The Court of Appeals for the Federal Circuit's Impact on Patent Litigation

Abstract

With its powerful mandate to unify patent law, the Court of Appeals for the Federal Circuit (CAFC), established in 1982, represents an intriguing recent example of an institutional innovation with potentially broad economic consequences. Given sole responsibility for handling patent appeals and widely regarded as pro-patent, the CAFC has indeed produced a new body of patent law. Unfortunately, research has yet to identify and explain accurately its impact on patent litigation, patenting and inventive activity. Given that both the amount of patent litigation and the number of patents have grown substantially during the last twenty years, the time is ripe to address this directly. We present and analyze a novel data set, spanning 1953-2002, that reflects more than 6,000 decisions published in the United States Patents Quarterly (USPQ).

Specifically, we: (1) compare directly the tendencies of the CAFC to those of its predecessor appeals courts; (2) consider separately the issues of validity and infringement; and (3) examine how appeals court tendencies affect the actions of lower courts and/or litigants. We find that the CAFC has been significantly more reluctant to affirm patents invalid than its predecessors but has not been more reluctant to affirm patents not infringed. As a result, district courts have decided patents invalid significantly less often, patentees have appealed invalid decisions significantly more often and the infringement inquiry has grown in importance.

Keywords: patent, litigation, structural break, time series analysis

JEL Classification: K2, K4