Questions regarding interlocutory appeals after claim construction
Claim construction is the first step in a patent infringement analysis, and is often the crucial issue in patent litigation. Following the Supreme Court's and Federal Circuit's decisions in Markman v. Westview Instruments, Inc.2 and Cybor Corp. v. FAS Technologies, Inc.3, it is clear that claim construction is a question of law reviewed de novo. It is also clear that claim construction is not "final" when completed by the district court, but is "final" only when the Federal Circuit provides its construction on appeal. Earlier this year, one Federal Circuit judge noted that since Markman the Federal Circuit has reversed 33-50% of decisions involving claim construction.4 The Federal Circuit sometimes finds that the district court's claim construction is incorrect and remands the case to the district court for another trial or other proceedings. Such action results in greatly increased expense and further extends the time for resolution of the case.
Many district courts hold "Markman hearings" and render claim construction early in the litigation (and at least before trial). If the district court's claim construction could be appealed immediately to the Federal Circuit for "final" claim construction, the expense and time of a trial may be saved, and the risk of the Federal Circuit ordering a new trial after a trial based on an erroneous claim construction would be greatly reduced or eliminated.
It is too early in the post-Markman era to make a final decision as to whether early, interlocutory appeals to the Federal Circuit regarding claim construction should be accepted or rejected. This article discusses the current state of this issue and raises some questions and possible solutions.
Section 1292(b) of title 28 of the United States Code governs certified interlocutory appeals. It provides: "When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order."
Thus, the district court judge may certify an appeal of claim construction after a Markman hearing when the judge finds (a) the claim construction reached involves a controlling question of law, (b) there is substantial ground for difference of opinion about that construction, and (c) an immediate appeal to the Federal Circuit regarding claim construction may materially advance the ultimate termination of the litigation. The district judge must make these findings in a written order.
Since claim construction is a question of law and is central to analysis of patent infringement and validity, finding (a) seems easy to meet in most cases. Finding (b) is more difficult, in that after a district court judge decides any issue of law, it may be difficult to convince the court that there is "substantial" ground for difference of opinion about the court's ruling. This difficulty may be tempered somewhat by the general recognition that claim construction is a difficult task and by the Federal Circuit's reversal of 33-50% of decisions involving claim construction.
Finding (c) is open to much debate. It is important first to remember that the statute does not ask whether an immediate appeal would materially advance the litigation. In nearly all cases, early and "final" claim construction by the Federal Circuit would materially advance the litigation. For example, such construction would bring more certainty and finality to further rulings by the district court. Instead, the statute asks whether an immediate appeal would materially advance the ultimate termination of the litigation. For example, the statute asks whether an immediate appeal is likely to allow all proceedings in the matter to end much sooner than if the matter is allowed to continue in the district court without an appeal. Evaluation of finding (c) will be case and fact specific. Questions to ask include: Is the claim construction issue so well defined that a ruling favorable to the plaintiff would cause the defendant's defenses to wither and a ruling favorable to the defendant would give the plaintiff no reasonable room to argue infringement under the doctrine of equivalents? Does the defendant have other defenses that are usually not claim-construction driven, such as license and laches, that would require trial (and possibly appeal) even if the Federal Circuit's claim construction was unfavorable to the defendant? One important factor in this inquiry is a factor about which I found no empirical data: how likely is settlement before trial? The vast majority of patent infringement cases settle before trial. How should the district court balance the general high likelihood of pre-trial settlement with the cost and time involved in an interlocutory appeal of claim construction to the Federal Circuit?
The Federal Circuit may elect to accept or reject the certified issue for immediate appeal. This decision is completely discretionary. So far, as explained further below, the Federal Circuit has elected to reject certified issues of claim construction following Markman hearings.
There are many questions for consideration in deciding the appropriate role for certified appeals of claim construction after Markman hearings. The first question is whether the status quo is acceptable. In examining this question, we should consider whether patent cases would in fact be resolved faster and cheaper with increased use of certified appeals of claim construction. Would the time delay for an appeal and the cost of an appeal justify such appeals? Would not allowing appeals from Markman hearings give rise to the risk of multiple appeals in the same case, thus creating delay and increased cost? Since impending trial encourages settlement, would the availability of an immediate appeal after a Markman hearing reduce settlement incentives?
The Federal Circuit judges should consider publicly announcing a policy regarding certified appeals after Markman hearings. They should ask themselves whether the increased efficiency is worth them spending their time considering such appeals in light of their present work-load and the possible benefits. They should also ask themselves whether allowing regular interlocutory appeals regarding claim construction obviates the role of the district court.
One "solution," of course, is the status quo. Parties seeking an early claim construction will have to pursue such construction through much less satisfying and rewarding means, such as appeals of preliminary injunctions (which provides much less "final" construction than the interlocutory review option) and appeals of summary judgment rulings when final. Other solutions include the announcement by the Federal Circuit of a policy regarding interlocutory appeals of claim construction or an amendment to Section 1292 specifying situations in which the Federal Circuit should/must accept certified appeals regarding claim construction. Another possible solution is a national board to construe patent claims involved in litigation.
It will take some time for the Federal Circuit and the bar to consider all the ramifications of Markman, Cybor, and their progeny. Appropriate policy regarding certified interlocutory appeals of claim construction after a Markman hearing is one important facet of our consideration.
(excerpts from American bar association)
GOVERNING STATUTE: 28 USC Section 1292(b)
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