Recently, the Federal Circuit issued a ruling in PCT International, Inc. v. Holland Electronics, LLC. With this decision the Federal Circuit upheld a permanent injunction and jury verdict in favor of PCT International, Inc. finding that competitor Holland Electronics infringed claim 1 of U.S. Patent No. 6,042,422, which is covers a connector for connecting an end of a coaxial cable to another coaxial cable.
The decision took less than a page and a half of text, but only 1 phrase was at all substantive. It simply read: “AFFIRMED. See Fed. Cir. R. 36.” (bold in the original). The remainder of the “decision,” which was labeled as non-precedential, was simply the heading and included the date the order was entered by the Clerk of Court, Peter R. Marksteiner.
This type of decision is what is called a “Rule 36 judgment,” or sometimes simply a “summary affirmance” or “Rule 36 affirmance.”
According to Federal Circuit Rules, a Rule 36 judgment can be entered without an opinion when it is determined by the panel that any one of five conditions exist and a written opinion would not have precedential value. The five conditions are:
- The judgment, decision, or order of the trial court appealed from is based on findings that are not clearly erroneous.
- The evidence supporting the jury’s verdict is sufficient.
- The record supports summary judgment, directed verdict, or judgment on the pleadings.
- The decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review.
- A judgment or decision has been entered without an error of law.
The per curiam decision of the panel in this case did not say which one of the five conditions applied, or if more than one applied, which is typical of a Rule 36 judgment from the Federal Circuit.
When I interviewed Chief Judge Rader the topic of Federal Circuit deliberations and Rule 36 Judgments came up briefly. In relevant part, our discussion was as follows:
QUINN: [C]an you describe how deliberations unfold? And what I mean by that is who decides who writes for the majority, when do you know whether you will write a dissent or write for the majority — sort of the mechanics involved.
RADER: When we come off of the bench, we immediately sit down as a panel of three and convene our conference. The junior-most judge always speaks first, and we do that for two reasons. One is to ensure a kind of judicial independence. The junior judge cannot defer to the more experienced senior judges, but must prepare his or her own independent opinion, which will be presented first in an oral fashion. And there is another reason for it, and that is if the first judge and the second judge differ, then the presiding judge can kind of rock back in his or her chair and listen, let the two judges represent the case and receive the benefits of that revisitation of the issues before making a decision that will decide the outcome of the case.
QUINN: So you pretty quickly after the oral argument the panel has an idea, or maybe even knows, whether there is going to be a split or it is going to be unanimous.
RADER: We do not know for sure. We do not discuss the cases in advance. Now, I’ve worked with everyone on this Court for many years and I generally predict with some degree of accuracy how they are going to vote. So I will often predict when we will have a split, but I am not always accurate on that. The conference is when we really decide and we discuss and come to a resolution. The second order of business, after we have discussed the outcome, is to decide how to resolve it. We decide whether to issue a simple Rule 36 affirmance, which is a standard one-page order that affirms on the basis of the judgment below. The second way of dealing with it is a non-precedential opinion, which is a short five-page opinion written solely for the benefit of the parties that is not binding on the Court in the future. Then there is the standard precedential legal opinion that you see regularly and discuss and which you see in casebooks. By the way, I think we tend to do about one-third of each: one-third of summary affirmance, one-third of non-precedential opinions and one-third of full-blown precedential opinions.
Thus, while it may seem strange to some that the Federal Circuit issue a one-page decision that merely says “AFFIRMED,” relying on this Rule 36 procedural tool is not uncommon and does allow the Court to manage its docket. The Federal Circuit believes these types of decisions provide a critical tool for the court to be able to address all the appeals they receive. Indeed, thanks to the America Invents Act (AIA) and the popularity of post grant proceedings, particular inter partes review (IPR), which is an administrative trial proceeding conducted by the Patent Trial and Appeal Board (PTAB), the Federal Circuit workload is only increasing.
As understandable as the need for a mechanism to quickly resolve cases is for a court as substantially overloaded as the Federal Circuit, there is something fundamentally wrong with using a Rule 36 judgment and providing no insight into even which rationale applied that allowed the Court to invoke Rule 36 in the first place. The parties to these cases have invested a great deal of time and effort to prepare and brief these cases and all they get is a one sentence decision that provides no insight into the Court’s thought process or analysis? That hardly seems fair; it hardly seems in keeping with traditional notions of American justice.
Moreover, in PCT International, Inc. v. Holland Electronics, LLC, the use of a Rule 36 judgment is particularly disconcerting because the Federal Circuit upheld the issuance of a permanent injunction by the district court. Since the Supreme Court’s decision in eBay v. MercExchange over a decade ago it has become increasingly difficult, indeed at times impossible, for victorious patent owners to enjoy exclusive rights once they have prevailed in a patent infringement litigation. Issuing a Rule 36 judgment where the patent owner was victorious and a permanent injunction stands robs the patent owner community of vital Federal Circuit precedent that could otherwise be used to inform district courts on the appropriateness of this extraordinarily important remedy.
Aside from robbing the industry of precedent, how can the public be at all confident that the Court took the time to thoughtfully consider the arguments made if there is nothing more than a naked conclusion reached? This rubs many the wrong way. Since the earliest days of our formalized education we have been told repeatedly to “show your work,” but here at the pinnacle of our Justice system judges are allowed to summarily reject an appeal without as much as an explanation?
This use of Rule 36 judgments is also particularly alarming given how frequently the Federal Circuit relies upon a Rule 36 judgment. Earlier this summer PatentlyO reported that as a result of the AIA the Federal Circuit is now getting more appeals from the Patent Office than from district courts, and that the usage of Rule 36 judgments is increasing both in real numbers and in percentages of disposals. Between January 2016 and May 2016, the Federal Circuit relied upon a Rule 36 judgment to dispose of 43% of appeals from district courts and nearly 50% of appeals from the United States Patent and Trademark Office.
The use of a Rule 36 judgment presents a real and growing problem for the patent community. Indeed, the right to a full, fair and thoughtful appeal seems to be almost completely compromised. This is in part the result of Congress continuing to load cases onto the Federal Circuit docket, and in part because of the Federal Circuit’s penchant for wanting to be a super trial court that reconsiders and reweighs evidence, which is not an appropriate role for an appellate court.