Reproduced with permission. Published July 15, 2019. Copyright 2019 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.

• Group challenging Apple’s victory at Federal Circuit
• Says appeals court played role of judge and jury

A bid to revive a $506 million judgment against Apple Inc. could help set boundaries on how far the nation’s top patent court can go in reviewing lower court decisions.

The University of Wisconsin’s patent and licensing arm is asking the U.S. Supreme Court to reverse the U.S. Court of Appeals for the Federal Circuit’s ruling that Apple didn’t infringe the group’s computer-processing patent with its iPhone and iPad chips. The Wisconsin Alumni Research Foundation, or WARF, claims the three-judge panel overstepped its authority by deciding the case as if it were a trial court and jury.

Intellectual property attorneys say the Supreme Court could be leaving in place bad precedent if it allows the Federal Circuit’s decision to stand. The case, practitioners note, also raises concerns about the Federal Circuit’s ability to overturn decisions without regard to established rules on how appellate courts operate.

“Arguably, the Federal Circuit went outside the bounds of traditionally reviewing appealed District Court decisions,” patent attorney Tyson Benson, of counsel at Bejin Bieneman PLC, said. “The appellate court is limited by the evidence and findings of the lower court to determine whether the lower court applied the correct law. In this event, the Federal Circuit arguably replaced the findings of the District Court with their own.”

If the Supreme Court reverses the Federal Circuit, it could put a court with a reputation for setting its own rules in line with other federal appellate courts, attorneys say.

The Federal Circuit “usurped the role of the district court,” by deciding on new patent language, applying it to the lower court record and flipping the verdict, Morgan Chu, a partner at Irell & Manella LLP who’s representing WARF, said. The three judges who overturned the verdict “were, in part, playing the role of a district court and, in part, playing the role of a jury.”

A Federal Circuit representative declined to comment beyond the decision. Apple and its counsel at Wilmer Cutler Pickering Hale and Dorr LLP didn’t respond to requests for comment. Apple has until Aug. 7 to respond to WARF’s petition.

A ‘Particular’ Dispute

The dispute pivots on how the parties, and the court, interpret the term “particular” in U.S. Patent No. 5,781,752 from the perspective of a person of ordinary skill in the art—a crucial standard in patent infringement cases.

Apple waived a hearing to settle the meaning of “particular,” known as claim construction. They instead brought expert witnesses to their 2015 trial to testify about how they interpreted the plain-and-ordinary meaning of patent language involving the term. A U.S. District Court for the Western District of Wisconsin jury found that Apple committed literal infringement of the patent.

The district court awarded WARF $234 million in damages. After trial, the district court denied Apple’s follow-up attempt to get a JMOL, or judgment as a matter of law, of no literal infringement. The court later upped the award to about $506 million for continued infringement.

Apple then appealed to the Federal Circuit, which granted the motion, concluding a reasonable juror couldn’t have found literal infringement. The panel, in its opinion, said it arrived at its view of the plain meaning of “particular” after reading the ‘752 patent.

The panel also said “there is not substantial evidence” to support WARF’s view of the relevant patent language, and such “is sufficient to set aside the jury’s infringement finding.”

WARF, in its Supreme Court petition filed June 5, said the panel should have sent the case back to the trial court for proceedings with the panel’s construction.

“The Federal Circuit said that it was interpreting the plain and ordinary meaning of ‘particular’ to a person of ordinary skill in the art, and then concluded that it meant what Apple proposed just before the case was given to the jury,” Chu said, noting Apple “waived its right to request this construction.”

Therefore, to adopt this construction of “particular,” the Federal Circuit “had to find that the district court abused its discretion. The Federal Circuit ignored this well-established rule that all other courts of appeals apply to all cases,” Chu said.

Paul Michel, a retired Federal Circuit chief judge, also takes issue. Appellate courts can’t overturn verdicts “based on simply disagreeing with the jury’s plain meaning construction, based on witness testimony of opposing experts,” he said.

“Three higher court judges could feel justified coming up with a new and different construction if it were a purely an issue of law, as it sometimes is, but here it was not,” Michel said.

“If the appellate court alters the jury’s presumed construction, then the case should be sent back for a new trial so the jury can decide infringement, applying the higher court’s new construction, possibly with new evidence,” Michel added.

Boundary Questions

Not everyone agrees the Federal Circuit went out of bounds.

Saurabh Vishnubhakat, associate professor of law at Texas A&M University, said if the panel may have concluded that the jury misunderstood the meaning of the term “particular” in the patent claims. If so, then the Federal Circuit may have been within its authority to toss the verdict, “even though the reversal may be right or wrong.”

Brian Cassidy, a Bloomberg Law legal analyst, also said he believes the panel judges were within their rights “through their grant of de novo review of claim construction and JMOL.” Nevertheless, he said, the decision could harm patent law if allowed to stand.

“It appears to open a new avenue for contesting jury verdicts,” Cassidy said. “Why not just field a JMOL for every verdict that doesn’t go your way and give it another shot at the Federal Circuit?”

The Federal Circuit’s standing as the nation’s court for all patent appeals may have something to do with its reasoning.

Randall Rader, a retired Federal Circuit Chief Judge, said that generally, the “Federal Circuit often reviews facts and law more extensively than a normal regional circuit, precisely because they would feel they have a responsibility to set national policy.” Rader consulted with WARF during its Federal Circuit proceedings and couldn’t comment on the case specifically.

Still, the panel that vacated the Apple judgment failed to point to any errors in the trial record when it reinterpreted the term “particular,” raising a question about the proper function of a federal appeals court, Benson said.

And allowing the Federal Circuit decision to stand could open the door for an interesting legal strategy.

A party could avoid fighting over a patent claim’s limitations in the district court. Then, on appeal, they could “go in and say well since we haven’t construed that and we’re doing by a person of ordinary skill in the aren’t, well, actually, a person of ordinary skill of the art would see this term this way,” Benson said.

“You don’t want appellate courts just substituting what their judgments are with what the facts are on the record, or trying to substitute their own judgment of what they think something actually is,” he said.

The case is Wisconsin Alumni Research v. Apple Inc., C.C.W.D. Wis., 02265, 7/17