Patent law seems like an easy place to talk about biopower. After all, it has been possible to patent life forms for some time now, and large numbers of patents are issued for products that directly affect life, as in the case of pharmaceuticals and other medical innovations. Biopolitical implications of patent law are thus easy enough to adumbrate, even if one wants to construe “life” in narrow, biological terms. There is, however, another angle that needs to be considered, which is the institutional structure of patent law. If one effect of the emergence of biopolitics is the rise of the regulatory state and the decline of judicial power, we see in the case of patent law an ongoing struggle between institutions representative of those forms of power. Two Supreme Court decisions in the past week illustrate this conflict; this post will deal with the first (TC Heartland) and I will have something to say about the second in a follow-up post.
First, the background. The Court of Appeals for the Federal Circuit (CAFC), as the only appellate court below the Supreme Court to hear patent cases, functions very much like a regulatory agency, insofar as its decisions in effect promulgate rules for interpreting the vagaries of statutory patent law and assessing the interpretations of the USPTO. In other words, the creation of the CAFC and the consolidation of patent appeals into it is an early example of a legislative move to make the patent regime more biopolitical. The Federal Circuit, as is also generally-known, is very friendly to claims of patentability. The Supreme Court, on the other hand, has for several years been trying to restrict patent claims, including around previously-unlitigated questions of subject matter eligibility. These claims, pursued under §101 of the Patent Act police the boundary between nature/discovery and invention, where the former is presumed unpatentable and the latter patentable. Although the Supreme Court has issued relatively few opinions on this matter, they have all involved efforts to reduce the number of patents issued, generally by applying juridical principles. For example, in its Myriad decision surrounding the breast cancer gene, the Court’s argument was essentially that although the extraction of the genetic code containing the mutation from its surroundings in some sense constituted a change in the genetic sequence (endings had to be snipped, etc.), that change was de minimis, and so below the threshold of patentability. The application of a de minimis rule is an exercise in juridical power; such rules are generally alien to biopower.
I am by no means the first to notice the rift between the Supreme Court and the CAFC. In an initial comment on last week’s case, in which the Supreme Court restricted which venues patent owners could use to bring infringement lawsuits, Ronald Mann put it this way:
“Where have I read this before: U.S. Court of Appeals for the Federal Circuit – patent-holding plaintiffs win; Supreme Court – corporate defendants win. The Supreme Court struck yet another blow against the expertise of the Federal Circuit, the specialized appellate court for patent cases, with Monday morning’s opinion in TC Heartland LLC v. Kraft Foods Group Brands, rejecting the rules on patent venue that the Federal Circuit has been administering for more than 25 years. The odd part of it is that this time it was the Federal Circuit saying that patent litigation should look more like conventional litigation and the Supreme Court saying that patent litigation needs to have special rules different from the rules of ordinary civil cases. The Federal Circuit can’t win even when it decides that patent litigation should follow the well-developed rules of mainstream civil procedure!”
Analysis of this case is in order, because it illustrates some of what is at play in the juridical/biopower distinction I am making.
The case turned on statutory interpretation and where a corporation can be said to “reside.” According to §1400(b) of the patent venue statute, “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business,” and litigation from the 1950’s clarified that a corporation “resides” in the state where it is incorporated. However, the general venue statute provides that a corporate defendant “resides” in any “judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.” The CAFC had reasoned that since §1391, revised after §1400(b), said it applied to all venue cases, it incorporated §1400(b), forcing a broader interpretation of residency.
In TC Heartland the Court ruled that its own interpretation of §1400 should govern patent venue selection. Justice Thomas wrote for the unanimous Court, that patent venue legislation has historically treated patents separately from general venue legislation, §1400 has not been legislatively modified or removed, there is no explicit indication in §1391 of an intention to modify §1400, and that the statutory text of the current version of §1391 supports the separate treatment of §1400. Thus reversing CAFC precedent dating to 1990, the Supreme Court underscored that, for patent venue selection, “resides” refers to state of incorporation.
The case is important not because of anything about the parties involved. It is important because it makes “patent trolling” – the process of buying up a portfolio of patents for the sole purpose of suing others for infringement – considerably more difficult. Because of its interpretation of “resides,” CAFC precedent allowed plaintiffs to go forum shopping for infringement claims, and many of them went shopping in the Eastern District of Texas, which was notoriously patent-friendly. Indeed, this one court had seen more than a third of all patent suits filed since 2014, despite being in the small town of Marshall (population 25,000 and lacking a technology hub). Indeed, one judge, Rodney Gilstrap, had heard nearly a quarter of all patent cases during that time period. Plaintiffs, usually companies that had bought portfolios of patent rights for the purpose, would mount expensive infringement suits in East Texas, and wait for defendants to settle. 90% of the cases thus filed were by such Patent Assertion Entities (a more neutral way of saying “troll”) enforcing high-tech patents.
Recent analysis by Brian Love and Kevin Yoon (also my source for the previous paragraph) suggests that this East Texas patent-friendliness was due to a multiplicity of individually small factors under the control of local judges. Cases there get resolved relatively quickly, and judges generally disproportionally deny both summary judgment motions by defendants and motions to transfer cases to other venues. They also take a long time to issue their decisions on summary judgment and transfer. Furthermore, Judge Gilstrap both uses unusually broad rules covering document production (including rules that the process of discovery cannot be thwarted by pending motions to dismiss), and moves the process of discovery very quickly. The result is in rapidly mounting costs for defendants, and great difficulty in cost containment, even in the case of frivolous suits. Defendants thus have very strong incentives to settle quickly, even for relatively small amounts, to avoid a rapid, unstoppable accretion of discovery expenses.
Love and Yoon thus conclude that only substantial venue reform is likely to make a difference. As they note, “because judges have broad, and largely unappealable, discretion to control when and how motions are heard and the way cases proceed in their courtrooms, almost any other reforms may ultimately prove toothless if judges choose not to embrace them” (6). In other words, it is impossible to reform the practices in East Texas, so it will be necessary to bypass them. That bypass appears to have happened with TC Heartland, which should impose substantial limits on both patent trolling and the Eastern District of Texas’ caseload.
At one level, the result of TC Heartland will thus be the reining in of a renegade District Court, and a closer alignment of much patent litigation with the legal purpose of patents, viz. “promot[ing] the progress of science and useful arts” (U.S. Const., Art. I, §8). The decision also pushes back against a de facto neoliberalization of patent litigation: by encouraging the business model of patent trolls, CAFC precedent allowed both for the creation of a market in overly broad patents and law firms to enforce them, and for a resulting privatization of patent litigation in the form of quick settlements. Arguably, this privatization has been built into PTO practice for some time, because the practice has been to issue patents with a very low level of scrutiny. Mark Lemley and Carl Shapiro argued some time ago that patents do not so much as give their owners a right to exclude but a right to try to exclude through litigation. (Lemley and Shapiro point out that this state of affairs is actually efficient when compared to a system where the PTO attempted to thoroughly vet patents before issuing them: insofar as most patents are worthless, so there would be a very high social cost to thoroughly vet them all before they were issued). Of course, overly broad and poorly vetted patents also go a long way toward producing the business model of Patent Assertion Entities.
Thus last week’s SCOTUS decision is potentially quite significant. To put the matter starkly, it represents an exercise of juridical power against the exercise of arbitrary sovereignty by a lower court, the rulemaking abilities of which were easily on par with administrative agencies, and which functioned to enable a market of patent settlements as part of the price of doing business in the high tech industry. At another level, it represents another Supreme Court pushback against the CAFC, a further extension of recent cases in which not only is the Court overruling the CAFC, but it has been doing so by of clear exercises of juridical power, generally against a more biopolitical version favored by the CAFC.
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