89 Indiana Law Journal 1547 (2014)
A substantial subset of patent opinions from the Federal Circuit Court of Appeals functions in a wholly different manner from ordinary judicial opinions: they have strong retroactive effects with weak prospective effects. All Federal Circuit opinions have strong retroactive effects because issued patents and pending applications rarely can be modified. The Federal Circuit decisions apply in full to these patents and applications, even though they were prepared without the benefit of the rulings. In contrast, many of these opinions have almost no prospective effects. Patent law provides tremendous linguistic flexibility to patent drafters, which can be used to avoid the holdings of many (but not all) opinions. Patent drafters can freely choose any words to describe and claim the invention in the patent application. Patentees carefully draft new applications, aware of the decisions, to avoid their holdings. If the Federal Circuit holds that a certain phrase necessitates a bad result, patent lawyers substitute equivalent uncontaminated language in its place in future applications. The prospective effects of these opinions are muted because of the linguistic flexibility in drafting applications. Issued patents cannot be effectively modified; consequently, they are strongly affected by Federal Circuit decisions.
There are substantial costs to the Federal Circuit’s actions. First, patent prosecutors are excessively cautious and spend extra time drafting claims and patent specifications to lower the risk of future changes in the law. This increases costs while still not substantially eliminating the problem. More troubling, the retroactive opinions weaken the incentive to innovate because the added uncertainty in the procurement process makes patent rights insecure. It thereby diminishes the value of patents. As their value decreases, patents cannot fully advance technological progress, as the Constitution urges. A counterintuitive solution—reducing the use of precedential opinions—can mitigate the retroactivity problem.
Schwartz, David L.
"Retroactivity at the Federal Circuit,"
Indiana Law Journal: Vol. 89
, Article 6.
Available at: http://www.repository.law.indiana.edu/ilj/vol89/iss4/6