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Judicial Exceptions to IP Statutes: Are They Dead?

March 22, 2019
Post by Kirk M. Hartung

On January 8, 2019, the U.S. Supreme Court decided a case involving the Federal Arbitration Act that could have a significant impact on patent law. The Arbitration Act, signed into law in 1925, allows parties to agree to submit disputes to arbitration, rather than litigating in court. Although, sometimes parties disagree as to whether an arbitration clause applies to a particular dispute. So who decides whether to proceed with arbitration, the arbitrator or the court? Even when the contract delegates this initial threshold question to the arbitrator, some federal courts will short-circuit the question and decide themselves if the argument that the arbitration clause applies is "wholly groundless". Courts which support the exception, reason that it prevents frivolous attempts to transfer disputes from courts to arbitration.

In Henry Schein, Inc. v. Archer & White, Inc., the District Court ruled that the argument for arbitration was wholly groundless and denied a motion to compel arbitration. The Fifth Circuit Court of Appeals affirmed. With the Circuit Courts split on this "wholly groundless" exception, the Supreme Court granted cert. to decide the question of whether the exception is consistent with the Federal Arbitration Act.

The Supreme Court reasoned that Congress designed the Act in a specific way, and it is not their proper role to redesign the statute. Noting that the Act contains no "wholly groundless" exception, the Court explained that they could not engraft their own exceptions onto the statutory text. More specifically, the Court stated, "We may not rewrite the statute simply to accommodate that policy concern" of preventing frivolous motions to compel arbitration.

So how does Schein apply to intellectual property law? The biggest impact may be on the judicially created exceptions to patentability. While 35 U.S.C. 101 sets forth the basic categories of patentable invention (any new and useful process, machine, manufacture, or composition of matter, or improvements thereof), there are exceptions for abstract ideas, laws of nature, and natural phenomenon. These judicially created exceptions are not patentable. However, since there is no basis in the statutory text for these exceptions, are these exceptions an impermissible "redesign" of the statute, as in Schein? If so, it seems that the abstract idea exception that has been subject to much debate in recent years, may be dead.

Another exception not found in the patent statutes is non-statutory double patenting. This is a judicially created doctrine grounded in public policy so as to prevent the unjustified or improper time wise extension of the "right to exclude" granted by a patent.

In Schein, the Supreme Court concluded that public policy cannot supersede statutory text approved by Congress to support a non-statutory exception. Shouldn't the same rationale apply to the patent statutes, and the judicially created exceptions of abstract ideas, laws of nature, natural phenomenon, and non-statutory double patenting?

The Supreme Court has also ruled that the same principals of equity apply to permanent injunctions in patent cases as in any other type of case. eBay Inc. v. Mercexchagne, LLC (2005).  Therefore, don't the same principals of judicial exceptions apply to patent statutes as in other statutes? If not, then why?

Kirk Hartung is Chair of the Mechanical Patent Practice Group at McKee, Voorhees & Sease, PLC. For additional information, please visit www.ipmvs.com or contact Kirk directly via email at kirk.hartung@ipmvs.com.


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The attorneys of McKee, Voorhees & Sease, P.L.C. designed this blog as an informational and educational resource about intellectual property law for our clients, other attorneys, and the public as a whole. Our goal is to provide cutting-edge information about recent developments in intellectual property law, including relevant case law updates, proposed legislation, and intellectual property law in the news.

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