(In)valid Patents

Paul R. Gugliuzza*

Increasingly, accused infringers challenge a patent’s validity in two different forums: in litigation in federal court and in post-issuance review at the Patent and Trademark Office (PTO). These parallel proceedings have produced conflicting and controversial results. For example, in one recent case, a district court rejected a challenge to a patent’s validity and awarded millions of dollars in damages for infringement. The Federal Circuit initially affirmed those rulings, ending the litigation over the patent’s validity. In a subsequent appeal about royalties owed by the infringer, however, the Federal Circuit vacated the entire judgment—including the validity ruling and damages award it had previously affirmed—because the PTO had since decided that the patent was invalid. The Federal Circuit reasoned that only “final” court judgments are immune from the effects of PTO review and, because of the open issue about royalties, no final judgment existed when the PTO rendered its conflicting decision on patent validity.

The Federal Circuit’s stringent conception of finality, which this Article terms the “absolute finality rule,” raises serious questions of judicial economy, fairness, and separation of powers. Among other things, it allows accused infringers multiple opportunities to defeat liability, permits an administrative agency to effectively nullify decisions of Article III courts, and incentivizes courts to abstain from hearing patent cases altogether, at least until the PTO reconsiders the patent’s validity. That said, some inefficiency or unfairness is inevitable when two different government bodies can evaluate the validity of the same patent, and the absolute finality rule, if nothing else, provides a relatively bright-line test. But it is not the only way to mediate disagreements between the courts and the PTO. This Article, in addition to identifying, describing, and critiquing the absolute finality rule, explores several other options for providing greater certainty about patent validity.

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© 2016 Paul R. Gugliuzza. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*Associate Professor, Boston University School of Law. For comments and helpful discussions, thanks to Jonas Anderson, Jack Beermann, Sarah Burstein, Daniela Caruso, Kris Collins, Stacey Dogan, Abraham Drassinower, Alan Feld, Wendy Gordon, Mike Harper, Keith Hylton, Rebecca Ingber, Dmitry Karshtedt, Sapna Kumar, Megan La Belle, Gary Lawson, Mark Lemley, Brian Love, Mike Meurer, Lisa Ouellette, Kevin Outterson, Arti Rai, Rachel Rebouch´ e, Greg Reilly, Laura Sheridan, Jake Sherkow, Simon Stern, Ryan Vacca, Melissa Wasserman, and Kathy Zeiler. Thanks also to participants at the Patent Conference at the University of Kansas School of Law, the Oklahoma Junior Scholars Conference at the University of Oklahoma College of Law, the Intellectual Property Scholars Conference at DePaul University College of Law, the Innovation Law and Policy Workshop at the University of Toronto Faculty of Law, a conference on the PTO and the courts at Stanford Law School, the Works-in-Progress Intellectual Property Colloquium at the University of Washington School of Law, and a faculty workshop at Boston University School of Law.