SAN FRANCISCO — Something funny happened on the way to giving district judges more deference on claims construction.
The U.S. Court of Appeals for the Federal Circuit surprised the patent community Friday by voting 6-4 to leave Cybor v. FAS Technologies on the books, meaning claim construction decisions remain subject to de novo review at the Federal Circuit. The decision figures to please large technology companies who urged the court to stick with the precedent, while frustrating district judges who don’t like seeing the time and effort invested in patent litigation upended in the absence of clear error.
Given the Federal Circuit’s move to reconsider Cybor en banc, the acquiescence of the party supporting it, and the U.S. government’s support for at least a partial overrule, it appeared last summer that Cybor‘s controversial 15-year reign was surely nearing an end.
But Judges Pauline Newman and Kimberly Moore, who have strongly criticized Cybor in the past, joined a majority that said principles of stare decisis compel staying the course. “The purposes of consistency and stability that underlie stare decisis led to the formation of the Federal Circuit, now 30 years past, to provide consistency and stability to the patent law,” Newman wrote for the court.
Dissenting Judge Kathleen O’Malley sounded almost betrayed. “Two members of the current majority have been among the harshest critics of Cybor—contending on multiple, and even recent, occasions that it was poorly reasoned, impractical, and should be reversed,” she wrote. But today, “the pull of stare decisis is so strong that it prevents them from acting on their long-term convictions.”
Berkeley attorney Andrew Dhuey, who had made the case for overruling Cybor on behalf of appellee Lighting Ballast Control, could only make light of the result. “I’m a little jet-lagged,” he emailed from Tokyo, where he’s preparing to run a marathon. “I thought I just saw Judges Newman and Moore vote to keep Cybor in force. I’ll try reading this again after I’ve had some sleep.”
The decision in Lighting Ballast Control v. Philips Electronics does not come as a complete surprise for one reason. The en banc call came in March, while three seats on the Federal Circuit were vacant and only five votes were needed for a majority. Judge Richard Taranto joined the court shortly afterward, and during September’s hearing it was he who pressed the stare decisis issue from the bench.
Weil, Gotshal & Manges partner Edward Reines, who is president of the Federal Circuit Advisory Council, said the ruling came down to “if it ain’t broke, don’t fix it.”
“The judges in the majority feel like they’ve been able to manage the claims construction process well, and they don’t want to loosen the reins,” Reines said. That was worth accepting the legal fiction that findings of fact don’t play a role in claims construction, “and creating discomfort with district court judges.”
Former Chief Judge James Ware of the Northern District of California said the problem from the district judge’s perspective is that claims construction occurs relatively early in patent litigation. Judges and the litigants sink a lot of time into issues like validity and infringement afterward. “Much of that work would be saved if we knew ahead of time it was not going to be upheld because there was going to be a different claims construction,” said Ware, who handled numerous patent cases as a judge and now mediates them at JAMS.
The Federal Circuit could solve the problem by permitting interim appellate review of claims, Ware said. But he acknowledged “that does shift a tremendous amount of workload to them.”
The Federal Circuit may not have the final word on Cybor, though. Given the 6-4 split and the intense amicus interest—to say nothing of an outcome at odds with the solicitor general—it would not be surprising if the Supreme Court granted certiorari. Hints could be dropped next week when the Supreme Court weighs the Federal Circuit’s standard for deference on attorney fee awards in patent cases.
“It strikes at the institutional center of the judicial system,” Reines said. On the other hand, there’s not a lot of case law on reviewing mixed questions of law and fact in the patent context, he said, and the court could be wary of biting off more than it could chew.
Lighting Ballast Control, a subsidiary of patent house Acacia Research Group, sued Philips, Universal Lighting Technologies Inc. and others for allegedly infringing Lighting Ballast’s ’529 patent, a device for controlling electrical current in fluorescent lights. The patent refers to a “voltage source means,” which Universal says is vague but which Lighting Ballast’s expert witness said would be understood by electricians to mean a rectifier—a device that converts AC current to DC. Lighting Ballast eventually won a $4.5 million judgment at trial.
A three-judge Federal Circuit panel threw out the judgment, saying the trial judge misconstrued Lighting Ballast’s patent. That led to the en banc call on whether claims construction is too easily overturned under Cybor.
Tech companies ranging from Google Inc. to Microsoft Corp. to Cisco Systems Inc. filed amicus briefs urging the court to keep Cybor in place, warning that a more deferential standard would turn claims construction into an expensive battle of experts in which owners of vaguely written patents try to create bulletproof records on appeal.
Lighting Ballast argued that claims construction is steeped in factual questions, such as what persons skilled in the art would have understood certain terms to mean at the time of drafting. Under Federal Rule of Civil Procedure 52(a), those findings should be accepted on appeal absent clear error, Lighting Ballast argued. Amici that included the American Bar Association agreed.
The U.S. Patent and Trademark Office staked out a middle ground, saying Cybor should be overruled but that only “subsidiary” factual issues involving extrinsic evidence should get deference. Universal Lighting adopted a similar view. “Why are you not arguing for the retention of Cybor?” Judge Timothy Dyk asked the company’s attorney at oral argument. “Are you assuming the court’s already decided that?”
It turned out Friday the court had not.
“After 15 years of experience with Cybor, we conclude that the court should retain plenary review of claim construction,” Newman wrote, “thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims.”
Plus, she wrote, “no one, including the dissent, proposes a workable replacement standard for Cybor, no workable delineation of what constitutes fact and what constitutes law.”
Newman was joined by Moore, Taranto, Dyk and Judges Alan Lourie and Sharon Prost.
Lourie added a concurrence noting that claims construction primarily involves reading the patent and its prosecution history. “This court is quite as able to do that as any district court, sometimes better,” he wrote. If the Federal Circuit does disagree with a construction, “it is not without a degree of informal deference,” he added.
In her dissent, O’Malley—the only member of the court who’s held the position of district judge—challenged the idea that overruling Cybor would upset settled expectations. “The one thing clear about Cybor is that no one in the legal community—except perhaps the members of the majority—has come to believe that either the wisdom or vitality of Cybor is settled,” she wrote.
Even the court’s “internal debate over Cybor has been heated, and has not abated over time,” she added, singling out the criticisms Moore and Newman have leveled.
In a separate opinion filed with Cybor, Newman had written, “By continuing the fiction that there are no facts to be found in claim interpretations, we confound rather than ease the litigation process.”
As recently as 2012, Moore criticized Cybor in a dissent from denial of en banc review, “We need to avoid the temptation to label everything legal and usurp the province of the fact finder with our manufactured de novo review,” she wrote.
Chief Judge Randall Rader and Judges Jimmie Reyna and Evan Wallach joined O’Malley’s dissent.
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