U.S. high court sets record for intellectual property caseload

WASHINGTON In a sign of the growing struggles that judges face applying old laws to new technology, the U.S. Supreme Court this year is hearing the highest proportion of intellectual property cases in its history.

In the court's nine-month term ending in June, the justices will decide eight cases on intellectual property issues: six on patent law, two of which were argued on Wednesday, and two on copyright law.

That makes 11.4 percent of the 70 oral arguments the court is hearing this term, a marked uptick from six cases, or 7.7 percent, the previous session, according to a Reuters review of the cases.

The court heard three or four cases each of the previous three terms, according to data compiled by Edward Lee, a professor at Illinois Institute of Technology Chicago-Kent College of Law, and the court heard even fewer in the previous decade: two or three per term.

The number of IP cases is the most in a single term since the middle of the last century at a time when the court is hearing fewer cases.

Intellectual property law, which includes patents, copyright and trademarks, has been around for centuries, but in recent decades it has become increasingly important for U.S. businesses, especially in globally competitive areas of the economy such as the technology industry.

The rise in high court cases also has been fueled by differences between rulings by the justices and the findings of a specialized Washington-based appeals court, which handles the nation's patent cases and has failed to reach consensus on some key issues.

Often filled with jargon and technological terms that can make issues seem obscure, the IP cases can have wide-ranging, real world effects.

This term alone, the court is due to decide the potentially broad question of when software can be patented. In a copyright case, the court will weigh the fate of a startup company that allows people to watch broadcast television on computers and mobile devices.

"This is absolutely a blockbuster year," said Mark Lemley, a professor at Stanford Law School.

LESS IDEOLOGICALLY SPLIT

Under Chief Justice John Roberts, appointed by President George W. Bush in 2005, the court has increasingly stepped in to confront unprecedented complexities of emerging technology.

The increase in IP cases is evidence also of the Roberts court's keen interest in business cases. Unlike other business cases on issues ranging from class actions to employment law, however, on these the justices seem less ideologically split.

Of the 23 IP cases decided from 2005 to 2013, a total of 15, 12 of them patent cases, were decided without a single dissenting vote, a Reuters review of the rulings found.

Legal experts are wary of making broad pronouncements about where the court stands on IP issues, saying the court approaches the subject on a case-by-case basis and prefers to rule narrowly.

Last term, for example, the court took the middle ground when faced with the question of whether human genes can be patented. On a unanimous vote, the court prohibited patents for naturally occurring human genes but allowed legal protections for synthetically produced genetic material.

Reflecting the complexity of the issues, Justice Antonin Scalia acknowledged the limits of his scientific knowledge in a separate opinion agreeing with the majority, writing, "I am unable to affirm those details on my own knowledge or even my own belief."

David Kappos, who headed the U.S. Patent and Trademark Office from 2009 to 2013, said the court was evolving the law to match evolving technology. "They are choosing very wisely, I think, to do it incrementally," he said.

PATENT PROBLEMS

Legal experts say the high court is taking more intellectual property cases mainly because of widely recognized problems in the patent system that have led to greater litigation in lower courts, especially over increasingly prevalent software patents.

In 2011, almost 125,000 software patents were granted by the U.S. Patent and Trademark Office, up from about 25,000 in 1991, the U.S. Government Accountability Office (GAO) said in an August 2013 report.

Much of the blame for the increase in litigation is assigned to patent-holding companies, derided as "patent trolls", which often turn to courts for help. Between 2007 and 2011, such companies accounted for an estimated 19 percent of all patent infringement lawsuits, according to the GAO report.

Companies differ over what type of patent protections software products should receive. Some, like Google Inc, favor looser protections, which they see encouraging innovation and discouraging patent trolls. International Business Machines Corp, one of the largest holders of patents, prefers that most software be patent eligible.

The U.S. Congress and the White House have long recognized that further patent reform is needed, even after the America Invents Act, aimed at achieving that goal, was enacted in 2011.

Frequently the focus is on reducing litigation.

In his State of the Union speech on January 28, President Barack Obama made a specific reference to the need for patent reform "that allows our businesses to stay focused on innovation, not costly, needless litigation".

Patent law insiders say part of the problem is the U.S. Court of Appeals for the Federal Circuit, which was set up in 1982 specifically to handle patent cases but has struggled at times to give clear guidance to lower courts.

Critics say the Federal Circuit's handling of the software patent case, which is being argued in the high court on March 31, underscores the need for Supreme Court intervention. The appeals court judges split 5-5 with no clear resolution of the case before them and no clear guidance for others involved in similar litigation.

The Supreme Court is generally seen as being less protective of patent rights than the Federal Circuit appeals court. In a 2006 case, for example, the Supreme Court unanimously found that judges should not automatically issue injunctions when they make a finding of patent infringement.

The high court's approach generally favors tech companies more than, say, the pharmaceutical industry, which favors strong patents to protect its multi-million dollar investments.

INCREMENTAL CHANGE

The two most high profile issues before the court this year are the software patent case and the challenge by broadcast TV networks to Aereo Inc, which allows customers to view broadcast network content via the Internet. Several of the patent cases hinge on highly technical issues that are of interest in particular to tech companies. Many, including Apple Inc, Google, Oracle Corp, and Cisco Systems Inc, have filed friend-of-the-court briefs, sometimes in multiple cases.

The two copyright cases - the Aereo dispute and a fight over an early screenplay for the "Raging Bull" movie - are equally important to media companies with large content libraries, such as Twenty-First Century Fox, Inc and Metro-Goldwyn-Mayer Inc, which have taken part in both.

By the end of June the Supreme Court will have ruled on some key questions. At a minimum, Aereo, backed by Barry Diller's IAC/InterActiveCorp, will know whether it can continue to expand its service across the nation or possibly be forced to abandon its current business plan.

In the software patent case, and the two cases argued on Wednesday, the court could issue rulings on attorneys' fees which could reduce the amount of litigation over software patents and make it easier for judges to make losing parties pay legal fees.

Lemley, of Stanford, said several of the cases on the docket "could really fundamentally change the practice of law."

(Editing by Howard Goller and Peter Henderson)