Federal Circuit Wary of Overruling 'Cybor' Precedent
Everybody arguing a potentially momentous patent case Friday — each of the parties and amicus curiae U.S. Patent and Trade Office — agreed that the U.S. Court of Appeals for the Federal Circuit ought to overrule its 1998 decision Cybor v. FAS Technologies.
The only people who didn't sound on board were the Federal Circuit judges themselves.
The appeals court set off an intense debate among IP lawyers, academics and technology companies when it agreed in March to reconsider how much deference trial judges deserve when deciding what a patent means.
But at least four of the 11 judges rehearing Lighting Ballast Control v. Philips Electronics sounded unwilling to overrule Cybor and cede more deference to trial judges' findings of fact in claims construction hearings.
Most ominous for Cybor's critics is that the four included one of the court's newest members, Richard Taranto, a potential swing vote.
"Do the standards for stare decisis justify our actually overruling — not clarifying, overruling — an en banc precedent?" Taranto asked Orrick, Herrington & Sutcliffe partner Steven Routh, representing defendant Universal Lighting. "Has the Supreme Court done something in the interim? Has the Congress done something in the interim? Has the rule proved unworkable?"
Routh had come in conceding that Cybor ought to be overruled, though in only a limited fashion. At Taranto's invitation he sounded ready to walk that back. "I think if you left Cybor as it is, it would not be a policy disaster," he said.
Cybor held that the Federal Circuit should review all aspects of claims construction — findings of fact and conclusions of law — de novo. The theory was that interpreting a patent's meaning is a purely legal matter, and having one court, the Federal Circuit, make that determination independently ensures patent uniformity.
Companies ranging from Google to Microsoft to Cisco Systems have filed amicus briefs urging the court to keep Cybor in place, warning that a more deferential standard will turn claims construction into an expensive battle of experts in which owners of vaguely written patents try to create bulletproof records on appeal.
Lighting Ballast Control, a subsidiary of patent house Acacia Research Group that has a $4.5 million judgment at stake, argues that claims construction is steeped in factual questions, such as what persons skilled in the art would have understood certain terms to mean at the time of drafting. Under Federal Rule of Civil Procedure 52(a), those findings should be accepted on appeal absent clear error, Lighting Ballast argues. Amicus American Bar Association has agreed, saying more deference will lead to greater predictability on appeal and less expense.
The PTO has staked out a middle ground, saying Cybor should be overruled but that only "subsidiary" factual issues involving extrinsic evidence should get deference. Universal Lighting, perhaps sensing that resistance was futile, adopted a similar view after the court granted rehearing.
On Friday, Circuit Judge Alan Lourie, the last remaining active member of the Cybor majority, was chilly toward that compromise. "Since the ultimate question is one of law," he said, "isn't it a sham for us to give deference on this so-called underlying fact question? Aren't we playing games?"
Routh argued that issue won't come up often on appeal because what people skilled in the art believed "isn't in dispute most of the time."
"Really?" replied Judge Kimberly Moore. "Because, let's see, seven years on the bench, that seems to be all you all dispute about."
Nathan Kelley, the acting solicitor of the PTO, walked a similarly fine line. "This court's case law on claims construction requires very little modification," he said. "We urge that this court modify Cybor only to the extent that there are sometimes underlying, subsidiary questions of fact."
But how could the court ignore stare decisis and throw out a previous ruling for tiny, incremental change, Taranto asked.
Taranto's vote figures to be important. The judges called the case en banc last March just hours before he was sworn onto the court, in what many observers assumed was a 5-4 vote. (An additional judge, Raymond Chen, joined the court in May.)
Berkeley attorney Andrew Dhuey, representing Lighting Ballast, seemed to have a more straightforward argument, at least at first. "Claims construction is always an evidentiary inquiry," he said, and evidence is inherently based on facts.
Judge Jimmie Reyna asked if that would apply to claims construction based exclusively on patent language, without resort to extrinsic evidence. Wouldn't that be like interpreting a contract, which is inherently a matter of law?
Now it was Dhuey's turn to tap dance a bit. "That deference can be rather thin if it's based on documentary evidence only," he said. "And this court might flesh that out in the context of patent law."