United States: De Novo Review Of District Court Claim Construction Is Here To Stay—For Now

The en banc Federal Circuit, in a 6–4 decision, invoked the doctrine of stare decisis and decided to retain the de novo standard for appellate review of district court claim constructions.

In a closely watched case in which 38 amici participated, the en banc U.S. Court of Appeals for the Federal Circuit, in a 6–4 decision, invoked the doctrine of stare decisis and decided to retain the de novo standard for appellate review of district court claim constructions (as formulated in its 1998 en banc Cybor decision).  Lighting Ballast Control LLC v. Philips Electronics North America Corp., Case No. 12-1004 (Fed. Cir., February 21, 2014) (Newman, J., joined by Lourie, Dyk, Prost, Moore, and Taranto, JJ.) (Lourie, J., concurring) (O'Malley, J., dissenting, joined by Reyna and Wallach, JJ., and Radar, CJ.).  Judges Chen and Hughes took no part in the case. 

The three published opinions cover 88 pages, but the distilled holding of the majority is that

... we apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law.  After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of [the Supreme Court's decision in Markman ], and that the criteria for departure from stare decisis are not met.

Background

In 1998, in the wake of the 1996 Supreme Court of the United States claim construction decision in Markman v. Westview Instruments, the Federal Circuit (in Cybor) held that during appellate review, patent claim construction is subject to de novo review for correctness as a matter of law.  The issue of whether the Cybor standard should be reconsidered en banc had been brewing for many years.  In 2006, a fractured Federal Circuit denied en banc review of the issue in Amgen v. Hoechst Marion Roussel ( IP Update, Vol. 9, No. 12) with then Chief Judge Michele joined by present Chief Judge Radar dissenting.  Judge Moore also filed a dissenting opinion in Amgen.  Even Judge Newman, who penned the majority opinion here, wondered if it was time for a change.

Again in 2011, in Retractable Technologies v. Becton Dickinson ( IP Update, Vol. 14, No. 7) the panel decision revealed a deep split among its members in the context of claim construction where claims are drafted broadly, but the written description supports a far more narrow invention.

Finally, in 2013, in response to a petition filed by Lighting Ballast Control, the Federal Circuit granted rehearing en banc in this case and instructed the parties to address the following issues:

  1. Should this court overrule Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir., 1998)?
  2. Should this court afford deference to any aspect of a district court's claim construction?
  3. Is so, which aspects should be afforded deference?

The Majority Opinion

As explained by Judge Newman, the parties and amici urged three divergent views for review of district court claim construction on the Federal Circuit:

  1. As argued by Lighting Ballast and several amici, Cybor was wrongly decided and should be discarded.  Rather, appellate courts give deference to a district court's fact-based rulings, such as claim construction, where the district court must wrestle with expert testimony and documentary evidence. 
  2. As argued by the United States, the American Bar Association and some amici, claim construction should be reviewed, as to underlying facts, based on the clearly erroneous standard.  Only the legal conclusions should be subject to de novo review.
  3. As argued by other amici and Philips, Cybor was correctly decided and is consistent with Markman, i.e., claim construction is a matter of law.  To adopt either of the other approaches would not only abandon the principles of stare decisis, but would add "to the already complex laws of claim construction, a new and uncertain and contentious inquiry into which aspects of a particular construction falls on which side of the fact-law line."

Focusing on the issue of stare decisis, the majority explored the history of the Markman and Cybor cases, noting that "Courts should be 'cautious before adopting changes that disrupt the settled expectations of the inventing community.'"  Finding no post-Cybor developments from the Supreme Court, Congress or the Federal Circuit "that may have undermined the reasoning of Cybor, or that implementation of Cybor has proved unworkable" over the past 15 years, the majority found no compelling reason to make a change in the law:

To the contrary, reversing Cybor or modifying it to introduce a fact/law distinction has a high potential to diminish workability and increase burdens by adding a new and uncertain inquiry, not only on appeal but also in the trial tribunal.  No consensus has emerged as to how to adjust Cybor to resolve its perceived flaws.  Despite probing questioning at the en banc hearing, and despite the extensive amicus curiae participation, there is no agreement on a preferable new mechanism of appellate review of claim construction; there is no analysis of how deference would be applied to the diversity of old and new technologies and modes of claiming, no clear exposition of fact or law as could be applicable to the millions of unexpired patents, each on a different new technologic advance. 

Commenting on the dissent, Judge Newman questioned the presumption that a majority of the legal community believed Cybor was wrongly decided and noted that 21 of the amici briefs urged its retention.  Judge Newman also noted that much of the research data cited by the dissent was "obsolete" and observed that Fed. R. Civ. Pro. 56(a)(6) does not go to the issue of the case—whether claim construction is a question of law or of fact.

The Concurring Opinion

In his concurring opinion, Judge Lourie explained that claim construction is, in its essence,  a question of law, notwithstanding that it is a "mongrel" question (of law and fact) and noted the congressional purpose (in creating the Federal Circuit) was to "achieve uniformity in the patent law."  As Lourie explained, "[i]t is not rare that a patent is asserted against more than one defendant in different forums, with conflicting holdings on infringement.  It would hardly promote uniformity of patent law for us to bless a claim construction in one district court, based on the court's judging the credibility and demeanor of the expert witnesses in one case, when a different case might lead to a different result based on a different district judge's appraisal of different witnesses."

Part of the problem, in Judge Lourie's view is that "[h]ired "experts" supporting the parties' theories of infringement or non-infringement take positions that are also distinct and isolated from (and often different from) those originally taken by the inventor and attorney, who knew what the invention was and what positions were taken in the Patent Office during prosecution."  These "actors" who take the stage in the district court are "not those who made the invention."  The solution to the problem, in Lourie's view, "does not lie in depriving the one institution charged with ensuring uniformity of part of its authority."

Judge Lourie observed that even under the Cybor rule, Federal Circuit panels carefully consider the work of the district courts, but sometimes just do not agree with their claim construction conclusions.  In other words, even operating under Cybor, there is substantial, albeit "informal," deference.  Notwithstanding the value of the district court's work and its impressions of the witnesses, Judge Lourie noted that claim construction should be largely determined by the intrinsic evidence (which the hired witnesses, regardless of their demeanor in court, cannot override).

The Dissent

The dissent, insisting that criticism of Cybor has been overwhelming among legal scholars and practitioners as well as among members of the Federal Circuit, noted the "heated" debate within the court, and questioned whether stare decisis was the right answer to the tidal wave of criticism:  "... the majority suggests, for the first time in the ongoing debate over it, that Cybor is too firmly established in our case law to be rethought."  

The dissent also pointedly noted Judge Newman's dissent (as well as the concurrences by Judge Mayer and Judge Plager) in the Cybor case, in support of the fact/law dichotomy that is part and parcel of claim construction practice.

In an unusually sharply worded attack on the stare decisis basis articulated by the majority for retaining the Cybor standard of review, Judge O'Malley wrote:

The fact that we have been engaged in a flawed practice for too long does not, alone, create the type of settled expectations stare decisis is meant to protect.  Because settled expectations will not be disrupted and no substantive rights will be reordered, stare decisis simply does not stand in the way of this court addressing the merits of Cybor and acknowledging that the rule of law pronounced therein is an incorrect one.

The dissent also faults Cybor as being in contravention of the standard of review for fact finding required by Fed R Civ Pro 52 (a)(6) to the effect that embedded findings of fact (as is entailed in claim construction) "... must not be set aside unless clearly erroneous ... ."  Said Judge O'Malley "[w]e should bring our case law in line with the directives of Rule 52(a)(6), as we are required to do ... ."

Finally, the dissent criticizes the Cybor rule as creating "greater incentives for losing parties to appeal, thus discouraging settlement and increasing the length and cost of litigation, and also attacks the notion that Cybor review leads to greater uniformity or predictability, pointing to cases where different panels of the Federal Circuit have construed the same term of the same claim differently.

Practice Note

Given the sharp divergence of the en banc Federal Circuit in this case, and the fundamental nature of the claim construction issues involved, it would not be surprising to see the Supreme Court, which has in the last few years demonstrated a proclivity to tackle controversial intellectual property issues,  take this case for review. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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