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Comment: Exactly Backwards: Exceptionalism and the Federal Circuit

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Case Western Reserve Law ReviewVolume 54 | Issue 32004Comment: Exactly Backwards: Exceptionalism andthe Federal CircuitR. Polk WagnerFollow this and additional works at: https://scholarlycommons.law.case.edu/caselrevPart of the Law CommonsThis Symposium is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law ScholarlyCommons. It has been accepted for inclusion in Case Western Reserve Law Review by an authorized administrator of Case Western Reserve UniversitySchool of Law Scholarly Commons.Recommended CitationR. Polk Wagner, Comment: Exactly Backwards: Exceptionalism and the Federal Circuit, 54 Case W. Res. L. Rev. 749 (2004)Available at: https://scholarlycommons.law.case.edu/caselrev/vol54/iss3/8COMMENT:EXACTLY BACKWARDS:EXCEPTIONALISM AND THEFEDERAL CIRCUITR. Polk WagnertFirst of all, I want to thank in particular Craig Nard for invit-ing me to this conference, and to Dan Burk and Mark Lemley forembarking upon a very interesting project.IWe meet today in an era of accelerating technological devel-opment, of the ballooning use of patents as both shields andswords in the marketplace, and increasing criticism of the courts'ability to meaningfully deal with these changes. Given this, itwould seem to be the rare and unique patent scholar whose respon-sive policy prescriptions center around unbounded policy-orientedjudicial interventions into various details of the patent law.Professors Burk and Lemley, however, are such patent schol-ars. Their basic premise is that the judiciary-in particular theFederal Circuit-should embrace and extend a trend towards tech-nology-specific rules that they argue is a major feature of modempatent law. That is, they argue that judicially-created technologi-cal-exceptionalism-in which every technology, every industry,has its own set of rules and procedures, and in which patents areevaluated on different bases-will address the challenges of thecurrent U.S. patent system.I will make three points in this brief response to their pro-posal. The first two address Burk and Lemley's descriptive claimthat the patent law is increasingly exhibiting a fundamental tech-t Assistant Professor, University of Pennsylvania Law School. Comments appreciated:polk@law.upenn.edu. For further research on related subjects, see polk.pennlaw.net/.749CASE WESTERN RESERVE LAW REVIEWnological-exceptionalism. That is, I first suggest that this trend iscounterfactual to the reality of the current patent law. Second, Iargue that the trend in fact runs counter to some major trends wesee across the patent law. And finally, I consider the public policyquestions raised by Burk and Lemley's call for judicially-createdtechnological-exceptionalism, concluding that-even assumingthey are descriptively correct-the dominant approach is exactlybackwards of the one they advocate.IIFirst let's look at whether technological-exceptionalism iscounterfactual. An initial problem here is that it's really tough tofigure out what is meant by technology-specific rules.' This isProfessor Janis's point.2 He says: Of course! The patent laws areunquestionably technology-specific. That's by design. That's thewhole point. The key is, then, to distinguish between two differentversions of technological-specificity. 3  The first I call micro-exceptionalism, which occurs when the same rules are applied todifferent technological facts and yield different results. This is thenormal course of things, the way we think of the patent law: gen-erally uniform rules, applied to very different technological facts,mediated by the patent law's ubiquitous "person having ordinaryskill in the art" standard.Although they fail to address the distinction, Professors Burkand Lemley discuss a far different form of exceptionalism: macro-exceptionalism, distinct rules or standards applied to differenttechnological facts. This version creates not only technologically-variable results, but also industry-variable results. ProfessorsBurk and Lemley explicitly claim that biotechnology is differentthan software and should be treated differently, and different sortsof rules and procedures should thus be developed.4 It's importantto understand that this is a vision of a very different sort of patentlaw than the micro-exceptionalism that is the conventional under-standing. One problem with Burk and Lemley's descriptive effort1 For more extended arguments on this point, see R. Polk Wagner, (Mostly) Against Ex-ceptionalism, in PERSPECTIVES ON PROPERTIES OF THE HUMAN GENOME PROJECT 367 (F. ScottKieff ed., 2003) [hereinafter Wagner, (Mostly) Against Exceptionalism]; R. Polk Wagner, OfPatents and Path Dependency: A Comment on Burk and Lemley, 18 BERKELEY TECH. L.J. 1341(2003) [hereinafter Wagner, Of Patents & Path Dependency].2 Mark D. Janis, Comment, Equilibrium in a Technology-Specific Patent System, 54CASE W. RES. L. REV. 743,744 (2004).3 This analytic framework was developed in Wagner, (Mostly) Against Exceptionalism,supra note 1, and Wagner, Of Patents & Path Dependency, supra note 1, at 1345-47.4 Dan L. Burk & Mark A. Lemley, Biotechnology's Uncertainty Principle, CASE W. RES.L. REV. 691, 706 (2004).(Vol. 54:3EXACTLY BACKWARDSis trying to tease out-when you look at the actual cases-what theFederal Circuit is doing: Are the judges being macro-exceptionalists? Are they really trying to do something distinctlydifferent, or is this the ordinary run of patent law wherein similarrules are applied to different sets of technological facts to yieldsomewhat different results?The second consideration, which is a very specific and per-haps the most original proposal Professors Burk and Lemley make,is to vary the person having ordinary skill in the art ("PHOSITA")in order to adjust the scope of the claim depending on the particu-lar technology.5 Table 1 below illustrates this.Table 1PHOSITA Obviousness Disclosure Scope-Effects Scope- Scope-Level Standard Standard (obviousness) (disclsuEfe ts(disclosure) (equivalents)lowerHigh higher loesih ( hing (needn't narrower broader indeterminate(easy field) (lots of things disclose as[software] are obvious) mch)much)Low lower higher(hard field) (fewer things (must disclose broader narrower indeterminate[biotech] are obvious) spespecifically)The Indeterminate Effects of the PHOSITA StandardA serious flaw in this proposal is that the variation of the PHO-SITA standard has, ultimately, indeterminate effects on patentscope. For example, look to the first row in Table 1 above, wherethe PHOSITA standard is high, which means it is a relatively"easy" field (e.g., software). The obviousness standard will besomewhat higher, because many things are then obvious in thatfield. As a result, the disclosure requirement will be lower. Thescope effects of the obviousness standard in this case will yieldnarrower patent claims: Because of the amount of obvious infor-mation, the claim will have to be narrower to avoid the prior art.Conversely, the disclosure requirements here will yield broaderclaims: The claim can be broader without disclosing the underly-ing invention quite as much. The scope effects with respect toequivalence, which under the doctrine combines both these effects,I d. at 736.2004]CASE WESTERN RESERVE LAW REVIEWare indeterminate.6 Whether a high level or low level of ordinaryskill in the art ultimately results in broader or narrower patentsdepends on what one thinks about the balance between at leastthese three, and perhaps more, factors. Thus the scope effects ofvarying the PHOSITA standard are fundamentally indeterminate asa general matter, and are likely to be impossible to figure out evenon a case-by-case basis. Obviously, one can make assumptionsand try to determine the effects, but I think it is quite troublesometo do so.Third, there are several alternative explanations for what isgoing on in biotechnology-the field that Burk and Lemley pointto as the primary example of technological-exceptionalism. 7 Forinstance, one alternative explanation is that the jurisprudentialdataset is characterized by a very small sample size; there are notmany cases that deal directly with this. Another alternative expla-nation is judicial consistency. Shockingly, one judge, JudgeLourie, has authored almost all of the major opinions noted byBurk and Lemley as relevant to biotechnology; thus, one explana-tion for the unusual patterns is that Judge Lourie could be a veryconsistent judge.A third alternative explanation is factual error. Perhaps theFederal Circuit is just wrong-Burk and Lemley note this in theirarticle, but set it aside as an explanation. 8 The Federal Circuit maysimply be wrong about the ordinary skill in the art level of differ-ent fields and continue to be wrong.A fourth alternative explanation is fact-versus-law confusion.The court, at some point, might have said something that was fac-tually based on biotechnology, or about computer software, andnow the judges are confused about what is fact and what is law.For whatever reason, the court may continue to follow this factthat was put in place a long time ago without changing, such that itlooks like the court is on a macro-exceptionalist mission when, infact, it is just confused.Importantly, however, each of these explanations suggeststhat any current exceptionalism is extremely unlikely to persist(even if it currently exists). It is not at all clear to me, even if youread the cases exactly as Professors Burk and Lemley do, that onecan determine with any confidence that macro-exceptionalism, asopposed to micro-exceptionalism, is developing.6 For further exposition on this point, see Wagner, Of Patents and Path Dependency, su-pra note 1, at 1348-50.7 Professors Burk and Lemley identify biotechnology as the primary example of techno-logical-exceptionalism. See Burk & Lemley, supra note 4, at 691.8 Id. at 714.[Vol. 54:3EXACTLY BACKWARDSIIIThe second major concern I have regarding the Burk/Lemleythesis is that their argument that technological-specificity is anemerging trend in the patent law appears directly counter to clear,verifiable jurisprudential trends at the Federal Circuit.First, I have done a lot of work recently on claim construc-tion.9 In their earlier discussions, the judges alluded to some ofthat work. The trend that I find suggests clear movement towardsrule-based uniformity, not standards-based disuniformity.Figure 160% ?20%+0% *The Federal Circuit's Trend Towards Rules-Based ClaimConstruction 10In Figure 1, the y-axis represents the frequency of what I callthe "holistic" methodological approach to claim construction. Thisis a largely standards-based (as opposed to rules-based) approach,whereas the alternative approach-"proceduralism"-is far morerules-oriented. Figure 1 shows a statistically significant trend overtime of the Federal Circuit becoming more uniformly rules-based.Second, I am involved in another ongoing project analyzingall of the Federal Circuit's en banc decisions. It is very interesting9 See R. Polk Wagner & Lee Petherbridge, Is the Federal Circuit Succeeding? An Em-pirical Assessment of Judicial Performance, 152 U. PA. L. REV. 1105 (2004).1o This chart is simply one chart from a much larger project. See generally id.2004]CASE WESTERN RESERVE LAW REVIEWto line up, as I did in Table 2, the last ten years of patent en bancdecisions.Table 2Case Year Old Doctrine ew Doctrine Change? UniformiTrend?Split: disclosed-but- Rule: disclosed-but-Johnson & unclaimed unclaimed does limit Yes V "Johnston does/does not limit equivalentsequivalents quIvalentsRhone-Poulenc 2002 Case-specific NoFesto 2000 Case-by-case PHE Rule: complete Yessurrender surrenderPatent-state law Patent-state lawMidwest 1999 conflicts analyzed conflicts analyzed Yes v/Industries under regional under Federalcircuit law Circuit lawIn re Zurko 1998 PTO fact-finding reviewed for clear error NoSplit: limited defer- Rule: no deference, Ys VCybor 1998 ence to district Rule no deYescourts pure law issuePatent-antitrust Patent-antitrustNobelpharma 1998 interface decided interface decided Yeaccording to re- according to Fed- Yesgional law eral Circuit lawHilton-Davis 1995 DOE issues NoRite-Hite 1995 Patent damages issues NoSplit: claim con- Rule: claim con-Markman 1995 struction as issue struction as issue Yes V/for judgejury for juryIn re Alappat 1994 PTO procedures/subject matter NoIn reDonaldson 1994 PTO must use 112/6 NoFederal Circuit En Banc TrendsExamination of the cases in which the Federal Circuit courthas either clarified or changed the law reveals that the court ismoving towards uniform rules. Table 2 lists the en banc decisionsin which there is a change-a shift in the doctrinal orientation-and it demonstrates that the court is moving more towards rules.Any artifacts Professors Burk and Lemley pick up that suggest thecourt is moving away from uniformity would be counter to the ac-tual evidence of a broader project going on at the Federal Circuitright now, both in the claim construction area and in a variety ofother areas as seen through the en banc analysis.[Vol. 54:3EXACTLY BACKWARDSThis type of data-driven project on en banc procedures sug-gests that the written description requirement is being targeted.The best predictor, when considering all the patent cases going enbanc, is denials of motions to rehear en banc prior to the case be-ing taken en banc. Right now we have four judges on record totake the written description issue en banc. If you look at this,some of the recent major en banc cases suggest that at some pointthis issue is going to be taken en banc. The trend demonstrated inTable 2 suggests that the Federal Circuit is not heading in the di-rection that Professors Burk and Lemley want, but in precisely theopposite direction-towards a more rules-based, uniform ap-proach.IVFinally, I want to take this opportunity to address some policyarguments. Professors Burk and Lemley make the basic point thatexceptionalism allows for policy-based interventions to ameliorate(what they consider to be) industry problems in biotechnology-overlapping rights and transactions costs." Their solution is toadjust the PHOSITA standard to allow for broader but fewer pat-ents.12As an initial matter, this argument raises a fatal indeterminacyproblem similar to that which I noted above: Broader patents aregoing to spur more patents, not'fewer patents. So it is not clearhow anyone expects achieve the Burk/Lemley goal of fewer pat-ents while simultaneously broadening their scope. This apparentlogical disconnect alone raises troubling questions.Second, there are other problems with exceptionalism thathave already been noted to some degree by other commentators,namely the virtually intractable information and game-playingproblems. We already see this, of course, in patent prosecutors.Whenever there is a line drawn, rational patent prosecutors want tostraddle it; that strategy gives litigators the most flexibility in thefuture. So, because exceptionalism involves the ever more de-tailed drawing of fine lines, one has to expect an explosion ingame playing.Third, there are issues concerning the political economy ofspecialized patent law. One can imagine the special interestgroups, the political economy issues that will arise once patent lawbegins to be disaggregated into all its component parts. Obvi-ously, this will increase complexity and uncertainty enormously." Burk & Lemley, supra note 4, at 722.12 This is the Burk/Lemley punch line for biotechnology. Id. at 737.2004]CASE WESTERN RESERVE LAW REVIEWClaim construction, for example, is a hard issue. After twentyyears, the Federal Circuit is finally trying to reach some sort ofcommon set of rules for claim construction. The prospect of hav-ing to repeat this process for dozens of legal issues in dozens ofdifferent technological areas is a deeply troubling aspect of theBurk/Lemley proposal.Finally, note that the Burk/Lemley scheme is a virtually per-fect indictment of itself. Their argument is that the Federal Cir-cuit, by creating an exceptionalist biotechnology jurisprudence,has it exactly backwards: narrow and numerous patents causingtransaction costs. In response, they suggest we ask the FederalCircuit to engage in even more open-ended, policy-driven excep-tionalism. Certainly the evidence to date suggests that this is notsomething the court is going to do well at all.Finally, I note that the transaction costs of overlapping rightsare potential problems not at all unique to biotechnology. Onecould adopt a different approach-clarify the rights-and go ex-actly the other direction. Instead of being disaggregated and com-plex, be simple and clear; the initial allocations matter less. Peo-ple can, in individual industries, tailor their rights with each otherto deal with these industry-specific issues. A big part of my pro-posal is the development of uniform, not disaggregated, rules.Some of the projects I am working on suggest this is what is goingon at the Federal Circuit right now-though of course only in fitsand starts. We are not there yet, and this obviously is not a com-plete solution. While it may not eliminate costs, it is far more at-tractive in a sort of second-best world than the exceptionalist ap-proach. Perhaps most importantly, the suggested solution does notdepend on the Federal Circuit's ability to develop policy, forwhich the court does not have a good record thus far.It may be that the Federal Circuit's trend is in the right direc-tion and biotechnology jurisprudence is the laggard, not the inno-vation. In that sense, I would suggest that it is not the Federal Cir-cuit that has it exactly backwards.Thank you.[Vol. 54:3

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