The Economics of a Centralized Judiciary: Uniformity, Forum Shopping, and the Federal Circuit

Abstract

In 1982, the US Congress established the Court of Appeals for the Federal Circuit (CAFC) as the sole appellate court for patent cases. Ostensibly, this court was created to eliminate inconsistencies in the application and interpretation of patent law across federal courts, and thereby mitigate the incentives of patentees and alleged infringers to "forum shop" for a preferred venue. We perform the first econometric study of the extent of non-uniformity and forum shopping in the pre-CAFC era and of the CAFC's impact on these phenomena. We find that in patentee-plaintiff cases the pre-CAFC era was indeed characterized by significant non-uniformity in patent validity rates across circuits and by forum shopping on the basis of validity rates. We find weak evidence that the CAFC has increased uniformity of validity rates and strong evidence that forum shopping on the basis of validity rates ceased several years prior to the CAFC's establishment. In patentee-defendant cases, we find that validity rates are lower on average, but do not find either significant non-uniformity of validity rates across circuits or significant forum shopping.

Across Five Eras: Patent Validity and Infringement Rates in U.S. Courts, 1929–2006

“…It is well known that patents are more likely to be found “invalid” in declaratory judgments. The same is true in our data, as shown by Atkinson et al (). For this reason, and because the flow of declaratory judgments varies widely across time, we omit them from our analysis and interpret our rates of validity and infringement as conditional on being in an infringement suit.…”

“…As Henry and Turner () point out, the CAFC more consistently applied a “clear and convincing evidence” standard for invalidating patents, bringing a sharp increase in the conditional rate of patent validity. Prior to this, the frequency of “invalid” decisions varied widely across the geographic circuits at both the district and appeals court level (Henry & Turner ; Atkinson et al ), suggesting an irregular application and interpretation of “clear and convincing evidence.” We estimate that the corrected validity rate nearly doubles, from 40.1 percent to 74.3 percent . During the Early CAFC Era, roughly 1983–1990, patentees enjoy the higher likelihood of validity and the strong patent scope held over from the Graver Tank Era, and corrected win rates soar to about 50 percent.…”

“…Henry and Turner () completed the 1953–2002 part of these data, with the initial goal to include large amounts of data from both before and after 1982. In addition to Henry and Turner (), Atkinson et al () use the 1953–2002 data to show that there was significant nonuniformity in validity outcomes across circuits prior to the CAFC, that patentees tended to file cases in more favorable circuits prior to the CAFC, and that both phenomena were mitigated by the CAFC.…”

Do Economic Downturns Dampen Patent Litigation?

“…and actual values for rates (inflation, interest rates, 64 See Atkinson et al (2009) (noting that the Federal Circuit decreased invalidation findings relative to the pre-1982 regional circuit outcomes). and actual values for rates (inflation, interest rates, 64 See Atkinson et al (2009) (noting that the Federal Circuit decreased invalidation findings relative to the pre-1982 regional circuit outcomes).…”

Are patent fees effective at weeding out low‐quality patents?

“…Atkinson et al. () provide some evidence that forum‐shopping practice may have anticipated the formation of the CAFC.…”