ALM Properties, Inc.
Page printed from: Corporate Counsel
Select 'Print' in your browser menu to print this document.
On March 15, 2013, the U.S. Court of Appeals for the Federal Circuit agreed to consider en banc whether claim construction decisions made by district courts should be given deference on appeal. This action may have profound implications for biotech patents in the years ahead. The Federal Circuit's standard for review of claim construction decisions, as stated in Cybor v. FAS Techs., is "as a purely legal question, [the court reviews] claim construction de novo on appeal including any allegedly fact-based questions relating to claim construction." The Federal Circuit granted the request to reconsider Cybor in response to Lighting Ballast Control LLC's 2012 petition for a rehearing en banc in Lighting Ballast Control v. Philips Electronics North America.
That the Federal Circuit has ordered en banc review of Lighting Ballast is noteworthy, and marks a potentially important development for biotechnology patent litigants. According to a 2012 study by PricewaterhouseCoopers, biotechnology patent cases are on the rise: The number of court decisions in the biotechnology/pharma industry has increased nearly threefold, from 40 in the 19952000 timeframe to 112 between 2006 and 2011. (See 2012 Patent Litigation Study.) Indeed, the Cybor issue has been previously addressed in biotechnology cases and will remain an important issue in such matters going forward. For example:
Under the U.S. Supreme Court's decision in Markman v. Westview Instruments (1996), claim constructionthe interpretation of terms in patent claimsis a matter of law for courts, not juries, to decide. Patent claims, appended to the end of a patent, define the boundaries of the patentee's right to exclude others from practicing the invention. Such terms are generally given their ordinary and customary meaning as understood by a person of ordinary skill in the relevant art at the time of the invention.
In the wake of Markman, many federal courts around the country have adopted claim construction procedures (often referred to as "Markman hearings") by which courts receive briefing and evidence (often in the form of expert testimony) related to the proper interpretation of patent claims to assist the court in construing them. Typically, the parties exchange not only proposed definitions for disputed terms but factual evidence (e.g., definitions from dictionaries or technical treatises and information from the written record of patent examination before the Patent and Trademark Office) in support of their proposed constructions. It is commonplace for courts to issue a "Markman" ruling in which the court construes disputed claim terms and provides its rationale for its constructions (including their factual underpinnings). Armed with those constructions, the parties can further develop their respective positions related to infringement, validity, and enforceability.
Claim construction orders are not generally subject to appeal before the proceedings in the district court have reached their conclusion. Thus, even though a claim construction ruling may be issued early in a case, the Federal Circuit will not review a claim construction decision until after the proceedings in the district court are concluded. When the Federal Circuit reviews claim construction rulings, they are reviewed anew, without any deference to findings made by the district court.
That the Federal Circuit has ordered en banc review of the Lighting Ballast decision is noteworthy, and marks a potentially important development for patent litigants. Commentators routinely criticize the Federal Circuit's current standard per Cybor under which factual determinations made in connection with claim construction are not given deference on appeal. Many assert that the Federal Circuit's standard results in an unnecessarily high reversal rate at the Federal Circuit, which in turn results in greater uncertainty and increased litigation costs.
Indeed, some of the most outspoken critics of Cybor include sitting Federal Circuit judges, who have lamented that although de novo review of claim construction was intended to increase certainty in the patent laws, it has contributed to high reversal rates of district court claim construction decisions.
Chief Judge Rader has been particularly outspoken against de novo review of claim construction. In his Cybor dissent, he wrote: "The current . . . regime means that the trial court's early claim interpretation provides no early certainty at all, but only opens the bidding. The meaning of a claim is not certain (and the parties are not prepared to settle) until nearly the last step in the processdecision by the Court of Appeals for the Federal Circuit."
In 2012 the Federal Circuit considered the amount of deference that a district court should be granted in another context in the case of Highmark v. Allcare Health Management Systems. In Highmark, en banc review was denied by a 6-to-5 vote. The five dissenters joined in a dissent that cautioned against "usurp[ing] the province of the fact finder with our de novo review" and noted that it has "done it with claim construction."
Notably, two of the judges from the Highmark majority (Judges Linn and Bryson) have taken senior status and will not vote in en banc review of the Lighting Ballast case. It is thus possible that the five dissenters from Highmark (Chief Judge Rader and Judges Moore, O'Malley, Reyna, and Wallach) may form the core of a majority overturning Cybor. Indeed, the current pace of judicial appointments may enhance the prospects that Cybor is overturned. As noted, five judges in Highmark already signaled the desire to revisit Cybor. With only 10 of the usual contingent of 12 judges sitting (the two nominees to replace Judges Linn and Bryson are still under consideration by the Senate Judiciary Committee; no dates have been set for confirmation hearings), a vote against Cybor by recently seated Judge Taranto in the Lighting Ballast case would be enough to doom it.
A decision by the Federal Circuit overruling Cybor has the potential to change the landscape of patent litigation by making it more difficult to overturn a district court's decision on appeal. Whereas practitioners have generally viewed claim construction as potentially case-dispositive, litigants on the receiving end of unfavorable claim construction orders have derived some comfort in knowing that the Federal Circuit will review claim construction de novo. But a Lighting Ballast decision overturning Cybor may change that, and prompt litigants to place even greater importance on the claim construction process. Indeed, one might expect that such a decision would lead to a greater occurrence of settlement in the immediate aftermath of claim construction.
The Federal Circuit is allowing briefs of amici curiae to be submitted in Lighting Ballast without prior consent of the court; oral argument has not yet been scheduled, although it appears likely to be scheduled for the fall. The outcome of this case may have profound ramifications for your company's patents, whether in biotech or other intellectual property areas, for years to come.
Kurt G. Calia is a partner in the Redwood Shores, California, office of Covington & Burling. Megan Keane is an associate in the firm's Washington, D.C., office. Both work extensively with the life sciences industry.