The Supreme Court has been asked to hear the case of Medela AG v. Kinetic Concepts, Inc. to decide this question.
In its petition for certiorari to the Supreme Court, Medela argues that the Court has long held that “[t]he ultimate judgment of obviousness is a legal determination.” Yet, Federal Circuit precedent permits the jury to make this determination, as opposed to the trial judge.
Jury verdicts of obviousness are typically limited to “yes” or “no” answers on a jury verdict form, making review by the district court, or even the appellate court, difficult. The Federal Circuit’s current procedure for reviewing such verdicts involves
re-creating the facts as they may have been found by the jury, and determining whether such hypothetical facts would be sufficient to support a legal conclusion of validity on any theory.
Obviousness is a legal determination based on underlying facts, such as the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, and objective indicators of non-obviousness.
The Federal Circuit reviews obviousness by reviewing the facts that the jury found “explicitly or implicitly” for substantial evidence and then the final obviousness determination based on those facts de novo. The facts the jury relies upon are almost always implicit, as the jury almost never lists all of the facts on its verdict form that it found to be true in making an obviousness determination. The Federal Circuit then reviews the record and, if there are disputed facts, such as testimony of witnesses, the court will assume the jury found the facts in favor of the verdict. Thus, the verdict will often be sustained based on such hypothetical fact-finding.
The Cert Petition
The petition first notes that the 7th and 9th Circuits each held en banc “that judges must independently determine whether proven facts lead to a legal conclusion of obviousness.” This was, of course, prior to appellate jurisdiction in patent cases being exclusive to the Federal Circuit. The Federal Circuit is not bound by these decisions.
The petition cites fairly extensively to the Supreme Court’s recent KSR decision on obviousness, where the Supreme Court determined that the Federal Circuit’s “Teaching, Motivation, Suggestion Test” was not the exclusive way to find obviousness. The KSR Court made a number of statements regarding the legal determination of obviousness, such as that factual findings should be made explicit to facilitate judicial review. The petition further argues that patent law obviousness is too complex for a jury determination.
Next, the petition cites Supreme Court cases that characterize a patent as a legal determination by an administrative agency, the PTO. Under administrative law and Supreme Court precedent, the PTO’s determination of a patent’s validity should only be disturbed by a court, not by a jury.
Finally, the petition notes that the Supreme Court previously granted certiorari in American Airlines, Inc. v. Lockwood in 1995 to decide whether a patent owner had the right to a jury trial in a declaratory judgment action of invalidity, an issue similar to one in this case. In Lockwood, the patent owner withdrew its jury demand before the Supreme Court heard the case and the case was dismissed as moot.
The petition was submitted by James Dabney of Fried, Frank and Professor John Duffy of George Washington Law School, who also successfully petitioned the Supreme Court in KSR. The petition is extremely well written and presents a good case for review and I hope the Court decides to do so.
The only real flaw is that it takes a very condescending view of juries, discussing patent litigation as being in a crisis because more cases are being tried to juries. My experience is that the decisions made by a collection of 6-12 individuals who listen to the evidence is generally superior to 1 or 3 judges who are simply reviewing the record.
Another question that is not addressed by the petition is how a change in the law would affect the standard of review for obviousness. A significant criticism of the Federal Circuit’s claim construction jurisprudence is its extremely high reversal rate, in the 30-50% range. Much of this criticism is the result of the lack of deference given to the trial judge’s determination and the Federal Circuit’s de novo standard of review. Will the same thing happen in obviousness? Will patent trials also include obviousness hearings similar to Markman hearings?
A decision by the Supreme Court as to whether to hear this case should happen early in the new term that begins in October.