Will the Supreme Court Accept Soverain v. Newegg?


To many, Soverain v. Newegg is just another obviousness dispute; so why would the Supreme Court get involved? It is really more than your typical obviousness dispute, though. Increasingly, patent claims are held valid in a variety of different forums — they are initially granted, they are litigated in district court and at the ITC, and litigated again and again at the USPTO. In some instances, after all that litigation, and even after multiple successful reexaminations in favor of the patentee, the Federal Circuit will find the claims invalid as being obvious.

How is this the case? That is a good question. It stems from the fact that obviousness, which is supposed to be a mixed question of fact and law, is reviewed de novo by the Federal Circuit. It seems the Federal Circuit, which as an appellate court is not well-equipped to deal with determining facts, reviews the underlying facts de novo as well.

The patents in question in this case were granted in the first instance, were upheld twice in reexamination despite being challenged with substantially the same prior art, and the patents were found valid and infringed by a jury in another case. Indeed, it seems that every time these patents had been previously considered, they have been found to have valid claims. In the not-too-distant past, we could have said that no patent claims that had ever passed reexamination had ever been determined to be invalid by the Federal Courts. Sadly, those days have been gone for at least several years.

Indeed, this case is important because we have entered a dangerous cycle where patent litigation never ends, or at least it never ends until the patentee finally loses. ‘Fight until the patentee finally loses’ shouldn’t be the name of the patent litigation game.

I first clued into this case in early September 2013, when the United States Court of Appeals for the Federal Circuit had just issued it latest decision in Soverain Software LLC v. Newegg, Inc. (Fed. Cir., September 4, 2013). This September decision was necessitated by the limited grant of rehearing ordered on June 13, 2013. The rehearing was granted for the purpose of clarifying the status of claims 34 and 35 of U.S. Patent No. 5,715,314.

The Federal Circuit’s original opinion issued January 22, 2013, and was authored by Judge Neman with Judges Prost and Reyna in agreement. In that January 2013 opinion, the Court identified claim 34 as representative of the “shopping cart” claims, and held claim 34 invalid on the ground of obviousness. The parties stated, on petition for rehearing, that the Federal Circuit ruling should have been for claim 35, which would conform to the judgment entered on the jury verdict. But that is where the agreement between the parties ended. Soverain requested further proceedings on the merits, while Newegg proposed that the Federal Circuit correct what they referred to as a “typographical error.” The Federal Circuit ordered additional briefing.

Ultimately, Judge Newman then pointed out that when a dependent claim is not separately argued, it rises and falls together with the independent claim, citing Gardner v. TEC Sys., Inc., 725 F.2d 1338, 1350 (Fed. Cir. 1984) (en banc) (“Gardner has not argued the validity of the remaining claims in suit, claims 3, 4, and 8, apart from the validity of claim 1, from which they depend. We cannot discern for ourselves any independent basis for their validity. We therefore affirm the holding of invalidity of these claims as well.”) Thus, the rehearing was not successful and claim 35, like claim 34, was ruled invalid because it was obvious. This seems simple enough, but the problem is that it results in a claim that was never asserted or litigated being declared invalid, which is a bit odd to say the least.

Undeterred, on October 16, 2013, Soverain Software submitted its Petition for Certiorari to the United States Supreme Court. The Newegg brief in opposition to Soverain’s Petition for Certiorari was due on November 18, 2o13, but Newegg’s attorney requested an extension until Thursday, December 12, 2013; their Brief in Opposition to certiorari was filed that day. I have been told that Soverain plans to file a reply to the Newegg brief, so it will be some time before we know whether the Supreme Court will take this important case.

For more on this case, please see: Soverain Software v. Newegg.

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