Richard Lloyd

Yesterday, the IAM blog carried the first part of an interview with Professor Mark Lemley in which he talked about the reasons behind a sharp fall in patent litigaiotn activity in the US, the changing dynamics in the patent marketplace and the relationship between the Federal Circuit and the Supreme Court.

In part two, among other things Lemley turns his attention to the need – or not – for Congress to address patent reform, the smartphone wars and the diverging patent interests of the life sciences and high-tech sectors.

Given all that we’ve seen from the courts, what’s left for Congress to do with regards to patent reform?

That’s an interesting question. When we went through the first round of patent reform from 2005 through 2011, that started out in Congress as litigation abuse reform. And as it went through the legislative process, courts ended up solving many of the problems that the original bill was directed at. Ebay dealt with the injunction question, Seagate dealt with the willfulness question, we made it easier to file declaratory judgments, and one by one these things dropped off so we ended up with a statute that didn’t have much litigation abuse reform in it. We may be seeing the same thing here, where a lot of the things that people were focused on as problems that required solutions from Congress, like fee-shifting, are in the process of being fixed by the courts.

So would you advocate taking more time to see what happens?

I think the need for legislative reform is a lot less right now than it was a year ago and it probably makes sense to wait a bit and see how these cases play out and what the new dynamic looks like before we try to rewrite the rules.

Do you think we are seeing the beginning of the end of smartphone litigation?

I’ve been waiting for the beginning of the end of the smartphone litigation for four years now. I guess I would say that I don’t know if any of these decisions, I don’t know if Alice or attorneys fees cases are going to effect it, but what’s notable about that smartphone litigation, and Apple v Samsung in particular, is that Apple has won at every turn and they’ve won a lot of money (at least by the standards of us mere mortals) but they haven’t changed the market dynamic of the industry through the litigation. If what they wanted was to shut Samsung down or make them make a different and less attractive phone, those things haven’t happened. And if it’s just about money, even if it’s about a couple of billion dollars, that’s something that doesn’t seem worth resolving continuously in the courts rather than in the boardroom.

How much of that is due to their inability to get injunctive relief?

I think it’s significant and certainly if they had an injunction things would look very different, particularly an injunction in the first case. If the answer is we’ve got an injunction against ‘slide to unlock’ and you’ve got to unlock your phone a different way I’m not sure that effects the dynamic and people’s willingness to buy Samsung phones. If the answer is I can’t actually use rows of icons and a shaped curved screen well that would make a more significant difference and would be harder to design around. So I do think if Apple wanted to reshape the market it needed one of two things to happen – one was a real injunction that was hard for Samsung to get around or the other was that customers would look at the lawsuit and be deterred and either think, oh this is a rip off or my phone’s not going to be around or Samsung’s not going to be around, and none of those things has happened.  

Looking ahead to the Supreme Court’s next term, what’s of particular interest to you?

On the patent side, Teva v Sandoz and the question of deference to the district courts on claim construction. One of the interesting things about that when you look at how the amicus briefs played out is that the tech industry is obviously concerned about giving deference to district judges, I suspect because most of the patent cases are filed in Delaware and the Eastern District of Texas, and those jurisdictions, justifiably or not, have a pro-plaintiff reputation. So it will be interesting to see what the court does there.

I suspect that they will probably take one or both of the Commil v Cisco cases on the question of inducement and maybe, interestingly, the right to jury trial on infringement issues. If they take that latter issue, that has the potential to be quite significant.

Is there a flipside in the Teva case for the high-tech industry? Obviously if they go one way then they hand more deference to district courts but the flipside is that you end up with a slightly more efficient system?

Absolutely – in any individual case if you won at the district court you want deference, if you didn’t win you don’t want deference in claim construction. I do think it’s likely to be more efficient to have deference, at least if we do have deference across the board. What I can imagine the Supreme Court saying, though, is that if all we’re doing is just interpreting the words of the claim or the specification, there’s no reason for deference on that, it’s a pure legal matter which the appellate courts can do just as well. Where we want to defer is where there’s a fact finding, where we bring in an expert witness or make a determination of what a normal person of skill in the art would know, that makes total logical sense. But if the rule is we’ll defer only if there’s evidence in the district court, district court judges now have a pretty strong incentive to have their claim construction hearings to be not just arguments about the meaning of terms but little mini-trials where we bring in witnesses and hold hearings to make fact findings; and I’m not sure that’s the way we want to do claim construction.

If you put yourself in the shoes of  a lawyer advising a client on filing a patent, traditionally it’s lets stake it out as broadly as we can. Everything we’re seeing now pushes towards higher quality in patent filing which to a lot of people means greater specificity, which is not what you’re brought up to do as a lawyer, so if you were advising a client, what would you say?

Particularly in the software industry but I think in general you probably do want as much specificity as possible. You do want to include that algorithm in the specification, you want to think about writing some means plus functions claims because doing so may actually focus the court’s attention on real technology that you’ve got and therefore get you around an Alice problem. And I think your point about higher quality is exactly right – those claims might be narrower but they ought to be held valid and so the question is, is that ok? Is that sufficient for innovation? And I kind of feel like the answer to that should be yes; that if I have a narrow but high quality claim which actually protects what I’m doing against someone copying it from me or doing the same thing, that should be enough for innovation to thrive. It does mean I might face competition from different types of products that I would like to be able to stop, but I do think a lot of the abuses and problems we’ve seen in the patent system have come from reaching beyond that and saying, I came up with this idea and therefore I want any idea that works in the same industry within the scope of my patent.    

There’s a natural split between high-tech, particularly software interests, and pharma and biotech and how they view and value patents. They co-exist, but sometimes there’s friction between the two. Do you see those interests now diverging and to what extent can they continue to co-exist?

I’m not sure how happily they have co-existed. When we watched the patent reform that led to the AIA, at every turn it was life sciences against information technology in the lobbying battles.

One of the reasons we’ve been able to do as well as we have with a unitary patent system, even though these industries have very different needs and very different innovation profiles, is that the courts have been willing to kind of apply rules with an eye to the needs and characteristics of the particular industry and technology, and I think we may see more of that. For instance in the indefiniteness world or in Alice, if those are doctrines that limit software patents but don’t end up limiting life sciences patents, that may be the best of all possible worlds. The worry is, or at least my worry is that, because Alice says patentable subject matter rules take the same test regardless of whether it’s an abstract idea or a natural phenomenon or a product of nature, that cases like Mayo are going to be make it really hard to protect some things like medical diagnostics which we actually do want really strong protection for and the biotechnology litigation results may be some evidence of that. So that makes it tougher for them to co-exist – if the things we’re doing to fix patent abuse in software are making it difficult to get effective protection in life sciences industries that need it, we’ve got a problem.

Patent rights are generally seen to swing. As you mentioned State Street was probably the point at which people realised the pendulum had swung towards very strong patent rights and they started from there to swing back. Where would you put that pendulum right now?

I think we’re probably in the middle; we probably have the balance we need. The real question is, when you look at the arc of history, the pendulum doesn’t swing to one end, swing back to the middle and stop. They keep swinging so the key is can we reduce the swing so it stays closer to a middle rather than keep going in the direction we’re going, follow the momentum of saying well alright these patents are bad therefore these other patents must be bad too, or a doctrine that limits abuse is good, therefore another doctrine that limits abuse must be good. So I think some time to digest what we’ve got and take some time to look around where we are is probably a good thing at this point.

Do you think some members of the tech community would agree with you?

I don’t know the answer to that. The tech industry is not monolithic – Apple and IBM, and increasingly Microsoft, are actually now fairly vocal proponents of patents as they become sort of more mature companies and see their market share being taken away by others. My guess is that if you asked engineers in the software world they would say, maybe not universally, but almost to a person, we’re on a roll lets just get rid of them.