector.


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