Federal Circuit En Banc Confirms De Novo Review of Claim Construction in Divided Opinion | Practical Law

Federal Circuit En Banc Confirms De Novo Review of Claim Construction in Divided Opinion | Practical Law

The US Appeals Court for the Federal Circuit issued a sharply divided 6-4 en banc decision in Lighting Ballast Control LLC v. Philips Electronics North America Corp., confirming the holding in Cybor Corp v. FAS Techs., Inc. that claim construction is subject to de novo review on appeal.

Federal Circuit En Banc Confirms De Novo Review of Claim Construction in Divided Opinion

by Practical Law Intellectual Property & Technology
Published on 25 Feb 2014 • USA (National/Federal)
The US Appeals Court for the Federal Circuit issued a sharply divided 6-4 en banc decision in Lighting Ballast Control LLC v. Philips Electronics North America Corp., confirming the holding in Cybor Corp v. FAS Techs., Inc. that claim construction is subject to de novo review on appeal.
On February 21, 2014, in Lighting Ballast Control LLC v. Philips Electronics North America Corp., the US Court of Appeals for the Federal Circuit, sitting en banc, confirmed its earlier holding in Cybor Corp v. FAS Techs., Inc. that claim construction is subject to de novo review on appeal (No. 2012-1014, (Fed. Cir. Feb. 21, 2014), 138 F.3d 1448 (Fed. Cir. 1998) (en banc)). In its sharply divided 6-4 opinion, the Federal Circuit applied the principles of stare decisis and concluded that there was neither grave necessity nor special justification for departing from Cybor's holding.

Background

This appeal arose from a patent infringement suit based on Lighting Ballast's US Patent No. 5,436,529 (the '529 patent). The district court construed the term "voltage source means" under 35 U.S.C. § 112 and a jury returned a verdict in favor of Lighting Ballast, leading to a final judgment of infringement and validity. Philips appealed the verdict, and a Federal Circuit panel changed the district court's construction of the "voltage source means" term and held the claims invalid for indefiniteness (Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 498 Fed. App'x 986 (Fed. Cir. 2013)). Lighting Ballast requested a hearing en banc, and on March 15, 2013, the Federal Circuit granted the request and vacated its earlier opinion (Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 500 Fed. App'x 951 (Fed. Cir. 2013)).
For purposes of the rehearing, the Federal Circuit asked the parties to file new briefs answering the following questions related to the de novo review standard for claim construction:
  • Should the court overrule the Cybor decision?
  • Should the court give deference to any aspect of a district court's claim construction?
  • If so, which aspects of a district court's claim construction should be given deference?
The Federal Circuit also specifically invited the US Patent and Trademark Office (USPTO) to submit its views on these questions as an amicus curaie.
In addition to the parties, 38 parties participated as amicus curaie in 21 briefs. The parties and amici were divided between the three following views on the Federal Circuit's questions:
  • The Cybor decision should be entirely discarded and replaced with deferential appellate review of claim construction under the clear error standard.
  • A hybrid approach should be adopted where the factual aspects of claim construction are reviewed under the clear error standard, while the final conclusion should be reviewed de novo as a matter of law.
  • The court should keep the de novo standard of review adopted in Cybor.

Outcome

In a 6-4 opinion, the en banc Federal Circuit confirmed the holding of Cybor and retained the de novo standard of review for claim construction decisions based on the principles of stare decisis.

Majority Opinion (Newman, Lourie, Dyk, Prost, Moore and Taranto)

Judge Newman, writing for the majority, stated that the question in this case was different from that presented in the Cybor case. Specifically, the court stated that the question was not whether to adopt a de novo standard of review for claim construction, but whether the court should change the de novo standard adopted 15 years ago and applied in many hundreds of cases. The court then stated that the principles and policies of stare decisis operate with full force when the court is asked to overturn its own en banc precedent. While the court acknowledged that there has been significant debate surrounding its Cybor decision, the court stated that there has to be more than just controversy over the rule to justify overturning it. For example, the court could depart from its precedent where:
  • Subsequent cases have undermined the doctrinal underpinnings.
  • The precedent has proved unworkable.
  • A considerable body of experience requires changing the law.
The court determined that none of these circumstances applied to this case, and stated that overturning Cybor would be more likely to diminish workability and increase burdens by adding uncertainty at the trial and appellate levels, particularly if the court adopted the hybrid approach proposed by several amici. In addition to its reliance on stare decisis, the court:
  • Rejected the proposal that the court draw a distinction between questions of law and fact in reviewing claim construction decisions because:
    • it could lead to lengthy peripheral litigation;
    • no workable proposal was presented for distinguishing between questions of law and fact;
    • claim construction is a legal statement of the scope of the patent right that turns on the content of patent documents, not witness credibility, and the presentation of expert testimony on the meaning of a claim term does not transform the claim construction question from one of law to one of fact; and
    • it would not be likely to change the outcome of many cases.
  • Declined to adopt a deferential standard because it would diminish the uniform treatment of a single patent. For example, a deferential standard could lead to:
    • the affirmance of different constructions of the same patent where the patent is litigated in different forums between different parties;
    • inconsistent results for infringement and validity of the same patent; and
    • forum shopping.
The court also provided the following remarks on the dissenting opinion:
  • Contrary to the dissent's arguments, all of the technology industries urged the court to keep the Cybor standard.
  • The dissent offered no superior alternative to the de novo review standard, nor any workable standard for distinguishing between legal and factual questions in claim construction.
  • The dissent downplays the gravity of overturning a previous en banc precedent in the absence of intervening Supreme Court or legislative action.
  • Federal Rule of Civil Procedure (FRCP) 52(a) proscribes only the standard of review for questions of fact, but does not give guidance for distinguishing between law and fact.
  • After initial high reversal rates, the rates of appellate reversal for claim construction have recently come to match the rates for other patent appeal grounds.
  • Data does not support the dissent's theory that Cybor has increased patent litigation and inhibited settlements.

Concurring Opinion (Lourie)

Although Judge Lourie joined in the majority opinion, he also wrote a concurring opinion to note some additional reasons for retaining Cybor, including that:
  • The US Supreme Court has held that claim construction is a question of law for the court rather than the jury.
  • One of the purposes for creating the Federal Circuit court was to achieve uniformity in patent law, and uniformity of claim construction through de novo review is consistent with that goal.
  • The court already gives informal deference to district courts when reviewing claim construction, even under the current de novo standard.

Dissenting Opinion (O'Malley, Rader, Reyna and Wallach)

The dissent emphasized the widespread debate over the Cybor decision and sharply criticized the majority's reliance on stare decisis as the basis for retaining a de novo standard of review for claim construction. The dissent further argued that:
  • The Federal Circuit should overturn its precedent in this case, like it has done before where the case law:
    • was wrongly decided;
    • is at odds with congressional directives; or
    • has had negative consequences.
  • Reversing Cybor would not upset settled expectations and would not reorder any substantive rights.
  • Cybor is based on the faulty premise that claim construction is a purely legal question that does not present factual issues.
  • Cybor contravenes the clear directives of FRCP 52(a)(6), which requires that findings of fact must not be set aside on appeal unless they are clearly erroneous.
  • There have been undesired consequences flowing from the court's claim construction precedent, including that:
    • parties and the district courts are subject to greater instability and expense because full trials are held based on a claim construction opinion that may later be overturned on de novo appellate review;
    • the Federal Circuit lacks the tools that district courts have available to resolve factual disputes fairly and accurately;
    • Cybor creates greater incentives for losing parties to appeal, thereby discouraging settlements and increasing the length and cost of litigation; and
    • Cybor has not promoted uniformity or predictability in patent cases.
The dissent agreed with the majority view that the ultimate question of claim meaning should remain subject to de novo review, but argued that FRCP 52(a) requires the court to give deference to the factual findings needed to reach the claim construction decision.

Practical Implications

While the Federal Circuit decision did not change the existing standard of review for claim construction decisions, the sharply divided opinions suggest that the issue of appellate review of claim construction is not completely settled. Until the Supreme Court issues guidance on this question, patent litigants should be prepared to litigate issues of claim construction both at the district court level and on appeal and can expect that the results of claim construction appeals will continue to depend on the assigned appellate panel.