The Federal Circuit should never use Rule 36 if a patent claim is invalidated

According to Federal Circuit Rules, a Rule 36 judgment can be entered without an opinion in five separate circumstances, but if and only if “an opinion would have no precedential value.”

Black’s Law Dicitionary, 6th Edition, defines “precedent” as follows: “An adjudged case or decision of a court, considered as furnishing an example or authority for an identical or similar case afterwards arising or a similar question of law…”

How is it possible that a decision finding one or more patent claims are invalid could have no precedential value? Truthfully, the thought that the invalidation of a patent claim is not precedential is at a minimum a factual impossibility, and very likely a legal impossibility as well. Clearly, the final decision that one or more patent claims are invalid will be authority for cases dealing with attempts to enforce the now defunct claim(s).

For the sake of simplicity, let’s work with an example. Let’s say that a not too hypothetical patent owner has had all the claims to the patent invalidated in some prior proceeding, whether in the district court or at the Patent Trial and Appeal Board, and now the Federal Circuit has rubber stamped the previous decision with a one-word judgment: “Affirmed.” Let’s further say that this case was between the patent owner and a single opposing party – Google, for example.

What happens if a patent owner who suffered that Rule 36 summary loss to Google at the Federal Circuit were to decide to sue another party – perhaps Apple – on the same claims that were invalidated in the above mentioned hypothetical Google proceeding? No doubt Apple’s attorneys would be rightfully indignant, and if the proceeding were in federal district court you could guarantee there would be sanctions, likely against both the patent owner and the attorneys representing the patent owner. Why? Because those claims have been lost (i.e., invalidated) in a prior proceeding, and it does not matter that Apple was not privy to that prior proceeding. The underlying property right has been lost, and whether the Federal Circuit wants to admit it or not that is binding precedent.

Claim construction is a question of law, which in some limited sense may at times also have a factual component (i.e., when extrinsic evidence is consulted to construe the claim). See Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. Questions of invalidity, however, are clearly questions of law. Thus, when claims are declared invalid it must necessarily be precedential. In other words, these invalidity determinations are conclusions of law that will absolutely be dispositive authority for cases dealing with attempts to enforce the now defunct claim(s).

Even if there is no bright-line rule to demand it, we all know that if the patent owner were to sue another party on claims lost in a Rule 36 judgment sanctions would issue. Obviously, the outcome of a Rule 36 judgment that invalidates one or more patent claims is very precedential. Thus, it is wholly inappropriate for the Federal Circuit to use Rule 36 if one or more claims have been invalidated. Truthfully, it is also likely equally inappropriate for the Federal Circuit to designate an opinion as nonprecedential if one or more claims are invalidated.

Interestingly, a decision upholding the validity of claims would have no precedential value, as ironic and idiotic as that is, because a challenger not in privy could still continue to challenge claims without estoppel ever applying. Title to patents never quiets, ownership is never real, patent owners need to prevail 100% of the time in every forum if they are to even retain the illusory hope of exclusive rights. On the other hand, challengers need to prevail once, and can do so without the Federal Circuit ever explaining why. To call this unfair and one-sided doesn’t even begin to capture the magnitude of just how shameful the system has become.