By Erin Geiger Smith

ISELIN, N.J. (Reuters) - Recent tension between the U.S. Supreme Court and the Federal Circuit Court of Appeals can be traced to a dispute over what kind of rules framework should be set for patent law, a former Federal Circuit judge said.

Arthur Gajarsa, who retired from the patent-focused court in June 2012 and is now senior counsel at Wilmer Cutler Pickering Hale and Dorr, spoke at a patent seminar on Wednesday hosted by the New Jersey Intellectual Property Law Association.

He said the Federal Circuit, which has jurisdiction to hear most patent appeals from U.S. district courts nationwide, has a statutory mandate "to normalize patent law" throughout the country and tries to do this "by establishing rules which district courts can follow."

Those rules, he said, "have to be clear, concise, and in some cases rigid. The Supreme Court does not like rigid."

In recent terms, the high court has taken a number of high-profile patent cases that came out of the Federal Circuit, which was established in 1982.

That was a departure from the early years of the Washington-based appeals court, Gajarsa said. Previously, the Supreme Court heard very few appeals of the Federal Circuit's opinions, other than in cases relating to its jurisdiction, he said.

This term, for instance, the Supreme Court agreed to hear three patent cases coming out of the Federal Circuit.

One area in which the two courts have not seen eye to eye - how to determine what inventions are eligible for patents - was addressed in the Supreme Court's 2010 decision in Bilski v. Kappos.

In that case, the Federal Circuit had ruled that a "process" was patentable if it was "tied to a particular machine or apparatus" or if it "transforms" something into a different state. The process at issue was a so-called business method related to commodities buyers trying to hedge risk. Applying the test to the proposed invention, the Federal Circuit found it ineligible for a patent.

That opinion, Gajarsa said, was straightforward and set up a fairly understandable rule. Gajarsa joined the majority opinion authored by then Chief Judge Paul Michel.

ABSTRACT IDEAS

The Supreme Court agreed with the Federal Circuit that the business method at issue was not patentable, but its opinion was more broad. Business methods could be eligible for patents, the Supreme Court said, even in cases where they may not pass the Federal Circuit's "machine-or-transformation test."

That opinion "muddled" the rule on what ideas constituted obviousness as related to patents, and the high court would have to take on more cases on the topic to try and straighten it out, Gajarsa said.

Inventions that are obvious or constitute abstract ideas cannot be patented under U.S. patent law.

Daryl Joseffer, a partner at King & Spalding who frequently argues before the Supreme Court, also spoke at the conference. He agreed with Gajarsa that the rigidity of the Federal Circuit versus the often more flexible standards of the Supreme Court would mean the high court continued to take high-profile patent litigation.

Joseffer pointed to a case that many patent experts believe the Supreme Court will take up next term, Akamai Technologies, Inc v. Limelight Networks Inc.

In Akamai, the Federal Circuit in September 2012 clarified what constitutes so-called "divided infringement," which is where different parties perform different steps to carry out the process of the patent that is allegedly infringed.

The Federal Circuit held that a party may be liable in these divided infringement cases even if it took multiple unrelated parties to carry out the action.

Whether or not the high court agrees to hear Akamai, a decision that may not come until late this year, the cases already in front of the court will continue to provide clues as to how patent law will be shaped.

For his part, Gajarsa said he wondered if the tension created by the Federal Circuit's attempts to develop rules would result in the Supreme Court's taking apart that normalization of patent law "piece by piece."

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