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Patent cases are notoriously expensive. Litigants spend a significant chunk of their money on claim construction — translating technical claim jargon into ordinary language. The reason is that claim construction usually determines the two root issues in every patent case: whether the inventor has a valid patent claim and whether the defendant infringed that patent. In 1995, the U.S. Court of Appeals for the Federal Circuit held in Markman v. Westview Instruments Inc. that the key question of claim construction was one of law within the sole province of the trial judge. This watershed opinion overruled prior cases permitting juries to determine claim meaning, if the claim was based on an underlying factual dispute (such as conflicting expert testimony). In 1998′s Cybor Corp. v. FAS Technologies Inc., the Federal Circuit held further that Markman decisions made by U.S. district courts are entitled to no deference on appeal. The en banc majority predicted that the de novo review standard would provide national uniformity to the process of construing patent claims, presumably resulting in increasingly clear guidance to the trial courts and fewer claim construction reversals. Several appellate judges disagreed, however. Judge Randall R. Rader, one of the most vocal dissenters, pointed out that the Federal Circuit should defer to the trial court’s construction when it was based on factual determinations, just as appellate judges defer to trial courts’ factual findings in other areas of the law. Rader pointed out that since the Federal Circuit had decided Markman, reversal rates on claim-construction issues exceeded 40 percent. “This reversal rate,” he opined, “is the worst possible. Even a rate that was much higher would provide greater security.” History, it seems, favors Rader’s dark prediction. While commentators differ as to precise numbers, patent scholars generally agree that the Federal Circuit’s reversal rate on claim-construction decisions is high. A study by professor Kimberly A. Moore published in the Harvard Journal of Law & Technology in 2001 pegs the Federal Circuit’s reversal rate on Markman decisions at 33 percent, while a study by Christian Chu published in the Berkeley Technology Law Journal in 2001 pegs it at 40 percent. Notably, these figures are roughly twice the average reversal rate for the other U.S. Courts of Appeals, according to professor Jill Fisch’s March 1991 article in the Cornell Law Review entitled “Rewriting History: The Propriety of Eradicating Prior Decisional Law Through Settlement and Vacatur.” The effect of the elevated reversal rate in patent cases has been dramatic. Despite the fact that the parties and the trial court spend enormous resources on a pre-trial Markman hearing — which generally includes hundreds of pages of briefing, truckloads of exhibits, numerous highly credentialed (or at least highly paid) experts and hours of argument — no one knows whether the trial court’s ruling will stand. This expense and delay increase if the U.S. district judge first delegates the claim-construction decision to a U.S. magistrate judge or court master (or both), since the litigants then will re-assert all the same arguments at each link in the chain up to the district court. Once the court master, U.S. magistrate judge or U.S. district judge renders the Markman decision, the court and the parties must then embark upon the costly and time consuming discovery and trial-preparation process. Next, they try the case (typically with a jury) simply to ready the case for a de novo claim construction by the Federal Circuit. During this lengthy stage, all involved know about the approximately 40 percent chance that the Federal Circuit will reverse the decision — along with the jury’s verdict — and the entire process will begin again. WHY SO HIGH? Why is the reversal rate so high? Commentators point to the difficulty trial judges experience in assessing technical claims from the perspective of one skilled in the art, to the complex nature of patent claim construction itself and to an activist Federal Circuit. No matter the cause, placement of the ultimate claim construction decision at the end of the case acts as an impediment to settlement. If a party who spent several million dollars loses at trial, why not spend another $100,000 to roll the dice with a near-50 percent chance on appeal? No reason exists not to take the chance. Unfortunately, delay and skyrocketing attorney fees result, a combination that puts patent litigation out of reach of most inventors. The time has come for the U.S. Congress to revisit the claim construction review standard. A workable solution need not result in perfect claim construction; rather, it should focus on the practical realities of litigation the parties face. The patent system’s objective is rewarding innovation while increasing useful public knowledge. If enforcing a patent becomes so expensive that only mega-corporations can afford the exercise or if the process takes so long that the technology (and inventors) die before a judge issues a final decision, then the system needs reworking. Congress can mitigate these problems by re-examining the claim-construction standard of review. The legal system entrusts trial judges in nearly every other area of the law with making correct decisions. When the trial judge bases those decisions on underlying factual determinations, appellate courts give them broad deference on appeal. This permanence of most trial court decisions informs the parties early on which way the wind is blowing, and this promotes certainty and settlement. Who wants to invest further money in a difficult case when there is only a limited chance of appellate reversal? Because most litigants don’t want to throw good money after bad, the case ends there, and the parties go their separate ways. Modifying the standard of review for claim construction would not be without problems. Some commentators believe that placing more claim construction authority in the trial court sacrifices uniformity for certainty. On the other hand, national uniformity provides little consolation to an inventor of modest means who learns, after the trial court issues a claim construction ruling in his favor, that his opponent will simply outspend him on the road to the Federal Circuit (where all bets are off and the favorable claim construction is of doubtful value). But in all policy matters, Congress must make difficult judgment calls and balance competing interests. Now is the time for legislators to enter the claim-construction debate. Steve Malin is senior counsel in the Dallas office of Sidley Austin Brown & Wood. He practices commercial and patent litigation in Texas and around the country. The views expressed herein are the author’s and do not necessarily reflect the views of Sidley Austin Brown & Wood. If you are interested in submitting an article to Law.com, please click here for our submission guidelines.

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