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IP Alert: Federal Circuit Retains De Novo Standard for Appellate Review of Claim Construction

February 27, 2014

The process of claim construction involves the determination of the meaning and scope of patent claims. Because claim construction defines the scope of the property right being enforced, the claim construction process is of critical importance in patent cases.

In 1996, the U.S. Supreme Court held in Markman v. Westview Instruments, Inc. that claim construction involves a determination of legal issues and therefore is a matter that must be decided by a judge, not a jury. In the 1998 decision Cybor Corp. v. FAS Technologies, Inc., the Federal Circuit implemented the Markman decision and held that in appeals from a claim construction ruling, the Federal Circuit would undertake a de novo review of a district court judge’s claim construction decision. Put another way, the Federal Circuit held that it would give no deference to the district court’s analysis on issues of claim construction.

After Cybor, it has been perceived that the Federal Circuit reverses district court judge’s claim construction decisions in a very high number of cases. Various studies reported claim construction reversal rates on appeal at 30 to 50 percent of appealed cases. Many commentators viewed the high reversal rates as a disincentive to settlement, given the relatively large possibility of a different claim construction outcome on appeal. Recently, the Federal Circuit considered this issue en banc in Lighting Ballast Control LLC v. Philips Electronics North America Corp.

As previously reported, on February 21, 2014, in its en banc decision, a majority of the Federal Circuit judges retained de novo review as the standard of appellate review for claim construction. The court explained that retaining this standard of review would provide “national uniformity, consistency, and finality to the meaning and scope of patent claims.” In the context of potential multi-case and multi-forum litigation, the Federal Circuit noted the importance of definitive resolution of claim construction as a matter of precedent. The court reasoned that a more deferential standard of review might lead to inconsistent outcomes. The court further reasoned that a more deferential standard of review would not lead to improved consistency or increased clarity.

Lighting Ballast, the appellee, argued that the standard of review should be a “clearly erroneous” standard of review, a standard that is far more deferential to the district court. This standard is typically applied to the review of factual determinations. In arguing for that standard, Lighting Ballast emphasized the factual aspects of claim construction, noting that the district court may consider expert testimony and documentary evidence, and arguing that the district court is in a better position to assess the credibility of witnesses. In rejecting this argument, the Federal Circuit noted that claim construction is a legal statement of the scope of the patent right that does not depend on witness credibility, but on the content of the patent documents. The court emphasized that under Markman, the construction of a patent claim is a legal matter, not a question of fact. 

Certain amici curiae also submitted briefs arguing for a change of the standard of review to a fusion or hybrid of de novo review and deferential review. Under such proposals, the factual aspects of claim construction would be reviewed under the clearly erroneous standard, while the final conclusion would be reviewed as a matter of law. The standard of review would depend on what the district court’s claim construction relied on: Claim constructions based on witness testimony would be reviewed for clear error (because such constructions inherently might entail credibility or reliability findings), while claim constructions based solely on the intrinsic patent record would be reviewed de novo. The Federal Circuit rejected this proposal as an “amorphous standard” that would be cumbersome and costly, reasoning that such a standard would engender threshold litigation over whether there was or was not a fact at issue.

The court also commented on stare decisis, the legal principle that a court should not change its decision on issues already decided so that litigants may rely on prior rulings. Holding that the criteria for departure from stare decisis had not been met, the court found no post-Cybor developments from the Supreme Court or Congress, or from fifteen years of Federal Circuit experience, that undermined the reasoning of the Cybor decision. The court additionally found no showing that de novo review of claim construction is unworkable or that Cybor had increased the burdens on the courts or litigants conducting claim construction. The court also noted that neither the appellee nor the extensive amicus briefing had proposed a clearly better resolution to claim construction than Cybor.

Finally, the court addressed the argument that the de novo standard adds uncertainty and expense to patent litigation by providing certain statistics. Specifically, the court proffered statistics tending to show a decline in the percentage of district court patent cases that are appealed, and also a decrease in the percentage of patent cases that proceed to trial in the district courts over time. 

There was a vigorous dissent in the opinion. This dissent, and the large number of amici in this case, may lead the Supreme Court to consider the case should there be an appeal. Fitch Even attorneys are monitoring the progress of the Lighting Ballast decision and will report on any Supreme Court activity. For now, however, the Cybor rule of de novo Federal Circuit review of claim construction remains intact. 

The Lighting Ballast case is of significance because it governs the standard of review of claim construction, an issue frequently raised in Federal Circuit appeals. For more information, please contact Fitch Even partner Alison Aubry Richards, the author of this alert.


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