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Significant Changes in Patent Litigation May Be on the Horizon

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The Federal Circuit recently decided to have the entire court consider en banc whether the court should overrule its longstanding rule that patent claim construction is a purely legal question which is reviewed de novo on appeal. This development may foreshadow significant changes in patent litigation practice.

A brief historical discussion will highlight the potential impact if the Federal Circuit changes the de novo standard of review for questions of patent claim construction.

In 1996, the Supreme Court held that the construction of patent claims, including terms of art within the claims, was exclusively within the province of the court to decide. Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996). This immediately had two significant impacts on patent litigation. First, district courts started scheduling Markman hearings in advance of trial in order to decide issues of patent claim construction. Second, it immediately became apparent that the subsequent trial on the merits could involve significant wasted resources if it was later determined on appeal that the district court made a material error in its Markman decision. Consequently, in the wake of the Supreme Court decision, a number of district courts certified their Markman decisions for an interlocutory appeal pursuant to 28 U.S.C. §1292(b). However, the Federal Circuit declined to take such interlocutory appeals, because if the court of appeals did so, every patent case would likely end up being appealed twice, and the determination of patent cases would be delayed while the interlocutory appeals were pending.

In 1998, two years after the Markman decision by the Supreme Court, the Federal Circuit decided that the standard of review for questions of patent claim construction was de novo, without deference to the lower courts’ decisions, because claim construction was a question of law. Cybor Corp. v. Fas Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc). This has been the governing law for the past 15 years.

Without any interlocutory review of lower court Markman decisions, during the years subsequent to the Cybor case, a number of patent cases had to be remanded for further proceedings after the Federal Circuit reversed the lower court’s decision on claim construction. This often meant that the case had to be re-tried based upon the different patent claim construction reached by the Federal Circuit.

The question that is now squarely before the en banc court is whether the Federal Circuit should overrule Cybor Corp. v. Fas Technologies, Inc. This is the result of the Federal Circuit granting a petition for rehearing en banc of the three-judge panel’s decision in Lighting Ballast Control LLC v. Philips Electronics North America Corp., No. 2012-1014 (Fed. Cir. March 15, 2013).

In the order granting a rehearing en banc, the Federal Circuit requested the parties to brief the question of whether the court of appeals should afford deference to any aspect of a district court’s claim construction, and if so, what aspects.  If the Federal Circuit overrules Cybor Corp. v. Fas Technologies, Inc., and accords deference to lower court claim construction rulings, it can be expected that significant changes will occur in patent litigation. A more deferential standard of review should reduce the number of lower court decisions that are reversed on appeal. The initial trial of a patent case will be less likely to end up being merely a dress rehearsal for a second trial after remand from appeal. In addition, it is likely that there will be a reduction in occasions when judicial resources and the parties’ resources must be expended in re-trying a patent case after the lower court’s claim construction has been reversed on appeal.