Destruction of Federal Circuit Claim Construction

By: Erin Phillips

On October 1, 2013 the Supreme Court granted certiorari in the patent case Highmark, Inc. v. Allcare Health Management Systems, Inc. to decide whether a district court’s exceptional-case finding to award attorney’s fees was entitled to deference by the Federal Circuit.[1]  Although on its face the implications of a judgment in favor of deference seem to reach only the most exceptional cases, the possible effects on patent claim construction are monumental.  A decision in favor of deference could spark a major reduction in power for the Federal Circuit.[2]

In its petition for certiorari Highmark stated,

This case is deeply important for another reason: It is part of a larger pattern of Federal Circuit decisions arrogating greater authority to the court of appeals and upsetting the traditional relationship between trial and appellate courts. The Federal Circuit now has asserted de novo review for claim construction… these determinations have substantial factual components.[3]

Claims are the most significant aspect of the patent document.[4]  The claims are the portion of the document that determines the boundaries of the patentee’s rights.[5]  In 1998, the Federal Circuit, en banc, ruled in Cybor Corp. v. FAS Techs, Inc. that claim construction is solely a question of law and is therefore subject to a de novo standard of review.[6]  In his dissenting opinion, Judge Rader stated that the “objective of claim interpretation is to discern the meaning of the claim terms to one of ordinary skill in the art at the time of invention” and de novo review would negate any expert testimony that furthers this objective.[7]

Additional arguments against a de novo standard of review for claim construction include: increased uncertainty in the outcome of litigation, increased number of appeals, and demoralization of trial judges.  Federal Circuit trends have shown that as many as 40% of claim construction cases are reversed.[8]  Critics of Cybor argue that trial judges are better equipped to make claim construction determinations and the most extreme argue that claim construction is inherently a factual determination.[9]

In September, the Federal Circuit, en banc, heard oral arguments in Lighting Ballast Control v. Philips.[10]  The court asked the parties to brief whether Cybor should be overruled, whether any deference should be given to district court claim construction and if so, which aspects should be afforded deference.[11]  Both parties agreed that the de novo standard is not appropriate, but differed as to the scope of the deference.[12]  The oral arguments of both parties touch on many of the arguments that the critics of Cybor have made.

During the Lighting Ballast oral arguments, the parties argued that claim construction contains both issues of fact and law.[13]  However, neither could fully articulate how issues of fact could be separated from issues of law at the district court level to make the deferential standard workable.[14]  The court was very troubled by this, which may be indicative of its future ruling.[15]

If the Federal Circuit agrees and tries to disentangle issues of fact and law in claim interpretation, it may invade the United State Supreme Court precedence of Markman v. Westview Instruments, Inc. that held that the “construction of a patent, including terms of art within its claim, is exclusively within the province of the court.”[16]  Because it is not likely that the Federal Circuit will try to separate issues of fact and law in claim construction in Lighting Ballast, the Supreme Court’s decision in Highmark has the potential to be the biggest impact on claim construction in the last decade.