[p.xiii] The evolution of technology law, especially as it relates to rights guaranteed through the patent system, is the result of the interplay of several forces, acting through key societal institutions. Among these key institutions are the intellectual property (IP)/patent bar, the U.S. Patent and Trademark Office (PTO), and the courts, in particular the federal district courts and the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). Another institution, somewhat less central though by no means of lesser importance within the system, is the U.S. Congress and the legislation it enacts in pursuance of the Constitutional Mandate of Article I: to promote the progress of science and useful arts. In this Foreword, I will comment about the evolving nature of these key institutions, and the forces affecting them, looking first where we have been, then where we think we are, and finally where we may be going.

The IP Bar. It is not news that profound changes have occurred in the last few years in the way the IP bar is organized. Not so very long ago, the IP bar consisted mostly of relatively small boutique firms and a handful of larger firms that specialized in IP law, the latter handling much of the IP litigation. The law of intellectual property reflected the organization of the bar: it was a specialized area of law largely unfamiliar to and ignored by the general practice firms. When a client had an IP issue, the general practice firms were perfectly happy to farm the work out to an IP firm.

In recent years, a substantial number of boutique firms have been merged either with other, larger IP firms, or with large general practice firms that now want to handle IP work in-house. More drastically, several of the big-name IP firms recently have simply dissolved, sending their partners and associates to other firms. Though a few large IP firms remain by managing to do both patent prosecution and patent litigation, many of the general practice firms prefer to use their own expert litigation teams, [p.xiv] enriched with patent practitioners, while the remaining IP firms find their niche in patent prosecution.

This segmentation of the practice into firms that specialize in patent prosecution and firms that handle the high-stakes litigation would seem to be a trend that is here to stay. It reflects among other things the tighter economics of the law practice, and the value added by IP activity. A recent article in Science compared the growth in number of lawyers claiming membership in the IP bar with the growth in research expenditures. The growth in the number of lawyers needed to handle the legal aspects of technology, and hence the money spent on such services, far outstripped the growth in spending to develop that technology.[1] Clients, understandably, are more closely monitoring what they get for their money, concerned about the cost of IP litigation and the large stakes involved, particularly in pharmaceutical, biotechnology, and information technology cases.

One fallout from all this may be a harbinger of good things to come. In the past, there seemed to be a sense among some of the bar that patent prosecution was less important than litigation, with the result that more resources migrated into the litigators’ hands, and the lawyers practicing patent prosecution were thought of as the green eyeshade crowd. This became a self-fulfilling prophecy, as shortcomings on the prosecution side were dealt with in litigation. There is now a greater awareness in the client base that litigation is a poor substitute — poor in the sense of inadequate, not in the sense of cost — for careful and competent drafting of applications, and for knowledgeable handling of the prosecution history record. Clients and the bar will have to recognize the need for greater investment up front in developing more carefully drafted patents, better claiming, closer attention to prior art and other validity issues, and more effective prosecution at the PTO. While the biggest payoff likely will be lower overall IP costs for owning inventions, there will be commensurate benefits for the PTO, as well as for the courts.

The PTO. Two factors have dictated the PTO’s behavior in recent years: the burgeoning number of applications, and inadequate funding for needed staff and facilities. Twenty years ago the average pendency for a patent application was a little less than two years, and the PTO’s backlog was about seventy-five thousand applications awaiting review. Today the agency receives about 350,000 new applications a year, and the backlog has increased to almost a half million pending applications. In some critical technologies the pendency time for an application can be as much as three, four, or even five years, and is expected to keep going up. A recent prediction by the PTO Director is that, unless radical changes are made, by the year 2008 the backlog will be over one million applications, [p.xv] with an average pendency of over forty months. He followed that prediction with a further observation: “[t]he patent system as we know it might well collapse as an effective tool for IP protection.”[2]

In response to this perceived problem, the PTO in June 2002 published its proposed Twenty-First Century Strategic Plan, which, following public comment, has now been updated by a February 2003 revision. The thrust of the PTO Plan is to speed up the examination process by, among other things, contracting out prior art search responsibilities (not surprisingly a move opposed by the examiner corps union); having as a target a pendency goal from filing to ultimate disposition of 18 months, with an interim year 2008 goal of 27 months overall; instituting a revised fee structure; hiring an additional 3,000 new patent examiners; becoming more productive by, among other things, transitioning from paper to electronic processing for trademarks by November 2003, and for patents by October 2004; completing the consolidation of the agency’s activities into a common campus instead of the current eighteen buildings scattered around Crystal City; expanding the system’s international reach; and operating more like a business, supporting a market-driven intellectual property system.

Key to all this is convincing the U.S. Congress that, at a minimum, the agency should keep its fee income, rather than have much of it siphoned off for other governmental purposes. This has been a long-standing grievance of the agency and of the users of the system who have seen their fee costs constantly increase without commensurate benefits. The PTO Plan made clear that, absent a change in its funding prospects, there would be no chance of attaining its goals.

The U.S. Congress, in the Patent and Trademark Office Authorization Act of 2002, authorized the PTO to receive appropriations for fiscal years 2003 through 2008 in amounts equal to those fees collected by the agency in each of the fiscal years. [3] It remains to be seen whether the appropriations committees, faced with constrained resources, will follow through in future years.

The consequences for the economy of a virtual collapse in the operations of the PTO, much less the consequences for the IP bar and the inventor community, would be difficult to overstate. The new Plan has received the support of the major IP groups, conditioned on the elimination of the diversion of PTO revenue to other governmental agencies. Even with the requested new funding the PTO will have a major challenge in meeting its stated goals. In addition to its impact on the IP bar, the inventor community, and the larger economy, the PTO’s ability to [p.xvi] effectively function is a key determinant in the ability of the courts to perform their function.

The courts. It is a peculiar characteristic of the IP system that the decision of the PTO regarding the validity of a patent, or even what it is the inventor actually invented, i.e., what the claims of the patent mean, is never final. A federal district judge can second-guess the agency, and until 1982 opportunities for forum shopping for review by a friendly regional court of appeals were rampant. Since 1982, and until 2002, the Court of Appeals for the Federal Circuit became the exclusive forum (subject only to occasional forays by the U.S. Supreme Court) for ultimately determining the scope and validity of particular patents, and, more importantly, for determining within the framework of existing statute the scope and direction of patent law, and to a lesser extent, trademark law.

As patents became more important to the technology world, and as technology became more complex and obscure to the uninitiated, the ability of trial and appellate judges to grapple with the issues presented in patent cases was tested. The traditional (and easy) way to deal with these complexities when they arose in the context of patent infringement suits between private parties at trial was to let juries decide both the question of infringement and any claim construction issues; this resulted in jury decisions, often couched in terms of a general verdict, that for all practical purposes were unreviewable. As the importance of the patent cases to the litigants and the economy became better understood, this situation was recognized as untenable, and was finally barred by the Federal Circuit’s Markman decision.[4] Trial judges now bear the responsibility in the first instance to decide as a question of law what the invention is, i.e., what the claims mean, subject to appellate review as all questions of law are.

Recent patterns suggest that patentees and alleged infringers are showing an interest in quicker and perhaps more determinate outcomes. This is reflected in a willingness as a litigation strategy to agree on the essential facts of the accused device or product, leaving the question of infringement to be subsumed into the question of what the claims mean. The decision in the case becomes a matter for summary judgment disposition by the trial court as a question of law, producing a final judgment ready for appeal if so chosen by the parties.

On appeal the trial judges do not have a hundred percent batting average in claim construction; it is probably closer to fifty percent. Even so, the Markman regime permits the parties and the courts to know what the issues are, and to focus on the key question in a patent: what is the invention for which the patent rights are granted, that is, what precisely do the claims mean.

[p.xvii] The answer to that question turns on three factors: how good was the claim drafting, how well versed is the court in the technology at issue, and how knowledgeable is the court in the law of claim construction (of course other issues, including patent validity, infringement under the doctrine of equivalents, and prosecution history estoppel, are often embedded in the cases).

As discussed earlier, trends in the bar and in the PTO may well result in continuing improvement in claim drafting, something to be devoutly hoped. Though my primary field of work was property law, until I joined the U.S. court of appeals something called intellectual property was foreign to me. Schooled in the precision by which deeds and grants of land are described and land use regulations are crafted, the apparent and deliberate imprecision of patent claims with the analogous so-called metes and bounds of the claimed invention was obviously difficult for me to comprehend.

Claim-drafting techniques are one-thing; learning the technology at issue is another. This can be a real challenge, and it is unlikely that understanding new technologies will get any easier for those not trained in the specific field at issue. Under the Markman regime, trial courts are free to educate themselves in the technology through tutorials presented by the parties, or by outside expert witnesses. Such tutorials are not subject to the usual rules about admissibility of evidence, but instead are viewed as informal opportunities for judges and lawyers to get on the same technological page. Of course, force-fed learning on a short string has its limitations.

Then there is the legal art of claim construction: how to read a patent claim; what can be garnered from the written description; when is reliance only on intrinsic evidence, the documents, appropriate, and when is extrinsic evidence, outside testimony, permitted. This is a skill that can best honed by repeated exercise. Yet most trial judges hear on average less than one patent case a year, though a few courts may hear somewhat more.[5] By contrast, the judges of the Federal Circuit have the benefit of repeated exposure: typically a judge of the Federal Circuit will hear upwards of forty or more patent cases in a year. In addition, it is the practice in the circuit to circulate all precedential opinions, which include all major patent cases, to non-panel judges, causing comment and discussion among the entire court.

The difficulties in understanding and correctly construing both law and technology have caused judicial specialization to become a frequent topic when the future of patent law is being discussed. In my view, on the [p.xviii] appellate level, and despite the complexities of new technologies, specialization would be unwarranted and undesirable.

Unwarranted, because as noted, there is ample opportunity for a circuit judge to become proficient in the law of patents, and adequate opportunity to become sufficiently informed about the technology issues in a particular case. The briefs and the record below constitute a tutorial, sometimes quite useful. Furthermore, most of the judges on the circuit choose law clerks with scientific and often patent law backgrounds, such that the major technology disciplines are often covered within any one chambers. Furthermore, in appeals it is not unusual for a case, including many patent cases, to turn on some issue of pure law or procedure, without necessarily implicating the particular technology that consumed so much of the effort in the trial court.

Specialization at the appellate level is also undesirable. At an earlier time when patent law was indeed a subspecialty, and the province of a small bar, little effort was made to relate the law of patents to general property and commercial law. That has changed with the changing role of intellectual property in the economy. As noted, that change is reflected in the makeup of the IP bar; it is also reflected in the way the courts relate IP law to the rest of the corpus of law. IP law is seen today as an integral part of general property and commercial law, and as a body of law essential to the maintenance of the U.S. engine of innovation.

An important part of a court of appeals’ role is to provide broad oversight over the development of the law, in light of evolving societal needs. Since its creation in 1982, the court of appeals has viewed itself as a generalist court with semi-specialized, subject matter jurisdiction. Appointments to the Federal Circuit have been made primarily from the general bar, with no more than a third of the court at any one time having a technical IP background. This also reflects the reality that IP is only one of the court’s jurisdictional responsibilities, based on its non-regional subject matter concept.[6]

The trial courts present a significantly different picture. As noted, many trial judges have little occasion to work with patent law and patent issues. And there is little to suggest that they have the opportunity or any particular incentive to obtain science-trained law clerks. The argument for a specialized trial bench, perhaps an Article I court not unlike the Court of Federal Claims or the Tax Court, has some force. Such a court could develop an expertise in patent law not generally found in the federal district courts.

[p.xix] One suggestion has been that as an experimental matter patent litigation jurisdiction be given to the Court of Federal Claims. [7] This suggestion was explored at a recent conference on the future of that court, and the role it plays in the federal system. [8] The suggestion was that, initially, jurisdiction over patent suits could be made concurrent with the district courts (much of the jurisdiction of the Court of Federal Claims already is concurrent with other forums). Experience would demonstrate whether the jurisdiction should remain concurrent, become exclusive, or revert solely to the district courts. This would provide an opportunity for a particular patent law trial bench to develop over time, with an expertise in the field not generally found in the district courts. At the same time, overspecialization would be avoided by the fact that the Court of Federal Claims handles a variety of other cases. This also would avoid the necessity of creating a new court for the purpose.

Other proposals have been made, including the deployment of expert scientific personnel in the federal judiciary,[9] the employment of technical advisers for specific issues, and the use of blue ribbon juries. None of these proposals have met with wide support, and none are free of significant difficulty.

The role of the Federal Circuit in providing national uniformity and predictability in intellectual property law was touted as one of the primary reasons for its creation; [10] opinion within the profession suggests that the Federal Circuit has largely succeeded in meeting the founders’ expectations in this regard. A startling and troubling development occurred in 2002 when the U.S. Supreme Court handed down its opinion in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.[11] The issue was whether the Federal Circuit has appellate jurisdiction over a case in which the complaint does not allege a claim arising under federal patent law, but the answer contains a patent law counterclaim. The understanding in the profession, and in the courts, had been that, consistent with the U.S. Congress’s purpose of providing national uniformity in patent appeals, [p.xx] any patent law claim, whether in the complaint or the answer, was subject to exclusive review in the Federal Circuit. The U.S. Supreme Court held to the contrary, based on its understanding of the meaning of “arising under” in the governing statute.

In effect, there is now again opportunity for some patent law appeals to be heard in the twelve regional circuit courts of appeals, with the potential for forum shopping and inconsistent rulings on patent law issues. The IP bar has expressed its concern, and various proposals for a legislative fix have been floated. It remains to be seen what the U.S. Congress will do, and in the absence of congressional action, how significant this inroad into national uniformity becomes.

The Law. Finally, some observations about the evolution of substantive patent law. As earlier noted, there has been an effort to bring patent law into the Twenty-First Century, and to make it more consistent with general law, particularly general property and commercial law, including antitrust law. This effort has been ongoing, and effective.

Nevertheless, there remain areas in which patent law suffers from a significant level of indeterminacy.[12] Competitors of an inventor whose invention will impact the marketplace are entitled to know exactly what it is that the patent right precludes their doing. The inventor, in exchange for the right to prevent others from making, using, or selling the invention, discloses what he has invented, and what is the best mode for making it. That information belongs to the public; competitors are free to use it in developing new products so long as they do not duplicate the claimed invention during the term of the patent.

The driving notion behind the phrase “The Rule of Law” is that outcomes — the legal consequences of known behaviors — will be predictable, and not simply arbitrary decisions by officials. Applying this notion to patent law, the importance of clear and understandable claims in a patent becomes apparent, the opposite of the practice of drafting to maximize ambiguity and thus opportunity for the patentee to extend the scope of the patent to the products of emerging competitors. A continuing focus on improved claim drafting and the use of the written description in patent claim construction will lead to less factual ambiguity, and less legal indeterminacy.

Indeterminate claims lead to problems in claim construction, an area of indeterminacy aggravated by the use of jury general verdicts. That aspect of the problem was successfully addressed in Markman and its progeny, and the Federal Circuit’s solution received the support of the U.S. Supreme Court against a constitutional challenge.[13] The Federal Circuit [p.xxi] has been less successful in addressing the indeterminacy inherent in a judge-made rule called the doctrine of equivalents.

The line between successfully designing around a patented invention, and duplicating its essential character in violation of the patentee s rights, is not an easy one to draw. When the design around is close but not exactly the same as the claimed invention, courts sometimes will protect the patentee’s rights by invoking the doctrine of equivalents. An insubstantial difference between a limitation in the claims and the equivalent element in the accused device or product will result in a judgment of infringement, even though the device does not literally infringe all the limitations of the claim, as the statute requires.

The courts treat application of the doctrine as a jury question, despite its obvious equitable nature. As a result, over the years patentees have invoked the doctrine almost as a second part of every infringement suit, hoping that, if the jury is not convinced of literal infringement by an accused infringer, they may find infringement under the doctrine of equivalents. Given the indeterminate nature of the test “insubstantial difference” this hope has proven to be worthwhile from the viewpoint of patentees. Further exacerbating the indeterminacy problem is that a final judgment as to whether the doctrine has been properly applied in a particular case is always open to appeal to the Federal Circuit, thus leaving the final decision as to what is an insubstantial difference to an after-the-fact assessment by appellate judges.

In an effort to cabin the indeterminacy problem and the misuse of the doctrine by litigants, the Federal Circuit has tried several approaches to limiting the doctrine. Its most recent effort was Festo Corp. v. SMC Corp., [14] in which the Federal Circuit announced a series of rules the effect of which was to put significant limits on the use of the doctrine of equivalents in patent litigation. The new rules provided that certain pronouncements by a patent applicant in the course of prosecuting the patent before the PTO will serve, in defined circumstances, as waivers of future use of the doctrine against competitors, who are entitled to rely on the pronouncements. The court’s effort in this regard was frustrated by the U.S. Supreme Court, which disagreed with the Federal Circuit’s attempt to erect a stricter rule of waiver, preferring instead a more open-ended rule.[15] The matter is again before the Federal Circuit on remand, which now must figure out what the U.S. Supreme Court meant.[16]

Conclusion. It is difficult to fault the patent system as somehow failing to encourage innovation and investment in new technology. Proponents of the system point to the constantly accelerating rate of technological change [p.xxii] and development. At the same time, it is equally hard to claim that it is the patent system that lies at the heart of this nation’s successes in technology development. Indeed, some critics argue that those successes are the result of the inherent adaptability and power of the marketplace, and happen despite the constraints imposed by law.

One need not decide which of those views is correct to conclude that improvements can be made in the patent law system. Whether cause or effect, it is better to have an efficient and well-functioning legal regime than one that is inefficient, wasteful, and frustrating to both inventors and government officials charged with administering the system.

The IP bar is in the process of responding to market forces that will dictate the form and shape of legal representation for inventors and entrepreneurs wishing to exploit their inventions. The PTO, as a government agency, is less able to respond to market forces, though the Director and his staff in the new Plan are proposing to move the organization in the direction of a business model agency. Whether the U.S. Administration and Congress will support the move, and allow the agency to evolve in response to market pressures, remains to be seen.

Judicial institutions are inherently conservative, especially regarding their own structure and behavior. To overcome institutional inertia and create new or revamped courts requires, as demonstrated by the history of the creation of the Federal Circuit, a coalescing of forces over time in response to a strongly felt need. It is not yet apparent that such forces exist, or that the need is sufficiently strongly felt. That could change, however, if the U.S. technological lead is seriously challenged, and if the patent system is seen as either a significant hindrance or a potential major contributor to keeping the nation’s technological edge.

Over the years the Federal Circuit has demonstrated a degree of creativity in accommodating doctrine to changing societal circumstances, while protecting vested rights and taking care to disturb established precedent only when genuine need is shown. For example, the Federal Circuit has recognized additional categories of patentable subject matter to include, among others, computer software programs and business methods.[17] It has also more frequently asserted its authority than it did in the early days regarding establishment of Federal Circuit rules governing IP cases, in matters such as the reach of long arm jurisdiction statutes, preliminary injunctions, review of the Judgment as a Matter of Law decisions, and pleading amendments, when such procedural issues in a case are deemed to involve a substantive matter unique to the Federal Circuit.

[p.xxiii] The U.S. Supreme Court has acknowledged the circuit’s unique placement as an expert forum for technology law development, and, by refraining from taking certiorari in most of the IP cases, has generally acquiesced in the circuit’s direction of development. It is true, however, that on a few of its occasional forays into patent law, the U.S. Supreme Court indicated that it considers its expertise to be of a higher order than that of the circuit.

In the last quarter century or so patent rights have become a large part of corporate wealth and power in the nation’s market place, to a noticeable extent replacing facilities and factories. That shift in economic character has driven shifts in the practice and processes of technology law. As is often the case, the law lags significantly behind social change, and the evolution of law and legal institutions in response to these shifts in society is in its early stages. At this juncture it is enough to recognize the evolutionary changes occurring, and monitor their further development in the years ahead.