Changes to Patent Litigation on the Horizon

This is the first of a two-part series evaluating the impact of the Lighting Ballast en banc decision.

For the first time in 15 years, the Federal Circuit, sitting en banc, will reconsider its de novo standard of appellate review in claim construction (the interpretation of the claim language in a patent), potentially changing patent litigation in several significant ways: (1) greater pre-suit uncertainty; (2) expanded role of expert witnesses; (3) increased litigation costs; (4) less likelihood of early settlements; and (5) increased nuisance suits. See Lighting Ballast Control LLC v. Philips Electronics North America Corp. and Universal Lighting Technologies, Inc., No. 2012-2013 (Fed. Cir.).

Fifteen years ago, in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), the Federal Circuit held that claim construction is a question of law such that all aspects of a trial court’s claim construction, including findings of fact, are subject to de novo review. If Cyber Corp. is modified, the Lighting Ballast panel decision may change the way patent infringement cases are litigated, prompting 40 amici, including technology giants Google, Amazon.com, Microsoft, and Cisco, along with the U.S. Patent and Trademark Office (PTO) and national and state bar associations, to submit briefs in support and against de novo review.

Opponents argue that de novo review leads to high reversal rates of a trial court’s claim constructions. Proponents argue that de novo review is necessary to promote uniformity and that reversal rates have declined in recent years to as low as 17 percent.

Among interested parties, there are varying points of view as to how Lighting Ballast should be decided. These break down into three basic categories:

1. Reversal: Appellee Lighting Ballast, advocates for a complete reversal of de novo review. Lighting Ballast argues that a trial court’s claim construction involves mixed questions of law and fact that is entitled to deference by the Federal Circuit and should only be reversed if clearly erroneous.
2. Affirmance: Several Fortune 500 companies, such as Google, Amazon.com, Yahoo!, Microsoft, Dell, and Cisco, argue that the Federal Circuit should not overturn 15-year-old precedent and disturb the de novo standard of review.
3. Hybrid Approach: Appellant Universal Lighting Technologies, the PTO, former Federal Circuit Chief Judge Paul Michel, and the Federal Circuit Bar Association, among others, request a hybrid standard of review. They seek limited clear error review of a trial court’s findings of fact, such as findings based on extrinsic evidence (evidence outside the patent and its prosecution history, such as expert testimony). They generally argue that deference is warranted only when the trial court is better suited than an appeals court to make factual findings, such as in hearing witness testimony and making credibility determinations.

With the parties and the majority of amici advocating for some level of deference, the Federal Circuit appears poised to modify the de novo standard of review. As a result, in-house counsel will likely be faced with the following challenges:

1. Greater Pre-Suit Uncertainty