Chapter §13.03 U.S. Court of Appeals for the Federal Circuit

JurisdictionUnited States

§13.03 U.S. Court of Appeals for the Federal Circuit

[A] Subject Matter-Specific Appellate Jurisdiction

The U.S. Court of Appeals for the Federal Circuit plays a unique and powerful role in the American patent system.433 The court has nationwide jurisdiction over appeals in patent cases. Created in 1982, the Federal Circuit is located in Washington, D.C.434

Before October 1982, an appeal from a final judgment in a patent infringement case tried in a federal district court was taken to the appropriate federal regional circuit court of appeals in which the district court was geographically situated. For example, if a patent infringement case was tried prior to 1982 in Chicago before the U.S. District Court for the Northern District of Illinois, any appeal would have been taken to the U.S. Court of Appeals for the Seventh Circuit.

Concerns over forum-shopping and lack of national uniformity in patent law (and a handful of other specialized areas of law) prompted Congress to create in 1982 a new federal appellate court, the U.S. Court of Appeals for the Federal Circuit.435 The Federal Circuit (or CAFC) has exclusive nationwide jurisdiction over appeals

from a final decision of a district court of the United States . . . in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents. . . . 436

Thus, if a patent infringement case is tried today in the U.S. District Court for the Northern District of California in San Jose, any appeal will be taken to the Federal Circuit, not to the U.S. Court of Appeals for the Ninth Circuit.

[B] Critiques of the Federal Circuit

Although the Federal Circuit has its share of critics,437 the consensus view is that the CAFC experiment has been a success.438 As a practical matter, the creation of the Federal Circuit has resulted in a single, relatively coherent body of patent case law. Notwithstanding certain areas of chronic disagreement within the Federal Circuit,439 district courts and litigants can generally rely on Federal Circuit patent authority with greater certainty than the disparate decisions reached by the regional circuits in patent cases before 1982.440

[C] Standards of Review

The "standard of review" applied by an appellate court indicates the degree of deference it confers to a particular finding or conclusion of the lower tribunal whose decision has been appealed. In Federal Circuit patent cases, the appellate court's standard of review depends on (1) the particular issue under review (e.g., patent claim interpretation, patent infringement liability, the validity of the asserted patent, its enforceability, remedies if infringement is found, etc.); (2) whether the issue is considered one of law, fact, mixed law and fact, or equity; and (3) the identity of the decision maker below. The following is a generalized summary.441

[1] Appeals from Federal District Courts

[a] Jury Trial

Consider a typical scenario in which a jury has been asked to render a verdict on whether a patent has been infringed and whether that patent is not invalid. If the jury answers those questions affirmatively, it may also be asked to assign monetary damages.442 Many such cases are resolved by means of a general verdict form that provides little or no specifics as to any factual findings made by the jury in reaching its verdict. Thus, the factual findings necessary to support a jury's verdict are frequently presumed or inferred.443

Whether inferred or express, the Federal Circuit reviews a finding of fact by a jury under the deferential "substantial evidence" standard of review.444 Substantial evidence is " 'such evidence as a reasonable mind might accept as adequate to support a conclusion.' "445 It is " 'more than a mere scintilla.' "446 In determining whether a jury's finding is supported by substantial evidence, the Federal Circuit " 'presume[s] that the jury resolved all factual disputes in favor of the prevailing party.' "447 The appellate court must examine the record as a whole, taking into consideration evidence that both justifies and detracts from the jury's finding.448

Although a jury may be given the factual question of patent infringement,449 the interpretation of the claims of the asserted patent is the exclusive responsibility of the district court.450 A district court's patent claim interpretation is considered ultimately a question of law subject to de novo (i.e., no deference) review.451 In some cases a jury's finding of infringement may be affirmed even if the district court erred in interpreting the claims, so long as the correction in claim interpretation would not have changed the result.452

With respect to questions of law, juries can provide verdicts on certain legal questions if properly instructed. For example, juries can render a verdict on the ultimately legal question of a patent's nonobviousness, provided they are properly instructed on the law (such as the factors of Graham v. Deere).453

The Federal Circuit applies a de novo standard of review to a jury's legal conclusions. For example, a jury's conclusion that a claimed invention would have been obvious is reviewed de novo, but the jury's factfindings underlying that conclusion (e.g., its findings on the Graham v. Deere factors) are reviewed for substantial evidence.454

When a district court has ruled on a post-verdict motion for judgment as a matter of law (JMOL), the Federal Circuit applies the same standard of review as that applied by the regional circuit in which the district court is located.455 Many regional circuits review the grant or denial of JMOL de novo.456 The test for granting a motion for JMOL is exacting, essentially requiring a district court to conclude that no "reasonable" jury could have reached the conclusion that the jury did, in fact, reach. For example, the U.S. Court of Appeals for the Fifth Circuit considers JMOL appropriate "only if 'the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict.' "457 The U.S. Court of Appeals for the Ninth Circuit holds a JMOL to be "proper if the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict."458

[b] Bench Trial

When patent infringement is tried before a district court without a jury, the Federal Circuit reviews the court's legal conclusions (e.g., the court's ultimate determination on patent claim interpretation) under the de novo standard of review.

Unlike a jury trial, a district court's findings of fact are reviewed under the "clearly erroneous" standard of Fed. R. Civ. P. 52(a).459

A district court's determination that a patent is unenforceable due to inequitable conduct is an equitable conclusion reviewed for abuse of discretion, based on underlying facts reviewed for clear error.460

When damages for patent infringement have been awarded (whether the amount was found by a jury or assessed by a district court), the district court has the discretion to enhance the damages (up to three times the amount found or assessed) under 35 U.S.C. §284. A district court's decision whether to enhance damages under 35 U.S.C. §284 is reviewed for abuse of discretion.461

If a district court determines that a case is "exceptional" under 35 U.S.C. §285, the court also has the discretion to award attorney fees to the prevailing party. An exceptional case is one that "stands out" based on either (1) the weakness of a party's litigating position, or (2) the unreasonableness of the party's litigation conduct.462 In Highmark Inc. v. Allcare Health Management Sys., Inc., the Supreme Court held that all aspects of a district court's §285 exceptionalness determination should be reviewed deferentially under the abuse of discretion standard.463

Many patent infringement cases arrive at the Federal Circuit on appeal from a district court's grant of summary judgment under Fed. R. Civ. P. 56(a), such that the cases have never reached juries.464 The Federal Circuit reviews a "district court's grant or denial of summary judgment under the law of the regional circuit" in which the district court is located.465 Many regional circuits apply a de novo (no deference) standard of review to a district court's grant of summary judgment.466

[2] Appeals from the International Trade Commission

In appeals from determinations by the International Trade Commission (ITC) in Section 337 actions involving patent infringement and validity,467 the Federal Circuit reviews "the ITC's legal determinations de novo and its factual findings for substantial evidence."468

[3] Appeals from the U.S. Patent and Trademark Office

Section 141 of 35 U.S.C. provides the right of direct appeal to the Federal Circuit from a final decision of the USPTO in an ex parte examination, reexamination, inter partes review, post-grant review, or derivation proceeding.469 In such appeals, the Federal Circuit reviews the agency's legal conclusions under the de novo standard of review and its factual findings under the substantial evidence standard of review.470

Before 1999, the Federal Circuit reviewed factfindings by the USPTO (e.g., what a prior art reference teaches for purposes of assessing nonobviousness under 35 U.S.C. §103) under the same "clearly erroneous" standard of review that it applied to factfindings made by federal district courts under Fed. R. Civ. P. 52.471 The Supreme Court ended that practice in Dickinson v. Zurko ("Zurko III").472 Under current law, the Federal Circuit must sustain USPTO factfindings so long as they are not "unsupported by substantial evidence."473

The issue in Zurko III was whether judicial review of the USPTO should be governed by the Federal Circuit's somewhat stricter (i.e., allowing somewhat closer judicial review) "court/court" standard of review, or instead...

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