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

By IPWatchdog
October 9, 2019

“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.” – Amicus brief of 12 senior executives, entrepreneurs and venture capitalists

denied - https://depositphotos.com/4540592/stock-photo-denied-rubber-stamp.htmlOn 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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Discuss this

There are currently 5 Comments comments. Join the discussion.

  1. BP October 9, 2019 10:01 am

    Who are juries to decide when we have the esteemed Fed Cir?

    In arguments running under 1 hour, the politically appointed Fed Cir knows better than those that spend months and generally years litigating at the trial level. The Fed Cir knows better than the trial judge Mazzant and the people of the jury, intelligent and generally unpretentious people that spent time away from work and families to faithfully perform their duties.

    From the apparent expert: “Hey, one of our research projects even made Jay Leno’s monologue!!” In the eyes of the siloed Fed Cir, I’m sure that added to “credibility”.

    As stated by the Fed Cir, the expert had worked with one of the co-inventors of the 102 reference (Johnson patent). The trial was ED TX, the expert from UT. That a Texas jury was unconvinced without “substantial evidence” of being unconvinced sure seems odd. Maybe there was a Fed Cir clerk from UT that weighed in?

    At least the Fed Cir decision is nonprecedential.

  2. Marco October 9, 2019 10:08 pm

    Really unfortunate and sad. This all started with Markman and the Federal Circuit’s hostility to jury determinations in patent cases.
    Then came the crazy AIA which displaces the entire Article III court system from a significant portion of patent dispute adjudication.
    What the heck is happening here?
    Why don’t we just let all patent disputes be tried in the first instance in the Federal Circuit, and have its circuit court judges empaneled as the jury and judge in a rotating manner.
    All the DC area firms who are getting rich off AIA cases in the PTAB would love this, because they would get most of the rest of patent litigation work.
    To heck with the rest of the country, the common sense and intellect of juries, and the protections and balances afforded by the Constitution.

  3. TFCFM October 10, 2019 10:44 am

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

    The headline is, at best, misleading.

    The Supreme Court merely declined to hear a case. Period. There are any number of reasons why the Court declines to hear cases.

    The fact that the appellant grossly misstated the issue in its “Question Presented” surely did not help their bid for cert.

    The issue was not “Whether an appellate court may reverse a jury verdict based on its own view [regarding] expert testimony….” Instead, the issue was more fundamental: whether the Federal Circuit’s holding (i.e., that the jury’s non-anticipation verdict was not based upon any substantial evidence) satisfied the standard for a grant of judgment as a matter of law.

    Given that there was no evidence whatsoever presented to refute the clearly anticipatory teachings in the prior art and that the unmistakable appearance that the jury was merely fooled by a charlatan who mischaracterized those teachings, the question reduces to whether, in the face of clear evidence of anticipation, a jury’s unsupportable verdict of non-anticipation should nonetheless be entered.

    (Query: Would this blog and its single-minded commenters be raising so much as a peep if, on the same facts with the parties’ identities reversed, the jury’s verdict had been adverse to the patentee and overturned to favor the patentee?)

  4. BP October 10, 2019 2:21 pm

    @3 TFCFM You may want to rephrase your “issue”. It’s more like: “Whether an appellate court may set aside/reverse a jury verdict where the jury was unconvinced that evidence of defendant’s invalidity defense did not meet the ‘clear and convincing’ standard”. Or, “Whether an appellate court’s determination that a jury must rely on ‘substantial evidence’ to be unconvinced that evidence of defendant’s invalidity defense did not meet the ‘clear and convincing’ standard is proper”. Or, “Whether an appellant court can, absent new evidence, set aside a jury’s determination that evidence of defendant’s invalidity defense did not meet the ‘clear and convincing’ standard”.

    A patent is presumed valid and must be proven invalid by clear and convincing evidence. When the prior art is asserted to anticipate, the patentee can present evidence but ultimately the burden is on the defendant. In other words, even if the patentee presents no evidence and states it disagrees, the jury can still find that the defendant did not meet the clear and convincing standard. If that were not the case, what would “clear and convincing” mean? There are instances when the patentee says we have a priority date before that anticipating reference such that the burden shifts to the patentee to prove the priority date; however, that is not the case here. To scan the record and state that the record did not have “substantial evidence” is a farce and ignores the fact that the ultimate burden is on the defendant and decided by the fact finder, i.e., the jury.

    The terminology was not identical, that alone is sufficient for a jury to decide that the evidence did not meet the “clear and convincing” standard – we argue that all the time before the USPTO and win under the preponderance of the evidence standard. But you can see why Taranto tries to negate the terminology issues.

    For a straight forward defense of invalidity as anticipated by a reference, why should a jury have “substantial evidence” to back its determination that the evidence presented was not “clear and convincing”? In criminal cases, do they ask the jury, what evidence did you have that prevented you from convicting? That’s BS, the state/government must prove its case. A judge may set aside a jury verdict of guilt – but not of acquittal – which is essentially what Taranto did in the context of the jury not finding invalidity as anticipated.

    The burden is ultimately with the defendant to convince the fact finder that the defense has been proven by “clear and convincing” evidence. Taranto really stretches the fabric to further weaken patents and muddy the waters.

    AIPLA:
    “If a party challenges the validity of the patent, you must decide, based on the instructions I will give you, whether the challenger has overcome the presumption of validity with proof that the asserted claims of the patent are invalid. The party challenging validity must prove invalidity by clear and convincing evidence.”

    “Clear and convincing evidence means that it is highly probable that the fact is true. This standard is different from the standard that applies to other issues in this case.”

    “You may think of this “preponderance of the evidence” as slightly greater than 50%. This is different from the criminal law standard of “beyond a reasonable doubt.” You may think of this “beyond a reasonable doubt” standard as approaching certainty, without reasonable doubt. The “clear and convincing” standard is between the two.”

  5. Anon October 10, 2019 4:27 pm

    BP,

    You had me along until: “The terminology was not identical, that alone is sufficient for a jury to decide that the evidence did not meet the “clear and convincing” standard” – I cannot go so far as to agree with that.

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