Capella Photonics Challenges Federal Circuit Practice of Judgments Without Opinions

AffirmedCapella Photonics, Inc. has filed a petition for certiorari arguing that the Federal Circuit’s practice of issuing judgments without opinion pursuant to Federal Circuit Rule 36 in appeals from the Patent Trial and Appeal Board violates 35 U.S.C. § 144, which provides that the Federal Circuit “shall issue . . . its mandate and opinion” to the PTO in such appeals.  See Petition for Writ of Certiorari, Capella Photonics, Inc. v. Cisco Sys., Inc., et al., No. 18-314 (U.S. Sept. 6, 2018).

The underlying Federal Circuit appeal arose from multiple Inter Partes Reviews of two Capella patents on fiber-optic communications systems.  The PTAB found the two patents invalid as obvious.  Capella appealed, arguing, as relevant here, that (i) the PTAB’s obviousness conclusion was based on an erroneous construction of a critical claim term, and (ii) the PTAB had violated the Administrative Procedure Act by allowing petitioner Cisco to submit eleventh-hour supplemental evidence in support of its obviousness argument and then denying Capella an adequate opportunity to respond.  The Federal Circuit affirmed the PTAB’s decision in a judgment without opinion pursuant to Rule 36, and then denied Capella’s subsequent petition for rehearing en banc (again without opinion).

Capella presents two primary arguments in support of its petition for certiorari.  First, Capella argues that the Federal Circuit’s issuance of a Rule 36 judgment in an appeal from the PTAB violates the plain text of § 144, which imposes upon the Federal Circuit a “mandatory” and “nondiscretionary” duty to issue an opinion in such appeals.  Pet. at 16 (quoting SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018)).  Capella points out that, under longstanding Supreme Court precedent, an “opinion” is “a statement of the reasons on which [a] judgment rests,” id. at 17 (quoting Rogers v. Hill, 289 U.S. 582, 587 (1933)), and that a Rule 36 judgment contains no “reasons”—it contains only a judgment.  Congress had good reason to require the Federal Circuit to issue opinions in PTAB appeals, Capella maintains; appellate-court opinions provide important guidance both to the immediate parties to the case and the patent-law community generally regarding the scope and boundaries of patent rights.  As Capella puts it:

Patent rights are public rights.  In order to “promote the Progress of Science and useful Arts,” the government grants to inventors limited “public franchises” in the form of patents that allow the inventors to exclude others from making, using, or selling articles embodying their inventions for a specified period of time.  It is critical to the functioning of the patent system that inventors, their competitors, the patent bar, and the general public understand the legal rules that govern the scope of those public franchises.  Only then can the patent system fulfill its twin aims of incentivizing valuable innovation while also ensuring that exclusionary patent rights do not inhibit the “the full and free use of ideas in the public domain.”  And only then can the relevant stakeholders be assured that they are governed by a legal framework that is rational and fair. The Federal Circuit’s routine practice of denying the public the guidance it deserves vis-à-vis the scope of patent protections thus threatens to undermine the very legitimacy of the patent system itself.

Pet. at 20 (citations omitted).

Second, Capella argues that a contrary reading of § 144—that is, a reading that would permit the Federal Circuit to issue Rule 36 judgments in PTAB appeals—would raise serious concerns under Article III of the Constitution.  Capella contends that § 144’s requirement of an “opinion” in PTAB appeals “operates as an important constitutional safeguard: it mandates that the [Federal Circuit] show its work in adjudicating the legal issues raised by the parties, and it thus ensures . . . that substantive Article III review of federal patent-law questions is available to parties litigating before the Board.”  Pet. at 25.  Capella notes that the Supreme Court stressed in its Oil States decision that it was not considering whether the IPR process “would be constitutional without any sort of intervention by a court at any stage of the proceedings.”  Id. at 24 (quoting Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1379 (2018)) (quotation marks omitted).

Capella closes by noting that, since the establishment of the modern PTAB, the Federal Circuit has issued Rule 36 judgments in approximately half of PTAB appeals—and “the problem is not going away.”  Pet. at 27-28.  This routine “derogation of the statutory scheme established by Congress and the constitutional protections afforded by Article III,” Capella asserts, “deprives all stakeholders in the patent system of critically important guidance concerning the scope of patent rights.”  Id. at 28.

The respondents’ response to Capella’s petition is due October 11, 2018.  The question presented in Capella’s petition was presented in another recent petition for certiorari in the case of Leon Stambler v. Mastercard International, Inc., No. 17-1140.  The Court called for a response to the Stambler petition but ultimately denied certiorari on October 1, 2018.

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Rob Sterne

Rob Sterne is a founding director of Sterne Kessler Goldstein & Fox. At the age of 26, and just one year out of law school, he set out to create a different kind of law firm—one that recognized the contributions of all its members and put a strong emphasis on scientific and technical knowledge. Now, nearly four decades later, Sterne has helped to nurture and grow this revolutionary idea into one of the top five largest intellectual property specialty firms in the country. And in so doing, he has established his place as one of the leading patent lawyers in the United States. In fact, Rob has been recognized by the Financial Times as one of the "Top Ten Most Innovative Lawyers in North America 2015," by Law360 as one of the "Top 25 Icons of IP," and among the country’s "IP Trailblazers & Pioneers 2014" by the National Law Journal. He is highly respected by his peers and has received some of the most prestigious awards and rankings for professional excellence in intellectual property law.

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Jason D. Eisenberg a director and practice group leader in Sterne Kessler’s Electronics Practice Group, provides strategic counsel from a quarter century of patent experience gained before law school as an examiner, during law school as a patent agent and extern at the Ohio Supreme Court, and after law school in private practice. Jason leveraged his nearly two hundred PTO Litigation proceedings, both AIA and reexaminations, as co-editor and author of several chapters of the Second Edition of Patent Office Litigation (Thomson Reuters, 2017).

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William H. Milliken is an associate in Sterne Kessler’s Trial & Appellate Practice Group. His practice focuses on patent litigation in the United States District Courts and the United States Court of Appeals for the Federal Circuit, with a particular emphasis on cases arising under the Hatch-Waxman Act. He has experience drafting appellate briefs filed in the United States Courts of Appeals, briefing and arguing complex motions before the federal district courts, and assisting with trial preparation in Hatch-Waxman and other patent infringement litigation.

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  1. Disenfranchised Patent Owner October 3, 2018 8:29 am

    This petition should have about 1,000 supporting amicus briefs.

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