Align v. Ormco: Some Implications of the Recent Federal Circuit Ruling

Implications: Last week's decision in the Align/Ormco appeal is hard to parse, and indeed on first blush might look like a win for Ormco.  A more careful analysis, however, reveals that Align's charaterization is closer to right: Ormco "won" a few claims, but those wins are far from strong, and they were paired with losses on other issues that are not only more significant but also more surprising.

Analysis: As per normal, both parties in the Align v. Ormco litigation have declared that the most recent decision was a victory.  And, on the surface, both parties are right.  Ormco successfully kept Align's patents out of the case and was able to get a few claims of its own patents reinstated.  Align, meanwhile, successfully kept the bulk of Ormco's patents out of the case, convincing the Federal Circuit that they are indeed invalid.  What, net, should we think?

Two thoughts from me:

1. The Ormco claims that were reinstated still must now go through the full patent litigation process.  They must be evaluated to see if they are valid.  They must be evaluated to see if they are infringed.  Thus, to the extent that commentators are claiming that Ormco's claims were found to be infringed, or that Align will now be found to infringe on remand, those comments are just wrong.  The Federal Circuit merely opened the door to a real litigation on those few claims; and, in that litigation, Ormco in my view has a significantly weak case.  Most likely, on remand, Ormco's claims will fail for new reasons.

2. When evaluating a decision, the important question is to ask how the result compares to our expected result.  None of the recent commentary seems to do that.  For instance, did we expect that Ormco's patents would be reinstated?  I did.  The lower court decision throwing them out was deeply flawed, and Ormco had great arguments about why the patents should be reinstated in their entirety.  Ormco will likely raise those arguments again now on another appeal; but, for now, my point is that Ormco's failure to reverse the district court was likely the biggest ramification of last week's decision.  It wasn't news -- the claims were out, and they are still out -- but Ormco's failure to get most of its claims reinstated was the biggest marginal change between last Thursday night and last Friday morning, and that is surely the thing that has most altered the bargaining dynamic between these two firms as of this week.