The Federal Circuit as a federal court.

Author:Gugliuzza, Paul R.
Position:III. Separation of Powers at the Federal Circuit D. Competition for Patent Power: Institutional Themes Reconsidered through Conclusion, with footnotes, p. 1828-1864
  1. Competition for Patent Power: Institutional Themes Reconsidered

    Despite this interbranch competition to influence patent policy, a strong claim can be made that power over the field is consolidated in the Federal Circuit. Although some of this consolidation might be attributed to Congress, which has not granted the PTO broad lawmaking power, the Federal Circuit has also developed doctrine that limits PTO authority. As in the federalism relationship, some of this doctrine, such as the court's willingness to address issues that the

    PTO never considered, might be on a collision course with Supreme Court cases limiting judicial review to matters considered by the Agency. Likewise, the court's behavior in the separation of powers relationship embodies the institutional themes discussed above. (200) The court's refusal to apply the APA to the PTO and its avoidance of Chenery are examples of patent-law exceptionalism. Also, the Federal Circuit has again shifted forms. In the federalism relationship, the court acted as a state court, defining the contours of state tort law. (201) In the separation of powers relationship, the court has acted as an agency administrator by dictating the course of patent examination and refusing deference to the PTO. (202) The court has also adopted the role of a legislature, developing patent rules that respond to proposals pending in Congress. (203)

    In addition, limits on the power of the PTO solidify the Federal Circuit's position as the only expert patent institution. In the federalism relationship, one might defend the curtailment of state-court jurisdiction by arguing that those institutions are poorly equipped to apply patent law because they so rarely hear patent cases. (204) In the separation of powers relationship, however, the curtailment of PTO authority is more remarkable because the Agency has deep, on-the-ground experience with patent law and adjudication, even if it is not currently designed to be a policy-making entity. (205) In the next relationship in this Article's taxonomy--the relationship between the Federal Circuit and trial-level patent infringement tribunals--the court has also limited the authority of other institutions that are well positioned to develop patent expertise.


    The Federal Circuit has also assumed a powerful role in its vertical relationship with the district courts and the ITC by aggressively reviewing fact-driven and discretionary decisions. In addition, this institutional behavior implicates important critiques of the current patent system, such as the unpredictability of patent litigation.

  2. The Federal Circuit and the District Courts

    The final two relationships this Article studies, the vertical and horizontal, focus mostly on the Federal Circuit's interactions with other federal courts: the district courts and the regional circuits. In its relationship with the district courts, the subject of this Part, the Federal Circuit has developed standards of appellate review and rules of appellate practice and procedure that enhance the court's authority over the patent system. In its relationship with the regional circuits, the subject of the next Part, the court has adopted choice-of-law rules and rules of appellate jurisdiction that also enhance the Federal Circuit's power relative to other courts.

    Early Federal Circuit cases suggested the court might take a modest role with respect to the district courts. For example, the court reasoned it had less power than the regional circuits to entertain interlocutory appeals, that is, appeals from orders that do not conclude the district court case, because the court had "no general supervisory authority over district courts." (206) This view was remarkable because Congress gave the Federal Circuit the same power as the regional circuits to hear interlocutory appeals of injunctions and controlling questions of law, two of the most commonly invoked exceptions to the final-judgment rule. (207) The Federal Circuit, however, no longer seems to view its authority over district courts as limited. Rather, the court has shaped patent law's standards of appellate review to give itself plenary power to resolve many important substantive issues. The court has also developed rules of appellate jurisdiction and procedure that give it significant control over the conduct of district court litigation.

    1. Enhancing Power Through Patent Law: The Federal Circuit as a Fact-Finder

      The differing institutional competencies of trial and appellate courts shape the standards of review on appeal. Appellate courts review questions of law de novo because they have more time to research the issues, because their multijudge panels permit collegial discussion and collective judgment, and because a key function of appellate review is to permit uniform development of the law. (208) In contrast, appellate courts defer to trial court fact-finding because of the trial court's familiarity with and proximity to the evidence and testimony. (209)

      In patent cases, the Federal Circuit has cast many important issues as questions of law, rather than questions of fact, enhancing the court's authority over district courts. The most notable area in which the court has treated arguably factual matters as legal questions is claim construction. (210) Determining exactly what patent claims mean is the most important task in a patent case, for the claims' meaning will often determine whether the accused product or method infringes. As Judge Mayer of the Federal Circuit has bluntly explained, "to decide what the claims mean is nearly always to decide the case." (211)

      Because the Federal Circuit treats claim construction as a question of law, it is not surprising that, according to the court, the analysis should focus on "intrinsic evidence": the claim language at issue, other claims in the patent, the patent's specification, and the prosecution history. (212) Yet the court has also acknowledged that extrinsic evidence, such as expert testimony, scientific treatises, and dictionaries, can be relevant. (213) It makes sense for the court to consider extrinsic evidence in interpreting patent claims because the claims are interpreted from the perspective of a person "of ordinary skill in the art at the time of the invention," (214) and the district judge will likely be unfamiliar with the pertinent technology. (215) Claim construction therefore often involves extensive technology tutorials along with expert testimony and declarations about who qualifies as a person of ordinary skill in the art and what the claims would mean to that person. (216)

      Evaluating this evidence would seem to be a fact-finding task, and it would seem that the district court's determination should receive some deference on appeal. But the Federal Circuit has rejected both of those premises. In Markman v. Westview Instruments, Inc., the court held that claim construction is a matter of law to be determined by the judge and not a jury. (217) The Supreme Court affirmed, holding that the Seventh Amendment did not require claim construction to be performed by juries. (218) Yet the Court also suggested that claim construction was a "mongrel practice" that was neither a purely legal matter nor a matter of fact. (219) Accordingly, commentators--and many Federal Circuit judges--have suggested that lower courts should receive deference for their claim construction rulings. (220) The Federal Circuit, however, has insisted on reviewing district court claim construction orders de novo, with no deference given. (221) Again invoking its mission, the court has emphasized that its "role in providing national uniformity to the construction of a patent claim ... would be impeded if [it] were bound to give deference to a trial judge's asserted factual determinations incident to claim construction." (222)

      As this Article was going to press, the Federal Circuit agreed to reconsider en banc its case law giving no deference to district court claim construction. (223) For good reason: the Federal Circuit's searching appellate review may have serious consequences for the patent system. As an empirical matter, numerous studies have documented the high rate at which the Federal Circuit overturns district court claim construction orders. (224) The most reliable studies have calculated the figure to be about 30 percent, whereas the overall rate for civil appeals in the federal courts appears to be less than 20 percent. (225) Although there is evidence that claim construction reversal rates have declined in recent years, (226) de novo review still presents serious efficiency problems. Claim construction orders are made relatively early in a case, often in conjunction with summary judgment motions, and before any trial. (227) Yet the Federal Circuit typically will not review those orders until after a final judgment issues. (228) In the interim, the district court may conduct a trial based on its initial claim construction. If the Federal Circuit eventually reverses that construction, a remand for further factual development--often a costly second trial--will be necessary. (229)

      Some data suggest that high Federal Circuit reversal rates are not limited to claim construction, (230) although the empirical literature does not unanimously support this view. (231) Regardless of these conflicting quantitative data, there is a widely shared perception that Federal Circuit appeals are abnormally unpredictable, due in significant part to de novo review of claim construction. (232) As a consequence, litigants and judges have a cynical perception of patent litigation generally and the Federal Circuit specifically. For example, then-District Judge Kathleen O'Malley, now a judge on the Federal Circuit, once joked that 'litigants should want to be on the losing side at the district court level because there appears to be a presumption...

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