3 April 2013

The Single Most Important Event In Patent Litigation: Will the Federal Circuit View It Differently?

On March 15, 2013, in a case that has significant implications for the claim interpretation process and the standard of appellate review, the Federal Circuit granted a petition for rehearing en banc of a ruling on claim interpretation.  Claim construction, the process in which courts determine the meaning of the claims of a patent, is "of substantial and ongoing importance in patent law," as the U.S. Solicitor has noted.  In Lighting Ballast Control v. Phillips Electronics, the Federal Circuit could potentially overrule the seminal 1998 case Cybor Corp. v. FAS Technologies, Inc.  In Cybor, the Federal Circuit held that "the Supreme Court's unanimous affirmance in Markman v. Westview Instruments, Inc., 116 S. Ct. 1384 (1996) (Markman II), . . .fully supports our conclusion that claim interpretation, as a purely legal issue, is subject to de novo review on appeal."  De novo review, with no deference given to the district court's claim interpretation rulings, has arguably contributed to the fact that district court patent cases have a roughly 50 percent reversal rate, and has helped make patent litigation a longer and more costly process for litigants.

Besides federal judges, who have frequently seen their claim interpretation decisions reversed, various intellectual property and legal organizations have also been critical of Cybor.  The Federal Circuit Bar Association has stated that "Cybor has produced an unacceptably high reversal rate, which spawns uncertainty, postpones resolution of patent cases, and discourages settlement."  Likewise, the American Bar Association has stated that Cybor and its de novo rule has "significantly increased the cost of patent litigation by frequently requiring relitigation of issues following a reversal."

For the rehearing en banc, the Federal Circuit has asked the parties to brief the following issues:

  • Should this court overrule Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998)?
  • Should this court afford deference to any aspect of a district court's claim interpretation?
  • If so, which aspects should be accorded deference?

The Federal Circuit has solicited briefing on these issues from the U.S. Patent and Trademark Office, as well as other interested parties.

The potential impact of the Federal Circuit's ultimate ruling is significant.  In particular, should the court overrule Cybor even partially (by holding that claim interpretation is a mixed question of law and fact, for example), parties may be more likely to settle cases after a district court decision, as the possibility of reversing the decision with a Federal Circuit appeal will have decreased.  Also, any district courts that may have been reluctant to engage in fulsome Markman hearings, complete with witnesses, could be motivated to conduct such hearings, as the district courts' ultimate rulings would be less likely to be overturned.  Finally, with a partial or complete reversal of Cybor, the cost in both time and money of patent litigation could decrease, with fewer appeals of claim interpretation rulings, and fewer remands to the district court in view of those reversed rulings.

Contact information

Steve Adkins +1 202 683 3865
Partner, Washington, D.C. steven.adkins@allenovery.com
Paul Keller +1 212 610 6414
Partner, New York paul.keller@allenovery.com
Kevin Baer +1 202 683 3868
Senior Counsel, Washington, D.C. kevin.baer@allenovery.com
Schan Duff +1 202 683 3861
Senior Counsel, Washington, D.C. schan.duff@allenovery.com
James Barabas +1 212 756 1120
Associate, New York james.barabas@allenovery.com

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