SCOTUS Denies Imperium IP Holdings Petition, Lets CAFC Assessment of Expert Testimony Stand Over Jury’s

On Monday, the U.S. Supreme Court denied a petition for certiorari filed by Imperium IP Holdings (Cayman) Ltd., thus letting stand a U.S. Court of Appeals for the Federal Circuit decision that reversed a more than $22 million enhanced damages award against Samsung.

Imperium Holdings petitioned the Supreme Court in July seeking to overturn the January 2019 Federal Circuit ruling that agreed with Samsung’s argument “that the only reasonable finding on this record is that the ’884 patent claims at issue here are invalid for anticipation,” largely due to the Court’s interpretation of the expert witness testimony during the jury trial. “Juries have wide leeway to assess evidence and credibility,” said the Court, “but under the requirement of substantial evidence, a jury’s rejection of expert testimony must have some reasonable basis.”

The question Imperium presented to the High Court was:

Whether an appellate court may reverse a jury verdict based on its own view that expert testimony was credible, ‘unrebutted,’ and ‘uncontradicted,’ or instead whether the Seventh Amendment requires the jury to make determinations about credibility and the weight of the evidence in determining whether a party has properly carried its burden of proof.

U.S. Patent No. 6,271,884 is titled “Image Flicker Reduction with Fluorescent Lighting” and claims a method of lighting photographs to reduce the impact of flickering fluorescent lights. A jury in the U.S. District Court for the Eastern District of Texas found infringement of claims 1, 5, 14, and 17 of the ’884 patent and of claims 1, 6, and 7 of U.S. patent No. 7,092,029, rejected Samsung’s invalidity challenges to the claims at issue from those patents, found claim 10 of U.S. Patent No. 6,836,290 infringed but invalid, and awarded damages for infringing the ’884 and ’029 patents. In post-trial rulings, the district court enhanced damages, granted Imperium an ongoing royalty, and awarded Imperium attorneys’ fees. Samsung appealed mainly with respect to the jury’s finding of no anticipation of the claims of the ’884 patent found infringed.

What’s Reasonable?

In the Federal Circuit’s January 31 decision, Judge Taranto, writing for the Court, said that “a reasonable jury was required on the record of this case to find the claims of the ’884 patent at issue to be anticipated by prior art.” The key prior-art reference at issue was the Johnson patent, U.S. Patent No. 7,289,145, which teaches a circuit for processing image data in a digital camera. Because Samsung’s expert witness, Dr. Neikirk, claimed in his testimony that the Johnson patent discloses each of the limitations of claims 1, 5, 14, and 17 of the ’884 patent, in particular that it “teaches the ‘setting the integration time’ and ‘maintaining the integral multiples’ claim limitations—which are the only limitations Imperium now argues are missing from Johnson.” The Court further stated that on cross-examination, “Imperium provided no basis for questioning those conclusions.”

Troubling Trends

Many took issue with the Federal Circuit’s analysis, calling it an overreach and another example of the Court’s troubling trend of “improper appellate fact-finding,” as outlined in the amicus brief “on behalf of twelve senior executives, entrepreneurs and venture capitalists who have devoted their careers spanning decades to founding, investing in and managing businesses whose livelihood is cutting-edge technology.” Their brief explained that:

“Amici are concerned that the Federal Circuit’s decision in this case – made by three unelected judges – usurps the Constitutionally-mandated role of juries to find the facts and decide issues of witness credibility. In so doing, the Federal Circuit continues an unfortunate pattern of improper appellate fact-finding that destabilizes our patent system to the severe detriment of entrepreneurial invention. Amici urge this Court to step in and restore the proper roles of the jury and appellate review in patent litigation by granting certiorari in this case….”

An important attribute of our patent system – and one equally enshrined in the Constitution – is the right of inventors to have patent disputes, no matter how complex and technical they may be, determined in Federal court by a duly-empaneled jury. As the Seventh Amendment provides: “[T]he right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States . . . .” U.S. Const. Amend. VII. So important was the right to a jury trial that assurance of its inclusion in the Bill of Rights became a key argument in securing ratification.

The brief further noted that both the USPTO and a jury had found the patents valid, and a district court had upheld the jury’s verdict, but “the Federal Circuit, based on a cold reading of the trial transcript, awarded defendant judgment as a matter of law.”

Costly, Wasteful, Unstable

US Inventor submitted an amicus brief in which it argued that the decision “discriminates equally against both jury trial winning plaintiffs and defendants. Plaintiffs and defendants each suffer impairment of their Seventh Amendment rights,” said the brief.

“Under the Federal Circuit’s logic, no defendant can any longer try its case by holding the plaintiff to its proofs. It must do more. According to the Federal Circuit, this has to include meeting a shifted burden to elicit directly contrary testimony, and/or narrow demonstrations that specific witness answers lack credibility.”

As an example, the US Inventor brief posited a hypothetical fraud case in which the jury is tasked with judging the credibility of witnesses.

“That is, this defendant asks the jury to find flaws in witness manner and demeanor, to weigh witness interests in giving testimony, or scrutinize witness inconsistency with their own answers or other evidence. At the Federal Circuit, such traditional jury determinations will have no effect. This fraud plaintiff will always win, so long as it has checked off all of the proverbial boxes to complete its prima facie case. The jury’s general mandate to assess credibility means nothing in any federal cases appealed to the Federal Circuit.”

US Inventor further argued that the Federal Circuit has created a legal environment that is more costly, wasteful, and unstable. Citing Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 574-75 (1985) and Polaroid Corp. v. Eastman Kodak Co., 789 F.2d 1556, 1558 (Fed. Cir. 1986), the brief said:

“If the Federal Circuit may replace a jury’s factual determination with its own, then going forward the winner of a jury trial at the district court will have to try the case anew in the appeals court. This flies in the face of the proper division of labor between trial courts and courts of review.”

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