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Document Type

Article

Publication Date

Winter 2020

Publication Citation

95 Indiana Law Journal 39 (2020)

Abstract

This Article fills a gap in the literature by providing novel and unique empirical evidence of the impact of percolated intellectual property doctrine versus the impact of isolated doctrine from a specialized court. It relies on the U.S. Supreme Court’s paired decisions in 2014 in Octane Fitness, LLC v. ICON Health & Fitness, Inc.15 and Highmark, Inc. v. Allcare Health Management Systems, Inc.16 to highlight a natural forum for evaluating the effects of percolation on federal legal doctrine. At issue in those cases was the fee-shifting language of Section 285 of the Patent Act: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”17 Fortuitously, Section 1117(a) of the Lanham Act, enacted twenty-two years after Section 285, contains the identical provision for the trademark and specific types of unfair competition cases that arise under it.18 Moreover, while patent appeals are now heard exclusively by the Federal Circuit, appeals from Lanham Act cases go to the regional circuits.19 The treatment of Lanham Act fee shifting in comparison to Patent Act fee shifting is thus a serendipitous natural experiment that allows a comparison of two forms of doctrinal development.

Using this experimental lens, we engage in a detailed analysis of fee-shifting cases and compare the results under percolation and specialization. Based on the literature, our hypothesis is that percolation is likely to produce doctrine that, while nonuniform, actually adheres more closely to statutory intent. We expect that the percolation blunts the type of judicial hyperactivity20 and activism that mars the decision-making of a specialized court like the Federal Circuit. And indeed, our results bear this out. They demonstrate, for the first time, that lack of percolation led to weaker doctrine in the Federal Circuit than in the regional circuits, despite identical statutory language.

Part I of this Article puts the experiment in context by explaining the role of generalist versus specialized courts in developing legal doctrine and the clear tradeoff between uniformity of doctrine and the advantages of percolation. It provides the theoretical construct that is so in need of empirical validation. Part II begins the empirical study by considering over six decades of Patent Act fee-shifting case law, beginning with the first enactment of a statutory provision in 1946. It describes how, when patent fee-shifting doctrine percolated through the regional circuits from 1946 to 1982, it was relatively stable, and outcomes were noncontroversial and largely congruent with the Supreme Court’s rulings in Octane Fitness and Highmark half a century later. However, with the 1982 introduction of the Federal Circuit as the sole voice in intermediate patent appeals, percolation ceased. Patent fee-shifting doctrine started to harden along rigid and inappropriate lines, eventually taking on the formalistic, inflexible format that was ultimately struck down by the Court in 2014.

In Part III, the paper presents the contrasting case of Lanham Act fee-shifting case law. The Lanham Act fee-shifting provision was adopted in 1974 and has always percolated through the regional circuit courts. Doctrine developed under the Lanham Act provision is less uniform than that found in patent law, as one would expect from percolating doctrine. However, we demonstrate that the Lanham Act fee-shifting doctrine was more consistent with the Supreme Court’s eventual edicts in Octane Fitness and Highmark than was the nonpercolating doctrine of the specialized Federal Circuit. Part IV concludes that percolation does indeed have clear advantages; it is more likely to result in doctrine that preserves the function of the trial court and avoids inappropriate policy making, although at the cost of uniformity in doctrine. Trade-offs indeed must be made when choosing court structures. We discuss our findings and suggest lessons to be learned that may lead to improvements and more informed analysis of the Federal Circuit.

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