Claim construction is often considered the most critical phase of patent litigation before trial. The construction of claim terms, which is essentially an explanation of what the claims mean, is critical to determinations of infringement and validity. In fact, claim construction is often dispositive on these issues.
Cybor Corp. and its aftermath
In 1998, the Federal Circuit ruled that it would review the district courts’ claim constructions de novo, with no deference to the district courts’ rulings, including findings of fact. Cybor Corp. v. FAS Tech. Therefore, even where the district court construes claims after it has been provided tutorials on the technology, has studied extensive briefing by the parties, has heard argument from counsel and live testimony from expert witnesses, the Federal Circuit will still decide claim construction issues with no deference to the district court’s decision. And the rate at which the Federal Circuit overturns district court constructions has been as high as 50 percent.
The result has been unpredictable and, therefore, lengthy and expensive patent litigation. The high likelihood that an important claim construction will be overturned at the Federal Circuit significantly impacts the parties’ strategies and limits the chances at early resolution. Even after the district court has construed the claims, parties often conduct discovery, build infringement and invalidity theories and present evidence at trial covering not only the constructions adopted by the district court, but also the constructions that were argued by the parties and rejected by the court.
Expending the time and resources to build and present these parallel liability cases is necessary to ensure that the best arguments can be made, however the claims are ultimately construed by the Federal Circuit. In fact, when the Federal Circuit reverses district court constructions, district courts often preclude the parties from seeking additional discovery on remand if the parties should have anticipated the construction adopted by the Federal Circuit.
Because of the high reversal rate, parties also are less likely to settle cases once the district court issues a claim construction, even if, for example, the court has construed the claims in a way that makes a finding of infringement virtually inevitable. There is little incentive in this situation for an accused infringer to pay a significant sum to resolve the matter. The accused infringer will often prefer to take its chances with the Federal Circuit, along with the delay that accompanies the appeal. If the appeal is successful and the claim construction is overturned, which it often is, the matter is typically remanded to the district court for further litigation and often a second trial.
Deferential review of the district courts’ constructions would mean fewer claim construction reversals. Fewer reversals would likely result in earlier resolution of patent infringement matters, fewer appeals to the Federal Circuit and, ultimately, less expensive litigation.
The Retractable Technologies Petition
The Supreme Court now has an opportunity to bring some predictability to patent litigation and, hopefully, reduce its cost. In March, Retractable Technologies, Inc. petitioned the Supreme Court for a writ of certiorari. One of the questions presented: “Whether claim construction, including underlying factual issues that are integral to claim construction, is a purely legal question subject to de novo review on appeal.”
In its petition, Retractable Technologies points out that several Federal Circuit judges, usually in dissenting opinions, have argued that the Cybor Corp. case should be revisited and asks the Supreme Court to do what the Federal Circuit has thus far been unwilling to do.
Retractable Technologies argues that the issues underlying claim construction are generally factual, not legal, issues. After all, the ultimate question to be decided when construing a claim is what a person of ordinary skill in the art at the time of the invention would understand the claim to mean. Retractable Technologies also argues that while the Supreme Court’s 1996 decision in Markman v. Westview Instruments, Inc. established that claims are to be construed by judges, not juries, that opinion “recognized that claim construction involved underlying factual questions, and said nothing to indicate that the Federal Circuit should displace the district court’s resolution of those questions.”
Companies that often find themselves embroiled in patent litigation will benefit in the long run if the Supreme Court rules that deference is to be given to district court claim constructions. An early claim construction that is likely to stick allows companies to make better predictions as to the merits of a case, make quicker decisions based on those merits and get back to business.