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E-business legend Mark Breier’s model for doing business at Internet speed is “Ready, fire, aim.” Breier, author of “The 10-Second Internet Manager,” a book that has become a primer for today’s corporate leaders, says that companies need to be able to move “to the speed of the new world economy” and worry about the details later. But for corporations anxious to resolve patent disputes, their present mode of existence is more like “ready, aim, aim, aim and fire somewhere way, way off in the future.” The delay is the unintentional fallout from a 1994 U.S. Supreme Court case that was supposed to add speed and predictability to patent cases, many intellectual property lawyers say. The case is Markman v. Westview Instruments, 517 U.S. 370 (1996), aff’d 52 F.3d 967 (Fed. Cir. 1996). In Markman, the high court said that “judges, not jurors, are the better suited to find the acquired meaning of patent terms.” Before this case was decided, patent trials had wildly inconsistent results because, many said, lay juries had to struggle with the technical and scientific complexities of patent claims. After Markman, trial court judges began holding separate proceedings away from the jury — so-called Markman hearings — to determine the scope of a patent’s claims. Now, however, many IP specialists see an alarming pattern of reversing trial court judges on Markman issues by the U.S. Court of Appeals for the Federal Circuit, says Professor Mark Lemley of the University of California at Berkeley (Boalt Hall). Some studies show as high as a 40 percent Markman reversal rate by the appellate court. Jerry R. Selinger has heard “underground rumblings” of discontent with the present process. Selinger, a partner in Dallas’ Jenkens & Gilchrist, says that the subject has been coming up at nearly every meeting of the intellectual property bar. GETTING AN EARFUL When the Intellectual Property Owners Association met in Dallas in November, “there were informal discussions about this issue,” says Herbert C. Walmsley, that organization’s executive director. “It was a question people thought was interesting.” Federal Circuit Judge Arthur Gajarsa was present at that meeting and, according to several meeting attendees, got an earful of complaints on the subject. Concerns about Markman are “extremely widespread,” says Lyerla. “There’s a real sense of fatalism among the patent trial bar, shared by the district court judges, that no matter how careful we are in trying to apply what the court says about Markman, there’s a high likelihood that on review, the [Federal Circuit] will change the construction of the claims.” When the Markman case itself was originally sent back to the Federal Circuit, the court refused to consider claims construction — i.e., the bounds of technology that the patentee is claiming — on an intermediate basis. Instead, it insisted that the litigants wait until the case was tried to conclusion in the lower court. This set a precedent for handling claims construction questions, now generally referred to as Markman issues. It means that a party who is unhappy with a trial judge’s ruling cannot appeal without going through the delay and expense of a full-blown trial, with discovery, expert witnesses and, often, economic analysts. “Clients tend to be bottom-line, and the two things they focus on in patent litigation [are] ‘How much is this going to cost me?’ and ‘How long will it take?’ ” says Bradford P. Lyerla of Chicago’s Wallenstein & Wagner. “ Markman has added a whole new level of lawyering and cost, both in terms of absolute dollars and … delay.” REBUKE FOR A JUDGE In early November, in a key business-method patent case, the Federal Circuit rebuked U.S. District Judge Barbara S. Jones for what it considered her incorrect determinations of the patent claims, saying that she “impermissibly read limitations” into the claim-construction. Interactive Gift Express (now known as E-Data Corp.) v. CompuServe Inc., 99-1324. Senior patent specialist Herbert F. Schwartz of New York’s Fish & Neave was not involved in the case. But he followed it closely, and, like Lyerla, he sees a growing problem with Markman reversals, including the discouragement of federal judges who have tried their best to unravel complex patent claims. “I have been before at least one district judge who said he didn’t care what anybody did because it would be reversed in the Federal Circuit anyway,” says Schwartz. The appeals court “leaves the judges hanging out there, and if the judge is wrong, the jury trial is for naught,” complains Arthur Wineburg, a partner in the Washington, D.C., office of Pillsbury Winthrop. Several federal judges in Texas have been vocal about their frustration with the Federal Circuit’s Markman reversals, which bounce the whole case back into their courts again. Judge Samuel B. Kent, who sits in Galveston, Texas, has been widely heard to refer to Federal Circuit judges as “little green men wearing propeller hats who don’t know Tuesday from Philadelphia.” He was not available for comment, but his colleague, Judge Sam Sparks, who sits in Austin, confirms the quote and says that the present situation is not fair to the litigants or the overburdened judges in his district. “We have the heaviest docket in the country, and right now I have 3,600 people in between 45 and 50 jails awaiting trial in this district.” Sparks says he understands that refusing to take intermediate Markman appeals saves the Federal Circuit from having to see the same patent case twice, but “it’s just too damn bad,” he says. “The old ‘I don’t want any more work’ theory just won’t wash.” Some judges simply stopped holding separate early Markman hearings, notes Selinger. Others make them short and sweet, says James W. Cannon Jr., a partner in the Austin, Texas, office of Palo Alto, Calif.’s Gray Cary Ware & Freidenrich. He says that one federal judge in his district used to hold four-day Markman proceedings, “and now he has a rule that the hearings have to last three hours” at most. Professor Robert Merges, who heads the Center for Law and Technology at Boalt Hall, says that several legal academics around the nation are studying whether judges who are well-known to the Federal Circuit are less likely to be reversed than those who have a lot of patent cases go up to the appeals court. Wineburg says this may be the case. “There is a certain fraternity there, when judges see one another at IP conferences or whatever. Where there’s a familiarity, there’s a deference,” he says. Selinger has been floating a proposal for a statutory change that would permit intermediate Markman appeals to the Federal Circuit. He calls it the “cost containment legislative proposal.” In light of patent infringement trial costs ranging between $1.5 million and $3.5 million, reported in a survey conducted by the Law Practice Management Committee of the American Intellectual Property Law Association (AIPLA), Selinger predicts that even a nearly deadlocked Congress will take some action. The measure would amend Section 1292(a) of Title 29 of the U.S. Code to provide an absolute right to an interlocutory appeal of Markman issues. He presented his proposal at an international intellectual property conference at The Hague, and it is presently being reviewed by AIPLA. Professor Merges says, however, that the high reversal rates may be pointing to a deeper problem. “Claims construction may turn out to be a fundamentally more uncertain proposal than we thought,” he says. “If reasonable minds can differ about this many claims, then certainty and stability may be more difficult to achieve than we ever thought.”

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