Rader Leaves Federal Circuit With Unfinished Business

Rader Leaves Federal Circuit With Unfinished Business Diego M. Radzinschi / The National Law Journal Judge Randall Rader, U.S. Court of Appeals for the Federal Circuit

SAN FRANCISCO — With a public thank-you to bench, bar and court staff, Randall Rader left the Federal Circuit courthouse for the last time today as a judge.

Remaining behind, though, is a $360 million verdict against Apple Inc. that could have multimillion-dollar implications for other big tech companies. Rader heard argument in VirnetX v. Cisco Systems in March along with Judges Sharon Prost and Raymond Chen, but the court had not ruled in the case as of Monday.

Experts on the U.S. Court of Appeals for the Federal Circuit said Monday that means the court will either rule 2-0 in the case—if Prost and Chen are in unanimous agreement—or add a new judge to the panel and possibly set a rehearing.

Rader dominated the March 3 argument, some of which involved the “Nash bargaining” damages theory advanced by VirnetX’s expert witness. Nash bargaining, a hypothetical negotiation which begins with a presumption that licensor and licensee would split incremental profit 50-50, is controversial within district courts. Rader didn’t sound as if he cared for it.

“Nash bargaining—is it ever anything other than 50-50?” he asked VirnetX counsel J. Michael Jakes, a partner at Finnegan Henderson Farabow Garrett & Dunner. “Isn’t that a rule of thumb? Didn’t we just smack that down in Uniloc?”

The outcome of this appeal also could affect VirnetX litigation that’s pending against Cisco Systems Inc. and Microsoft Corp., according to Apple’s appellate brief, filed by Wilmer Cutler Pickering Hale and Dorr partner William Lee. VirnetX also has conducted an “aggressive ‘pure IP licensing’ campaign” against companies such as Google Inc., Cisco, Sony Corp., Samsung Electronics Co., Verizon Communications Inc. and International Business Machines Corp., Lee wrote.

If the court ultimately does rule 2-0 without Rader, it would be consistent with Federal Circuit quorum rules and not without precedent, said Perkins Coie partner Dan Bagatell. He noted that the Federal Circuit issued some opinions 2-0 following the retirement of former Chief Judge Paul Michel and the 2011 death of Judge Daniel Friedman.

Those cases didn’t involve one of the 10 biggest patent awards in the last 15 years, but Bagatell and Emory Law professor Timothy Holbrook, neither of whom is involved in the case, said they doubt that would matter. “There’s always a petition for hearing en banc that can be filed” if the losing party objects to the 2-0 vote, Holbrook noted.

Rader, meanwhile, waxed philosophical in a farewell email circulated by Foley & Lardner’s Harold Wegner. “Time flies on wings of lightning,” Rader wrote, as court veterans such as himself, William Bryson, Pauline Newman and Alan Lourie will soon be passing the torch to a newer generation of jurists.

“Just as legendary judges pass perpetually the torch to new judges, so too Don Dunner, Bill Lee, Seth Waxman and others have set standards of excellence that will be matched by newer attorneys who will become themselves legends of reason and persuasion,” Rader added.

Rader resigned as chief judge last month and ultimately from the court altogether while issuing an open apology to his colleagues for an effusive email to Weil, Gotshal & Manges partner Edward Reines that could have been read as an open endorsement of Reines’ skills.

On Monday, Rader said he would exit the court with a high-five to the court’s security officers while symbolically honoring Circuit Executive Daniel O’Toole and other court staff. “With eyes misted over with magnificent memories,” he wrote, “I will then turn my gaze to the horizon.”

Contact the reporter at sgraham@alm.com.

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