Rule 36: Unprecedented Abuse at the Federal Circuit

By Peter Harter & Gene Quinn
January 12, 2017

Broken gavelThe United States Supreme Court first promulgated Federal Rule of Appellate Procedure 36 in 1967 in order to clarify appellate practice and procedure, and to assist Circuit Courts of Appeal in the management of their workflow. The Supreme Court recognized that there are some rare instances where the outcome of the case is so clear a full opinion wouldn’t be necessary. It seems doubtful, however, that the Supreme Court envisioned Rule 36 decisions, which are all of one short sentence, would be used in close to half of all cases brought to a Circuit Court. But that is precisely what is happening at the United States Court of Appeals for the Federal Circuit.

America’s innovators feel as if they are under siege, and by any honest objective review that feeling is based on substantial fact. Over the last decade patent rights have become eroded, first with the loss of the right to a permanent injunction after proving an infringer trampled on your patent rights (i.e., eBay v. MercExchange), then by making it much easier to demonstrate an invention is obvious (i.e., KSR v. Teleflex), then with the enactment of the horribly misnamed America Invents Act, which ushered in three new one-sided challenges that make it relatively easy for challengers to strip patent rights away from patent owners, to the four Supreme Court cases constantly narrowing what is considered patent eligible (i.e., Bilski, Mayo, Myriad, and Alice). Add in all the determinations from inferior decision-makers, such as examiners and Administrative Patent Judges and Federal District Court Judges, and we are at a point now were we have fallen through the looking glass for real. The Patent Trial and Appeal Board has ruled that a magnetic resonance imaging (MRI) machine is an abstract idea and not patent eligible. You have to wonder whether these judges stopped to think about what would happen if they tripped on the way to the MRI machine and fell. Would they still think the machine to be abstract and non-existent when they hit their head on the machine as they fell to the floor? But that is the brave new patent world in which we live.

Our system of justice is built on the premise that if there is an errant decision there will be an opportunity to appeal to a higher authority to rectify that decision. Not so fast! In the patent world the Federal Circuit is further placing America’s inventors under siege as the result of their mercurial use of Rule 36.

Perhaps one of the biggest problems with Rule 36 is that it only allows a Court of Appeals to summarily affirm a loss, which in recent years means patent owners are at the short end of that stick. Could you imagine how quickly Rule 36 would no longer be used if the Federal Circuit could summarily, with one sentence, say that the previous decision maker was wrong and the patent claims were valid?

For the past decade academics and judges have questioned whether the Federal Circuit should be the sole patent appeals court in the United States. While there probably is not enough interest in the patent reform lobby to break up the Federal Circuit, it would certainly be reasonable for Congress to start asking questions at some point about what the taxpayer is getting for their money. With no written opinions in close to 50% of patent cases, is America’s patent court living up to its assignment?

And one need not rely on anecdotes. A recent review of other appellate courts using Rule 36 shows that the Federal Circuit is indeed creating unique rules for the patent system, a problem long identified by the Supreme Court as deeply troubling. Even though Appellate Procedure Rule 36 dates back to the 1960s, five of the 12 circuits do not have a local rule on using Rule 36 to affirm a lower court decision and, therefore, rely on the Federal Rule of Appellate Procedure itself for the issuance of summary affirmances. None of the so-called Regional Circuits use Rule 36 as extensively as does the Federal Circuit, particularly with respect to novel and controversial issues.

For example, in each of the following appeals from the U.S. district courts involving substantial issues under the Alice doctrine, the Federal Circuit entered a Rule 36 order and thus provided absolutely no guidance, saying only in one sentence that the district court record supported the entry of judgment below.

  1. Becton Dickinson and Co. v. Baxter Int’l Inc., Appeal No. 15-1918 (decided May 9, 2016) [Remote Pharmacy Monitoring]
  2. IP Learn-Focus, LLC. v. Microsoft Corp., Appeal No. 15-1863 (Decided July 11, 2016) [computer learning system comprising particular combinations of different types of sensors (e.g. optical sensors, nonoptical sensors, and imaging sensors) and software programming, applied to MS’s Kinect device]
  3. Novo Tranforma Techs. L.L.C. v. Sprint Spectrum, L. P., Appeal No. 15-2012 (decided September 23, 2016) [payload delivery system that eliminates the incompatibility between different communication services employing different media for communicating information]
  4. Broadband iTV Inc. v. Hawaiian Tele., Inc., Appeal No. 16-1082 (decided September 26, 2016) [Automated Control of Video-on Demand Technology]
  5. Blue Spike LLC v. Google, Inc., Appeal No. 16-1054 (decided October 10, 2016) [Alternative to digital watermarking by creating a “Signal Abstract”, a smaller digital representation of the digital signal, that can be used for identification purposes]
  6. Concaten, Inc. v. AmeriTrak Fleet Solutions, LLC, Appeal No. 16-1112 (Decided October 11, 2016) [Snow management system where real-time data is collected from a plurality of working snowplows and that data was then used to optimize the routing and operation of subsequent snowplow operations]
  7. GT Nexus, Inc. v. Inttra, Inc., Appeal No. 16-1267 (December October 11, 2016) [Computer network architecture called “common carrier system” that integrates existing automated carrier booking and tracking systems and enables multiple shippers and multiple carriers to communicate across a common platform]
  8. Netflix Inc. v. Rovi Corp., Appeal No. 15-1917 (decided November 7, 2016) [Automated Viewing Recommendations and Booking-marking in Interactive Program Guides]
  9. American Needle, Inc. v. Zazzle Inc., Appeal No. 16-1550 (decided November 10, 2016) [selling objects on line using a two-dimensional format to preview merchandise in three dimensions]
  10. Personalized Media Commc’n LLC v. Amazon.com, Inc., Appeal No. 15-2008 (decided December 7, 2016) [seven distinct network control applications from seven different and patentably distinct patents]
  11. MacroPoint LLC v. FourKites Inc., Appeal No. 16-1286 (decided December 8, 2016) [Five vehicle tracking applications]
  12. Voxathon LLC v. FCA US LLC, Appeal No. 16-1614 (decided December 9, 2016) [Technology for allowing driver to access telephone calls through Vehicle Entertainment and Data Systems]

Several of the parties receiving these Rule 36 judgments have requested rehearing asking the Federal Circuit to provide Section 101 guidance en banc but to date none of these requests have taken up by the Court.

What is more confounding, in the Spring of 2016, Federal Circuit Judge Jimmie Reyna told an audience of American University Law School students in a speech delivered in a courtroom at the Federal Circuit that he is not worried about the surge in appeals from the PTAB. He said that the water is at his ankles and that the court can handle it even if it rises to his throat. Reyna went on to tell the students that when a Rule 36 affirmance is delivered the court has done 90% of the work to get to a decision.

If 90% of the work is already done, why not go the rest of the way to produce a written opinion? If 90% of the time and energy is already going into a Rule 36 affirmance, is it really worth providing no guidance to the industry and treating the parties with such utter disdain?

One critical role with which the Federal Circuit was charged when it was created was to bring to consistency to patent law jurisprudence.  It was clear that, when the Supreme Court in Alice declined to provide precise contours as to what was an “abstract idea,” it expected the Federal Circuit with long established patent law expertise to provide that guidance.  It is becoming clearer and clearer that the Federal Circuit is simply abnegating its duty in this regard by refusing to speak on critical issues of patent eligibility under when it has a duty to do so.

And there is a critical element in the Federal Circuit’s misuse of Rule 36 in the Section 101 context that is particularly egregious.  The fundamental requirement of Fed. Cir. R. 36 (set forth below) is that an opinion would have no precedential value:

Rule 36. Entry of Judgment – Judgment of Affirmance Without Opinion

The court may enter a judgment of affirmance without opinion, citing this rule, when it determines that any of the following conditions exist and an opinion would have no precedential value:

…..

(c) the record supports summary judgment, directed verdict, or judgment on the pleadings;

Yet, the principal manner in which the district courts are divining their guidance from the Federal Circuit is by review of the precise language of claims that court finds non-statutory and comparing them to those at issue before the lower court.  In Enfish v. Microsoft, Judge Hughes openly acknowledged that the test for patent eligibility is an ex post facto test that compares the instant claims against other cases where there is an opinion and then figures out which case is most similar to the claims in the instant case. Essentially, the patent eligibility test is a matching test without any semblance of intellectual rigor. How then could it be possible that more written opinions would not shed important light and have precedential value? Indeed, given the nature of the 101 test accurately described by Judge Hughes in Enfish, the Federal Circuit should review as many different claims as possible to expand its guidance to the lower courts.  Any Section 101 case in the present state of affairs would necessarily have precedential value. How does this continuing affirmance of multiple district fact patterns without written opinions not violate the clear language of Rule 36 itself?

We know that the bar believes that there is a crying need for clarification.  This sentiment was voiced quite vigorously by the “Current Issues in Patent Litigation” panel at the April 2016 Federal Circuit Judicial Conference. This panel included Don Dunner, considered the Dean of the Federal Circuit bar, and former USPTO Director David Kappos. The moderator was Carter Phillips, the lawyer who represented eBay in the Supreme Court in eBay v. MercExchange. At this conference both Dunner and Kappos were particularly vigorous in their insistence that the Court had a duty to provide guidance in the Section 101 arena. This means the Federal Circuit should publish more written opinions and stop wasting ink on Rule 36 nothing-burgers.

They are not alone.

One could accept an affirmance without a written opinion where the lower court conclusions were clear and unassailable, and perhaps provided grounds for fee shifting (i.e. loser pays) such that the party should not have even bothered to appeal. However, even experts like Mark Lemley have said at the recent USPTO roundtable on subject matter eligibility hosted by Stanford Law School that, given the Supreme Court’s lack of guidance in Alice, common law jurisprudence at the Federal Circuit level is clearly needed to determine what is patentable and what is not. Lemley concluded that every written opinion is going to be important. In fact, Lemley was very blunt: “101 jurisprudence is offensive because there is no there there.” (Lemley is a Stanford law school professor and a lawyer with the San Francisco based firm Durie Tangri where he focuses on patent litigation.)

Thus, Rule 36 affirmance abuse by the Federal Circuit exacerbates this nothingness and deprives the general public of much needed guidance. Worse, the Federal Circuit says that it does 90% of the work of a written opinion to get to this nothingness, which just makes this whole episode all the more offensive. So what is stopping the Federal Circuit from the remaining 10%? What is stopping the Federal Circuit from actually complying with the explicit language of Rule 36, which should only ever result in sparing use of this procedural tool? How does this square with the Federal Circuit’s own rule that a Rule 36 affirmance only ratifies the judgment of a district court judge and not its reasoning? See, for example, Rates Technology, Inc. v. Mediatrix Telecom, Inc., 688 F.3d 742, 750 (Fed. Cir. 2012).

Making this all the more important, and egregious, is that the Federal Circuit ruled in 2016 that its “decisional mechanism” for all 101 cases will be “the classic common law methodology.” Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1294-95 (Fed. Cir. 2016).

That’s exactly what Professor Lemley highlighted at the recent USPTO 101 subject matter eligibility event in Silicon Valley: case by case comparisons, building on what has come before is the 101 test. And this is exactly the kind of material Chief Justice Roberts just said in his annual year-end report that district court judges dearly depend upon for the appellate courts to produce.

Absent some kind of intervention from Congress it will be up to the Federal Circuit itself to resolve this issue by allowing parties to rehear en banc Rule 36 affirmances and to also stop the practice of Rule 36 affirmances entirely. Otherwise it is only going to be a matter of time for someone to appeal this issue to the U.S. Supreme Court, and possibly also for questions about the long-term viability of the Federal Circuit to start to be seriously discussed on Capitol Hill.

The Author

Peter Harter

Peter Harter has over 20 years of experience bridging the ecosystems of technology, business, law, venture finance and politics by providing advice to management, boards and investors on legislation, regulation, court cases, media, standards, treaties, political campaigns, capital, property and labor. As the founder of The Farrington Group, Peter advises public and private companies, investors, startups and nonprofits on risks from legislation, regulation, court cases, standards, politics, and more. He also helps identify relationships for sales, finance and and executive recruitment. Peter’s career began in 1993 as an Internet lawyer. He broadened in Silicon Valley as head of global government affairs for Netscape and EMusic.com and in business development and sales for Securify. He deepened his experience in policy in Washington, DC, lobbying on patent reform for Intellectual Ventures. Peter has expertise in the areas of patents, copyrights, open source, cybersecurity, export controls, voting, antitrust, nuclear energy, big data, and medical research reform.

To contact Peter please connect with him via LinkedIn.

Peter Harter

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments. Join the discussion.

  1. KenF January 13, 2017 9:05 am

    It used to be said that the law is an ass. Now it’s the court, too.

  2. Mark Nowotarski January 13, 2017 9:06 am

    “In Enfish v. Microsoft, Judge Hughes openly acknowledged that the test for patent eligibility is an ex post facto test…”

    I agree that patent eligibility has now become an ex post facto test. Doesn’t this undermine the presumption of validity? How can an issued patent be presumed valid, if the validity of the claims can only be determined in light of court decisions that occur after the patent is examined?

  3. Curious January 13, 2017 10:04 am

    How can an issued patent be presumed valid, if the validity of the claims can only be determined in light of court decisions that occur after the patent is examined?
    That’s because 35 USC 101 keeps getting amended, and the Courts have to reconsider its meaning each time. Oh wait, I forgot, 35 USC 101 has not been substantively amended in 65 years.

    After 65 years and ask a patent attorney whether a particular patent passes muster under 35 USC 101 and the vast majority of them will say “I’m not sure — but we’ll know when it gets to the Federal Circuit.” Does anybody believe this type of uncertainty fosters innovation and investment in innovation?

    Inventor: “Mr. VC, I want you to invest $10M in my business that is protected by US Patent No. 9,876,543.
    Mr. VC: “Is your patent valid?”
    Inventor: “The patent office issued it, so it should be valid.”
    Mr. VC: “Has it been through an IPR? has it been tested in Court?”
    Inventor: “But that is going to cost upwards to $1M …..”
    Mr. VC: “Thanks [while shaking head] … maybe you should have gotten your patent in China where they are broadening patent rights [while checking his calendar to see if he has any Chinese startups to interview]”

  4. Ternary January 13, 2017 12:12 pm

    Curious. That is absolutely correct. I have to present to my investors soon on the “value” of my patent portfolios and if they should extent their funding. I don’t want to say that my inventions and issued patents are not worth investing in. But clearly, the value of issued patents has dramatically decreased over the last 5 years. The uncertainty of the legal situation and anti-patent trends, as documented extensively on IPWatchDog, force me to keep issued cases “alive” and thus increase cost. The risk on the validity of patents has increased and the length of a process to defend validity has increased while probability of success has decreased. While potential infringers are better off challenging my IP than engaging in licensing.

    What would you do as investor?

  5. Anon January 13, 2017 5:13 pm

    The legal term, gents, is “Void for Vagueness.”

    Perhaps the Court should learn from – instead of disdaining – the “scriveners” attempting to protect inventions.

  6. step back January 13, 2017 9:17 pm

    Anon @5

    There is little doubt that the “scriveners” are the devil’s stepchildren and the familiars of all things witchcraft. The “spirit” of Kitty Hawk (*) lurks within them. 😉

    (*) Outgoing President Obama paid homage to the “spirit” of Kitty Hawk in his farewell speech.

    https://patentu.blogspot.com/2017/01/depriving-inventors-of-legal-counsel.html

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