Fed. Cir. confirms de novo review of claim construction


The Fed. Cir. took this case en banc to consider whether the de novo review standard set forth in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), should be overruled. The en banc Fed. Cir. confirms that de novo appellate review applies to district court decisions concerning claim construction, and reinstates its previously-withdrawn panel opinion:

For the reasons we shall discuss, we apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law. After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman II, and that the criteria for departure from stare decisis are not met.

Slip op. at 7. Judges Chen and Hughes did not participate.

Lighting Ballast Control LLC v. Philips Electronics North America Corp., ___ F.3d ___ (Fed. Cir. Feb. 21, 2014) (en banc) (N.D. Tex.) (5 of 5 stars)

Majority Opinion (NEWMAN, Lourie, Dyk, Prost, Moore, Taranto): After summarizing the positions of the parties and amici, the Fed. Cir. ruled that, under the doctrine of stare decisis, "a compelling justification" is required to overturn a rule already in place. Id. at 17. The Fed. Cir. found no such justification. No judicial or legislative developments post-Cybor required overturning the de novo standard adopted in Cybor. Nor could the Fed. Cir. find proof that the de novo standard has been unworkable. And the Fed. Cir. noted the lack of agreement on any preferable new mechanism for appellate review of claim construction, and the lack of consensus that a different appellate review standard would improve claim construction outcomes. Slip op. at 21-22. The Fed. Cir. disputed that district courts' occasional reliance on extrinsic evidence necessarily amounted to fact finding, pointing out that courts interpreting statutes routinely consult dictionaries and treatises for aid.

The Fed. Cir. noted a prospect for confusion and disparate outcomes e.g., when the same patent is litigated in multiple districts upon departure from a de novo review standard. Such result would be incompatible with the Fed. Cir.'s mandate to promote uniformity in the patent laws. The Fed. Cir. thus concluded, "The proponents of overruling Cybor have not met the demanding standards of the doctrine of stare decisis." Id. at 26.

The Fed. Cir. also responded to several statements in the dissent. It disagreed that the legal community disfavored Cybor to the extent suggested in the dissent, and noted that a number of large corporations had appeared as amici favoring Cybor. The Fed. Cir. also emphasized that, while some of its members (and even members part of the majority in this appeal) had previously raised questions about Cybor, the question in the present appeal is not the same as the question presented in 1998, due to stare decisis considerations. The Fed. Cir. also wrote that the dissent had offered "no superior alternative to de novo review, nor any workable standard for distinguishing between legal and factual components of claim construction." Id. at 31. The Fed. Cir. further explained that Federal Rule 52(a)(6), which requires deference to fact finding, is not controlling because “courts must look outside the Rule to decide if a question is properly characterized as one of fact.” Id. at 34. Finally, the Fed. Cir. cited evidence indicating that Cybor's rule did not impose unwanted effects on either the Fed. Cir.'s reversal rate for claim construction matters, the overall cost of litigation, or parties' willingness to settle.

Judge Lourie's Concurrence: Judge Lourie wrote that, in holding claim construction a question of law, the Fed. Cir. had "go[ne] only minimally beyond the [Supreme] Court's explicit holding that it is only a question for the court." Concur. at 2. An alternate rule would fail to promote uniformity, and might put the Fed. Cir. in the position of confirming conflicting claim constructions for the same patent.

Judge Lourie responded to criticism, sometimes leveled at the Fed. Cir., "for allegedly ignoring all the fine work of district court judges in construing patent claims. That criticism is premised on the misperception that we do not give a district court's claim construction any deference." Id. at 4. The Fed Cir carefully considers the work of the district court in evaluating claim construction.

Judge Lourie rejected the suggestion that claim construction could be split into legal and factual issues. "[I]n claim construction, simpler is better[.]" Id. at 6. And he characterized proposed solutions as “engaging in a kind of sham” that would harm the goal of promoting national uniformity. Id. at 7.

Judge O'Malley's Dissent (Rader, Reyna, Wallach, joining): Judge O'Malley would have overturned Cybor and would have treated the ultimate question of claim interpretation as a question of law subject to de novo review, but district courts' decisions on underlying fact questions as fact-finding reviewed only for clear error.

Judge O'Malley wrote that stare decisis should not be used to justify continued application of an incorrect rule. Judge O'Malley disputed that Cybor had led to any settled expectations, citing a number of instances where jurists, practitioners, and academics criticized Cybor. She also cited evidence that claim construction is panel-dependent at the Fed. Cir., and argued that this undermined any contention that Cybor led to uniformity.

Judge O'Malley argued that Cybor misinterprets Markman. She pointed out that Markman acknowledged fact issues in the claim construction process, and argued that de novo review is incompatible with such issues. She disputed that the Supreme Court had anywhere endorsed reviewing such fact issues with anything other than the normal deference given to fact findings. And, in the present appeal, Judge O'Malley pointed out that extrinsic evidence was necessary to determine whether to apply means-plus-function treatment to a claim term. Such demonstrates the incorrectness of Cybor's rule that claim construction is a purely legal process.

Judge O'Malley also argued that, by imposing de novo review, Cybor contravenes Rule 52(a). In other circumstances in patent law (e.g., the legal determination of obviousness), the underlying fact issues are given deferential review. Judge O'Malley argued that Cybor is an outlier and should not be continued.

Finally, Judge O'Malley recited evidence that Cybor's rule has led to a variety of "undesired consequences" that militate for its overturn. For example, under Cybor, neither parties nor district courts can safely rely on claim constructions until after appellate proceedings, thus increasing expenses and discouraging settlement. Judge O'Malley pointed to the government's amicus brief endorsing a shift to some "hybrid" appellate review standard, and would have implemented such a standard.

This article first appeared on Fish’s Litigation Blogand similar blog posts are available here.