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Federal Circuit Reaffirms De Novo Review of Patent Claim Construction

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On February 21, 2014, the Federal Circuit, sitting en banc, issued its opinion in the closely-watched case Lighting Ballast Control LLC v. Philips Electronics North America Corp., ___ F.3d ___, Case No. 2012-1014 (Fed. Cir., Feb. 21, 2014).  In a 6-4 decision, the court declined to overrule or modify the de novo standard of review for claim construction first articulated in Cybor Corp. v. FASTechnologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), principally on the ground that stare decisis and considerations of uniformity militate strongly against upsetting the settled practice of the past 15 years.

In Lighting Ballast, the district court construed the claim term “voltage source means” as a means-plus-function claim, and initially ruled on summary judgment that the term rendered the claims invalid for indefiniteness.  On motion for reconsideration, however, the district court reversed itself, relying primarily on the testimony of the inventor and the patentee’s expert, both of whom testified that one of skill in the art would understand that the “voltage source means” corresponds to a rectifier or other similar structure because the surrounding claim language and the term itself implied such structure.  The case went to a jury with an instruction that the term referred to “a rectifier.”  The jury found the claims valid and infringed.

On appeal, the panel reversed.  Lighting Ballast, 498 Fed. App’x 986 (Fed. Cir. 2013), withdrawn, 500 Fed. App’x 951 (Fed. Cir. 2013).  First, the panel determined that the term “voltage source means” was a means-plus-function claim.  The panel started with the presumption invoked by the use of the word “means,” and from there determined that the testimony of the inventor and the patentee’s expert to the effect that particular structure was implied could not cure the absence of structural language in the claim.  The panel then found the asserted claims indefinite, because the specification failed to disclose structure capable of performing the recited function.

Subsequently, the full court granted the petition for rehearing en banc, requesting briefing on the issues of (i) whether the court should overrule Cybor, (ii) whether the court should afford deference to any aspect of a district court’s claim construction, and (iii) if so, which aspects of a district court’s claim construction should be afforded deference.  Lighting Ballast, 500 Fed. App’x 951 (Fed. Cir. 2013).

Given this procedural backdrop, many in the IP community anticipated that the Federal Circuit would use Lighting Ballast as a vehicle by which to overrule or limit Cybor.  The case would appear to have been a perfect vehicle by which to do so, given the district court’s clear reliance on witness testimony to settle a critical issue of fact, i.e., whether a person of skill in the art would understand “voltage source means” to describe a particular structure of class of structures.  However, the full court declined to move away from the de novo standard of review applicable to claim construction determinations that has been in place for the past 15 years.

In an opinion authored by Judge Newman, the court applied the principal of stare decisis as the primary ground of decision.  Stating that “[t]he question now is not whether to adopt a de novo standard of review of claim construction, but whether to change that standard adopted fifteen years ago and applied in many hundreds of decisions,” the court determined that the bright-line rule of Cybor was neither unworkable nor unduly burdensome on courts or litigants conducting claim construction.   Slip Op., at 16.  To the contrary, the court concluded that reversing Cybor or adopting a hybrid standard of review would likely undermine efficiency and predictability and increase the cost of litigation by introducing a “new and uncertain inquiry” prefatory to review of the merits, while affecting the outcome of few if any cases.  Slip Op., at 21-22.  The majority rejected the argument that Federal Rule of Civil Procedure 52(a)(6) requires deference to factual determinations embedded in claim construction determinations, dismissing the dissent’s reliance on the dictate of the Rule as “simplistic,” and invoked the Supreme Court’s opinion in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) for the proposition that “the fact/law distinction is not immutable” and has “turned on a determination that, as a matter of the sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.”  Slip Op., at 33.  At bottom, it appears that the majority was convinced that any standard of review other than de novo would inject yet more complexity into the claim construction process for no offsetting gain, and would undermine the objective of national uniformity that is central to the court’s mission.

Judge Lourie concurred, setting forth additional reasons why rejection of the de novo standard would, in his view, be unwise.   The principal point carried in Judge Lourie’s concurrence was that the trial judge’s superior ability to assess witness credibility is largely irrelevant to the process of claim construction given the tight focus on intrinsic evidence and the practical reality that hired experts are unlikely to lie in furtherance of their clients’ objectives.  Moreover, Judge Lourie underlined that the ultimate determination of the meaning of claim language would remain a legal issue subject to de novo review even were Cybor to be abrogated, so even if the circuit court were to give formal deference to district court fact determinations “we would be engaging in a  kind of sham, giving with one hand and taking back with the other.”  Slip Op., Lourie, J.,  at 7.

The dissent (authored by Judge O’Malley) attacked Cybor on all fronts, echoing themes that are undoubtedly familiar to many in the IP community.  First, the dissent sought to knock the support out from under the majority’s reliance on stare decisis, arguing that the de novo standard of Cybor had been wrongly decided, was frequently criticized (even by several judges in the majority) and imposed unnecessary burdens on litigants and courts.  There are, according to the dissent, no settled expectations that would be upset by abrogation of Cybor, so stare decisis does not “stand in the way” of a fresh look at the standard of review.  Slip Op., O’Malley, J., at 14.  The dissent then attacked the majority’s reliance on Markman, asserting that while the Supreme Court had assigned the task of claim construction to district judges it had not settled or even addressed the issue of whether fact issues were subject to deference on appeal.  That issue is, argued Judge O’Malley, settled by Rule 52(a)(6), which provides in no uncertain terms that findings of fact “must not be set aside unless clearly erroneous . . . .”  Slip Op., O’Malley, J., at 23.  Finally, the dissent pointed to a variety of undesirable consequences that purportedly flow from the current regime, including increased uncertainty as to the meaning of claim terms, increased expense due to the incentives for appeal built into the system, and a failure to promote uniformity.

It is fairly clear that all three opinions were crafted with an eye toward Supreme Court review, and given the significance of this issue it would not be surprising were the Court to take this opportunity to finally settle the issue.  Of course, were the Supreme Court to accept certiorari, it would feel no obligation to adhere to the “settled practice” of Cybor on the basis of stare decisis.  Moreover, the highest tribunal might find much with which it agrees in the dissent, in particular its reliance on Rule 52 for the rule of decision.  On the other hand, it is difficult to see how a more deferential standard would serve any real purpose other than that of doctrinal propriety, particularly in light of the dissent’s concession that a district court’s factual determinations “will not resolve the legal question of what construction is to be afforded a claim term.”  Slip Op., O’Malley, J., at 42 n.9 (emphasis in original).  In the end, each of the three opinions in this important case could well lead practitioners to conclude that even were Cybor to be overruled and a more deferential standard to be applied to fact determinations, the impact on the process and substance of claim construction might well be trivial in relation to the energies expended in debating the issue.