The Federal Circuit: what went wrong and how to fix it.
by John P. Sutton, San Francisco, California
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A BRIEF HISTORY OF THE CCPA
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Appendix 1 (cont.)
What does this 70 year history show?
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No Jurisdiction over appeals from United States
District Courts from 1910 to 1980
1929: Court of Customs and Patent Appeals
(CCPA) created with jurisdiction over appeals from
administrative boards in patent and trademark
cases
1929: The Supreme Court rules that CCPA judges
are:
• administrative judges under Article 1 of the
Constitution
• (not federal judges with lifetime tenure under
Article 3 of the Constitution)
1958: Congressional statute changes CCPA judges
to
• Article 3 judges
CCPA Judges in Appendix 1 (during the last 51
years)
• Only four had patent experience: Judges Rich,
1890: Regional Courts of Appeal created to
review all appeals from district courts
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Patent infringement cases are difficult:
•
•
Complexity of Patent Law
Unfamiliarity with technology
1982: Congress created specialist Court of
Appeals
•
•
•
Judges to have Patent Law and Science
experience
Decisions are uniform from one court
Decisions avoid inconsistencies in the 12
regional federal courts
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Federal Circuit staffed by judges from
•
•
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CCPA and
Court of Claims
Jurisdiction over patent appeals from all
United States District Courts
•
•
Jurisdiction removed from 12 Regional Courts
of Appeal
Trademark and copyright jurisdiction remains
with Regional Courts
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Issues with Federal Circuit judges
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Congress assumed that judges from
CCPA and Court of Claims had:
• expertise required for patent
infringement appeals
• experience to review patent appeals
from district courts
Reality: these judges had no experience with:
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Deference to finders of fact in the first
instance.
Jury trials of patent infringement cases,
either as district court judge or as lead
trial lawyer.
Extensive trial experience court, as
opposed to drafting patent applications,
PTO appeals, interferences, or patent
transactions like licensing.
Appellate review of district court cases,
as opposed to review of administrative
judge decisions.
Deference to fact finders

There are two kinds of trials in United
States District Courts:
•
•
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Actions tried upon the facts without a jury or
with an advisory jury, and
Actions tried to a jury
Both kinds of trials require that the facts
found in the district court must be
accorded deference by the reviewing
court
Review of decisions of federal
administrative agency decisions are also
required to give deference to facts found
by the agency
Policy or adjudicating disputes?
Baker v. Carr (1962)

There are three branches of government
under the United States Constitution:
•
•
•
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Legislative (Article 1);
Executive (Article 2); and
Judicial (Article 3).
The first two are political departments
for enacting and executing the policy
decisions and standards for governing
and the third is non-political, for
resolution of judiciable controversies .
The powers of the three are separate.
Illustrative cases in five areas of
Federal Circuit error
1.
2.
3.
4.
5.
Failure to accord deference to fact finders
• in district court
• in administrative agency
Well pleaded complaint rule
Policy of dismissing invalidity claim where
noninfringement found
Policy of granting injunction where patent
valid and infringed
Doctrine of equivalents
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1(a). Deference to lower court
To Facts Found In District Court

If facts are found by a jury, they
must be accepted by the reviewing
court unless they are not supported
by “substantial evidence.”

If facts are found by the court
sitting without a jury, they must be
accepted by the reviewing court
unless they are “clearly erroneous.”
1(a). Deference (cont.)
Seventh Amendment (ratified 1791)

“In Suits at common law, where the
value in controversy shall exceed
twenty dollars, the right of trial by
jury shall be preserved, and no fact
tried by a jury, shall be otherwise
reexamined in any Court of the
United States, than according to the
rules of the common law.”
1(a). Deference (cont.)
Rule 52(a) (adopted 1937)
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A district court’s “[f]indings of fact,
whether based on oral or
documentary evidence, shall not be
set aside unless clearly erroneous,
and due regard shall be given to
the trial court to judge of the
credibility of the witnesses.”
1(a). Deference (cont.)
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The Federal Circuit has not deferred
to the facts found in the district
court.
Illustrative cases:
• Dennison Mfg. Co. v. Panduit Corp.
(1986).
• Cybor Corp. v. FAS Technologies, Inc.
(1998)
1(a). Deference (cont.)
Dennison v. Panduit
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held that the Federal Circuit failed to
defer to the district court’s findings of
fact
failed to even mention its duty to defer
under Rule 52(a).
the Supreme Court vacated and
remanded for consideration of Rule 52(a)
in reviewing “basic factual inquiries,”
such as
•
•
•
•
the scope and content of the prior art,
the differences between the prior art and the
claims at issue,
the level of ordinary skill pertinent art, and
secondary considerations outlined in Graham
v. John Deere Co. (1966).
1(a). Deference (cont.)
Cybor v. Fas (1998)
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The majority in Cybor chose to disregard
the Supreme Court decision in Markman
v. Westview Instruments, Inc. (1996)
because
The Supreme Court did not hold that
although “claim construction is a legal
question for the judge, there may also
be underlying fact questions.”
According to the majority, Markman did
not endorse the view “that claim
construction may involve subsidiary or
underlying questions of fact.”
1(a). Deference (cont.)
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Rule 52(a) prohibits setting aside fact
findings by the district court unless
“clearly erroneous.”
The Supreme Court in Markman does also.
The Supreme Court said that a jury should
not decide claim construction issues, but
the judge may “constru[e] a term of art
following receipt of evidence.”
The judge construes based upon the
evidence that it receives.
Facts found by the district judge based
upon the evidence it received may not be
set aside unless clearly erroneous.
The judge may “use [] expert testimony
about the meaning of terms of art.”
1(a). Deference (cont.)
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Cybor said that the Federal Circuit had the
“role [of] providing national uniformity to
the construction of a patent claim, a role
that would be impeded if we were bound to
give deference” to facts found by a district
judge.
In effect, the Federal Circuit sets itself up
as the sole and final arbiter of what claim
terms mean.
This is not uniformity; it is idiosyncrasy.
1(a). Deference (cont.)

Humpty Dumpty declared:
• There’s glory for you! “I don’t know what
you mean by ‘glory’,” Alice said. I meant,
“There’s a nice knock-down argument for
you!” “But ‘glory’ doesn’t mean a ‘nice
knock-down argument’ Alice objected.
“When I use a word” Humpty Dumpty
said in a rather scornful tone, “it means
just what I choose it to mean—neither
more nor less.”
Carroll, Through the Looking Glass, 4:2
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1(b). Deference to Facts Found by
Administrative Agency

In Dickenson v. Zurko (1999), the
Supreme Court reversed and
remanded the Federal Circuit
holding that it did not have to abide
by the Administrative Procedure
Act, any more than it felt bound by
the Federal Rules of Civil Procedure
52(a).
1(b). Deference (cont.)
The Administrative Procedure Act
(APA) provides that a court
reviewing agency factfinding shall:

Hold unlawful and set aside agency
findings found to be either
• Arbitrary, capricious, or an abuse of
discretion, or
• Unsupported by substantial evidence
1(b). Deference (cont.)
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The CCPA routinely substituted its view
of the facts for that of the PTO,
disregarding the APA, enacted in 1946
For example, In re Zeidler (1982),
decided just before the CCPA was
abolished and the Federal Circuit was
created, involved a finding of
obviousness by the examiner
A staff dye chemist of the company to
whom the application was assigned filed
a declaration listing the advantages of
the dye claimed in the application
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1(b). Deference (cont.)
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In Zeidler, the examiner and the reviewing
Board of Appeals found the declaration
unpersuasive, but
the CCPA reversed, noting that “an
expert’s evaluation in this field is entitled
to more weight that that of a layman.”
No deference was given to the expertise of
the PTO.
No mention of the standard of review in
the APA was made.
Dickenson v. Zurko (1999)
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The applicability of the APA to review of
PTO decisions was determined in
Dickinson, where the PTO challenged the
failure of the Federal Circuit to follow the
APA.
Zurko applied for a patent upon a method
for increasing computer security.
The PTO patent examiner concluded that
respondents method was obvious in view
of the prior art, and the Board affirmed,
just as it did in In re Zeidler.
The Supreme Court reversed and
remanded for review using the standard
of the APA.
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2. The Well-Pleaded Complaint Rule
Christianson v. Colt Industries Operating Corp (1988)
• A Supreme Court case vacating and
remanding the decision of the Federal
Circuit for violating “the well-pleaded
complaint rule.”
• In patent cases, jurisdiction of a district
court extends only to those cases in
which a well-pleaded complaint
establishes
 either that federal patent law creates
the cause of action or
 that plaintiff’s right to relief
necessarily depends on a resolution of
a substantial question of patent law.
2. The Well-Pleaded Complaint (cont.)
Christianson v. Colt Industries (cont.)
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“ Under the well-pleaded complaint rule, .
. . whether a claim ‘arises under’ patent
law must be determined” from the
complaint, not on defenses that might be
raised.
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2. The Well-Pleaded Complaint Rule (cont.)
Holmes Group v. Vornado Air Circulation Systems (2002)
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complaint alleged noninfringement of trade
dress, and a counterclaim alleging patent
infringement.
“[T]he Federal Circuit’s jurisdiction is fixed with
reference to that of the district court, and turns
on whether the action arises under federal
patent law.”
“Here, it is undisputed that petitioner’s well
pleaded complaint did not assert any claim
arising under federal patent law. The Federal
Circuit therefore erred in asserting jurisdiction
over this appeal.”
Vacated and remanded.
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3. Policy of exercising jurisdiction over invalidity
Cardinal Chemical Co. v. Morton Int’l, Inc. (1993)
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involved a long-standing policy of the Federal Circuit of
dismissing a district court holding of invalidity as moot,
where the district court had found no infringement.”
“The question presented is whether the affirmance by
the Court of Appeals for the Federal Circuit of a finding
that a patent has not been infringed is a sufficient
reason for vacating a declaratory judgment holding the
patent invalid.”
Cardinal filed a petition in the Supreme Court
“asserting that the Federal Circuit errs in applying a per
se rule to what should be a discretionary matter.”
“[T]he Federal Circuit is not a court of last resort.”
“[N]othing prevents us, as a jurisdictional matter, from
reviewing the Federal Circuit disposition” of the case.
“We also emphasized the importance to the public at
large of resolving questions of patent validity in
Blonder-Tongue Laboratories, Inc.” (1971).
4. Policy of Granting Injunction where Patent Valid & Infringed
EBay, Inc. v. Mercexchange, LLC (2006)
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Another long-standing policy of the Federal Circuit
is to apply a “general rule that courts will issue
permanent injunctions against patent infringement
absent exceptional circumstances.
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“According to well-established principles of equity,
a plaintiff seeking a permanent injunction must
satisfy a four-factor test before a court may grant
such relief.” The factors are:
1. “irreparable injury;”
2. monetary damages are “inadequate to
compensate for that injury;”
3. “balance of hardships” favors plaintiff; and
4. “the public interest would not be disserved by a
permanent injunction.”
4. Policy of Granting Injunction (cont.)
EBay, Inc. v. Mercexchange, LLC (2006) (cont.)
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“We hold only that the decision whether to
grant of deny injunctive relief rests within
the equitable discretion of the district
courts, and that such discretion must be
exercised consistent with traditional
principles of equity, in patent disputes no
less than in other cases governed by such
standards.”
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5. Doctrine of Equivalents
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Federal Circuit has sought to abolish the
doctrine of equivalents for years, but the
Supreme Court, which created the doctrine,
refuses what is basically an equitable
concept to do substantial justice where the
invention is appropriated by the accused
infringer, even though the claim words may
not precisely cover the invention. Two
cases illustrate the Federal Circuit’s
reluctance to abide by the doctrine.
5. Equivalents (cont.)
Warner-Jenkinson Inc. v. Hilton Davis Chemical (1997)
The Federal Circuit believed that the Doctrine of
Equivalents developed in Graver Tank v. Linde Air
Products (1950) was too difficult to apply and
invited the Supreme Court “to speak the death of
that doctrine.” The Supreme Court “decline[d]
that invitation.”
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The doctrine expands coverage of a patent
beyond the literal meaning of the claims where
the equivalent element to the claimed invention
element the
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•
•
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“function served by a particular claim element” is the
same;
“way that element serves that function” is the same, &
result thus obtained by that element” is the same.
5. Equivalents (cont.)
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Although this triple identity test is a “poor
framework” for analyzing products and
processes other than mechanical devices,
“[w]e expect that the Federal Circuit will
refine the formulation of the test for
equivalence in the orderly course of case-bycase determinations, and we leave such
refinement to that court’s sound judgment in
this area of its special expertise.”
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5. Equivalents (cont.)
Festo Corp. v. SMC (2002)
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The Federal Circuit held that if it could not abolish
the doctrine of equivalents, it would abolish it for
any claim that was amended during prosecution.
The “flexible bar” approach to prosecution history
estoppel, developed “in the ordinary course of
case-by-case determinations,” was thrown out by
the Federal Circuit as “unworkable” in favor of
abolition of the doctrine for any amended claim.
The Supreme Court disagreed. “The scope of a
patent is not limited to its literal terms but
instead embraces all equivalents to the claims
described.”
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How to fix the Federal Circuit
Not feasible:

replace existing judges with lifetime
tenure with judges experienced in
• Science and technology
• Jury trials of patent infringement cases
• Review (and deference to) district court
decisions
• Supreme Court precedents governing
circuit court review
*
Fix (cont.)
Feasible:
Teach existing Federal Circuit judges:
1.
A solid grounding in the
Federal Rules of:
• Civil Procedure (especially Rule 1 and
Rule 52(a))
• Appellate Procedure
• Evidence
Fix (cont.)
Feasible:
2.
How to judge:
• A reviewing court may not substitute its
view of the facts for that of the trier of
fact
• Know precedent
• Follow precedent
• A reviewing court does not decide
cases; it reviews lower tribunal
decisions for error
Fix (cont.)
Feasible: 2. How to judge (cont.)
• Policy is the domain of the political
branches of government, not the
judiciary. Leave politics behind when
on the bench.
• Bright-line tests are for Congress to
enact, not the judiciary.
• Seek justice, not the desired result. Be
blind to the parties.
• Justice in this case is the goal, not
other cases.
• Equity and Law have been merged in
the United States since 1938.
• Seek wisdom; listen to Judge Newman.
3. Defer to technical experts who have
passed the gatekeeper test in the
district court; those skilled in the art
know more about the art than you
do.
4. Be humble; you are not Humpty
Dumpty.
5. Keep these commandments; review
frequently.
The Federal Circuit: what went wrong and how to fix it.
The End