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Justin E. Gray

IP Litigation Attorney at Foley & Lardner LLP

Former Adjunct Professor at Northwestern University School of Law

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Friday
Feb262010

Visiting Judge Explains Potential Downfalls of De Novo Standard of Claim Construction Review

Trading Techs. Int'l, Inc. v. eSpeed, Inc. (Fed. Cir. Feb. 25, 2010)

In a case where a claim construction ruling was affirmed, the interesting point from a standpoint of patent law is the public policy discussion of the Visiting Judge concerning the Federal Circuit standard of de novo claim construction review.  Visiting District Judge Clark from the Eastern District of Texas, sitting by designation, explains the potential downfalls of this de novo review in his concurring opinion.  As it is a good read for those interested, the concurring opinion is reproduced in full below for the reader's reference:

Believing that the judgment is correct and that the opinion correctly analyzes the issues in this case in light of current law, I concur. I write separately to respectfully suggest that the current de novo standard of review for claim construction may result in the unintended consequences of discouraging settlement, encouraging appeals, and, in some cases, multiplying the proceedings.

Determination of the meaning that would have been attributed to a claim term by one of ordinary skill in a sophisticated field of art on the date of filing often requires examination of extrinsic evidence—a determination of crucial facts underlying the dispute, as outlined by Judge Rader in the majority opinion. On some occasions, a determination will be made based, in part, on the weight to be given to conflicting extrinsic evidence or even to an evaluation of an expert’s credibility.

The standard of review that will be applied by a higher court sets one of the important benchmarks against which competent counsel evaluates decisions regarding settlement and appeal. The importance is highlighted by the fact that every brief must state the standard of review. See Fed. R. App. P. 28(a)(9)(B), (b)(5); Fed. Cir. R. 28(a)(10),(b).

The de novo review standard has at least two practical results, neither of which furthers the goal of the “just, speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1. First, rejection of settlement is encouraged, and a decision to appeal is almost compelled, where counsel believes the client’s position is valid, even if debatable, depending on the view taken of extrinsic evidence. It is a natural reaction upon receiving an unfavorable claim construction from a trial court to conclude that one’s own view of complicated facts will be better understood by the judges of the Federal Circuit, who generally have more experience with patent cases, and who, by their own authoritative rule, review the claim construction without regard to any determination the lower court has made.

A patentee has the opportunity to write clearly enough so that the meaning of the claims can be determined from the specification. What public policy is advanced by a rule requiring the determination of underlying facts by more than one court, especially when the likely result is that another group of citizens will be required to “volunteer” for lengthy jury duty on remand?

A second, although less common, consequence of the de novo review standard is the opportunity it offers to the party that presents a case with an eye toward appeal rather than the verdict. Skilled counsel who believes a client may not be well received by a jury is tempted to build error into the record by asking for construction of additional terms, and/or presenting only a skeleton argument at the claim construction stage. This is risky, but it would be unusual for this Court to consider a point waived if a particular claim construction had been requested of the trial court and some argument made, but the clearest explanation was presented on appeal. An appellate court normally does not consider an unpreserved point of error, but a more sharply focused argument regarding points presented on appeal, from among those that are technically preserved, is actually the goal of the appellate specialist. This tactic would be less inviting if claim construction was officially accorded some measure of deference, even if it was applied only in those cases in which resort to extrinsic evidence was necessary.