Patent Appeals for the Businessman:
Basics of the Appellate Process

by David R. Todd*

Introduction

It may seem like ages ago that your patent case began. Regardless of whether it was you who initiated the case or whether you were dragged into it, the costs have likely been considerable. Nevertheless, both sides have pressed on because there is a lot at stake.

After a long, drawn out battle in federal court, the jury has finally returned a verdict in your favor. The other side has vowed to appeal. How does that work? What is likely to happen? What are the risks? How long will it take?

Or perhaps the judge has just decided an important issue against you. Can you appeal now? Should you? For many businessmen and even for some lawyers, the appellate process is an unknown. This can be unnerving, especially when so much is riding on the outcome. Understanding the process can help you to assess the risks you face on appeal and to make better decisions about the course you should pursue.

Appeals Courts vs. Trial Courts

The first thing to understand is that an appeals court is different from the trial court that you have been dealing with up until now. There is no jury. No witnesses. No trial. Only a panel of judges studying written briefs and questioning lawyers.

This difference exists because an appeals court makes its decisions based only on the record that has been developed in the court below. Thus, it generally cannot hear new evidence or new arguments; it can only review the evidence and arguments that were submitted to the trial court. Its purpose is generally not to redo what has already been done in the trial court, but to determine whether legal errors or significant factual errors were made in reaching the outcome that has been appealed.

The U.S. Court of Appeals for the Federal Circuit

Any appeal from your patent case is almost certain to be decided by the U.S. Court of Appeals for the Federal Circuit, located in Washington, D.C. The Federal Circuit was created in 1982 and has jurisdiction over appeals in nearly all patent cases.1 Congress has authorized 12 full-time judges for the court.2 Usually, each case is decided by a panel of 3 judges. Some of the judges have a technical background or had experience in patent law before they were appointed to the bench. Most did not.3 Each judge has three law clerks, which help the judge to review and assess each appeal. Many, if not most, of the law clerks at the Federal Circuit also have a technical background and are interested in patent law.

The Federal Circuit is unique among the federal courts of appeals. Whereas the jurisdiction of the other courts of appeals in the federal system is regional and depends on where the trial court was located, the Federal Circuit has nationwide jurisdiction over cases involving certain subject matter. The court hears cases involving patents, claims against the U.S. government, international trade, government contracts, and federal employee grievances, just to name a few.4

Appealable Now?

One of the first questions to consider when the judge or jury makes a decision that is unfavorable to you is whether that decision is appealable now or can only be appealed later. Usually and generally speaking, unfavorable intermediate decisions can only be appealed after a final decision resolving the entire case. There are exceptions, but it is important to keep in mind that intermediate decisions by the judge or even the jury may not be appealable.

Here are the three most common situations in which an appeal may be taken:

• The court has entered a “final judgment” based on a jury verdict (e.g., awarding a sum of money or denying all relief to the patent owner), and the judge has denied all motions to alter the judgment.
• The judge has granted a motion for “summary judgment,” deciding that there is insufficient evidence for one party or the other to win and therefore no need for a trial on any issue.
• The judge has granted or denied an injunction.

Here are examples of situations in which an appeal usually cannot be taken (yet):

• The jury has rendered a verdict.
• The judge has issued an unfavorable opinion interpreting the scope of the patent.
• The judge has granted “partial summary judgment,” deciding that there is insufficient evidence for a trial on a particular issue in the case.
• The judge has precluded a key witness from testifying at trial.

Cross Appeals

If the trial court’s decision is unsatisfactory to both parties involved in the case, then both parties may decide to appeal. Often, one party is willing to live with unfavorable aspects of the trial court’s decision, but if the other party decides to appeal then it concludes that it might as well do the same. A second appeal in the same case is called a “cross appeal.”

Time for Deciding Whether to Appeal

In general, a party has 30 days after a final decision to decide whether to appeal or 14 days after another party appeals, whichever comes later.5 The appeal is initiated by filing a “notice of appeal” with the trial court.6 The clerk of the trial court sends the notice to the clerk of the court of appeals, who “dockets” the appeal.

Putting Things on Hold During an Appeal

If the trial court has issued a final judgment awarding money to the other side, you likely want to know whether you can wait and pay only if you are unsuccessful on appeal. Or if the judge has issued an injunction ordering you to stop an activity accused of infringement, you may be wondering whether you can put the order on hold while you appeal.

Both of these situations require a “stay.” A “stay of execution” prevents a winning party from forcing the losing party to pay the amount awarded in a judgment pending an appeal. A “stay of execution” can be automatically obtained by paying for a bond.7 The bond issuer guarantees that the winning party will be paid if an appeal is unsuccessful. The trial court judge can also grant a “stay of execution” without a bond in other appropriate circumstances.

A “stay of injunction” is more difficult to obtain. In general, a party subject to an injunction must first ask the trial court judge for a stay pending appeal,8 although the judge that was persuaded to grant the injunction is often unlikely to grant a stay. If no stay is granted, the party’s only recourse is to appeal and to file a motion with the appeals court. The appeals court can grant a temporary stay while it considers whether to grant a stay during the entire appeal. A “stay of injunction” is discretionary, not automatic.

Briefing

The most critical part of any appeal is the briefing process. A “brief” is a document drafted for the appeals court by the parties that explains the parties’ positions and details their arguments. Usually, three briefs are written and filed in each case. If there is a cross appeal, then there are four briefs in each case.

Briefing usually takes from about four to eight months to complete. This depends on the complexity of the appeal and the schedules of the lawyers involved in drafting the briefs. It is only after all of the briefs in a case have been filed that a panel of judges is assigned to the case. The identity of the judges assigned to the case is not revealed, however, until the date of oral argument. After the case is assigned, the clerk provides all of the briefs to the judges assigned to the case. The judges and their law clerks then begin studying the briefs in preparation for oral argument.

Briefing is critical because a case is largely decided as the judges and their law clerks go through the process of studying the briefs. A judge’s decision is heavily influenced—even dominated—by what is presented in the briefs.

Oral Argument

The Federal Circuit generally holds oral arguments during the first full week of each month.9 Usually oral argument in a case will occur about two or three months after briefing has been completed. Oral argument provides an opportunity for the lawyers for each party to orally emphasize the main points of their argument, but its main purpose is to allow the judges to question the lawyers about aspects of the case that are not clear to them or about the implications of the parties’ arguments. Hence, the small amount of time allotted. Each party is given only 15 minutes.

It is common at oral argument for a lawyer to begin a presentation about his or her case, only to be interrupted by a judge with a question. To an outsider, this might seem to be frustrating, but a good appellate lawyer understands that it is an opportunity. The judges have come to oral argument having already studied the parties’ briefs, having already discussed the case with their law clerks, and usually having already made a tentative decision about the case. A judge’s questions identify the specific concerns that judge may have about the case and provide an opportunity to educate the judge on the very issue on which the judge believes his or her decision may turn. Without such questions, a presenter is left to guess as to which issues are important to the judges and which are not.

The Decision

Immediately after oral argument, the judges making up the panel meet together in private to discuss the cases that have just been argued. For each case, the judges take a straw vote as to how they believe the case should be decided. They then decide whether they will explain the basis for their decision with a written opinion or not. If they decide to issue a written opinion, then the opinion is assigned to one of the judges for drafting.10

The judges may decide not to issue an opinion if they find that there was no significant error in the decision being appealed and there would be no benefit in explaining their reasoning. If they decide not to issue an opinion, then the clerk announces their decision a few days after oral argument.11

If the judges do decide to issue an opinion, the judge assigned to do so prepares a draft and circulates it to the other judges on the panel. This usually takes a few weeks. The opinion attempts to explain the issues to be decided, the decision of the majority of the judges on the panel, and the reasoning for their decision. After the draft is circulated to the other judges on the panel, the other judges have the opportunity to vote whether to join the opinion, to draft their own concurring or dissenting opinion in response to the opinion, or to offer proposals as to how the opinion might be amended. This process continues iteratively until an opinion has been drafted that garners the votes of a majority of the judges on the panel—usually two votes, since most panels have three judges.

The opinion is then circulated to the other 9 judges on the court who were not part of the panel. They have an opportunity to suggest changes to the authoring judge and to the panel deciding the case, although they only have authority to force such changes if they can muster the support of a majority of all the judges on the court.

Usually, an opinion is completed and issued to the public within three or four months of the date of oral argument.12 However, the wait can be shorter or longer, depending on the complexity of the case and whether there are varying positions among the judges on the panel.

Possible Outcomes

Most issues on appeal will have one of three possible outcomes: (1) affirmed, (2) reversed, or (3) vacated. “Affirmed” simply means that the decision of the trial court stands. This is the most common outcome. “Reversed” means that the decision reached by the trial court was wrong, and the appeals court’s decision is to be substituted in its place. “Vacated” means that the decision reached by the trial court was reached on erroneous grounds or using erroneous procedures, but the appropriate decision is unclear without further proceedings before the trial court. Thus, a case can also be “remanded,” which means that the case is to be sent back to the trial court to resolve whatever issues might remain.

If an issue in the case is remanded, the remaining issues are resolved by the trial court using the same procedures as before. For example, there may be further discovery if the trial judge believes that it is necessary and warranted. Likewise, the issue may be resolved on summary judgment if the standard for summary judgment is met, or the issue may need to be resolved with a new trial. Generally, the remand of some issues does not reopen other issues.

Standard of Review

A significant aspect in any appeal is the “standard of review.” As mentioned above, an appeals court is very different from a trial court in that it generally cannot hear new evidence or new arguments; it can only review the evidence and arguments that were submitted to the trial court. The “standard of review” governs the degree of deference that an appeals court owes to the decisions of the trial court. The “standard of review” often determines the outcome in a case.

For example, factual questions decided by a jury are subject to an extremely deferential standard of review. Factual questions include: what really happens inside the defendant’s factory, whether a witness is telling the truth, or when the defendant first knew about the patent. The appeals court may only reverse the jury’s verdict on such factual questions if the decision was unreasonable. It does not matter that the appeals court may have decided differently if it had sat as the jury. The inquiry is whether the jury’s verdict was reasonable.

On the other hand, legal questions resolved by the trial judge are reviewed “de novo,” i.e., with no formal deference granted to the trial judge’s decision. For example, if a trial judge decides that a defendant can be liable for infringement even if he does not know about the patent, that is a decision on a question of law. If challenged on appeal, the inquiry is not whether the trial court’s view of the law is reasonable, but what the law is.

A good appellate lawyer understands that the applicable standard of review is often outcome determinative. Normally, the most fruitful avenues of attack on appeal are those that raise legal questions or other issues with the least deferential standard of review. Currently, the Federal Circuit considers the fundamental question of “claim construction,” i.e., the proper scope of the patent, to be a question of law. Thus, it does not accord formal deference to the trial judge’s decision on this issue, making it one of the most common issues raised on appeal.

On the other hand, if a party is challenging factual questions or other issues subject to a deferential standard of review, a good appellate lawyer for the other side will point out and emphasize the standard of review in the briefing and at oral argument. It is because of the standard of review that the result in most appeals is an affirmance.

Petitions for Rehearing

If the panel’s decision—once their opinion issues—is unfavorable to you, there is a procedure for asking the judges on the panel to reconsider their decision. It is a “petition for rehearing.” Such a petition is appropriate if the panel has overlooked or misapprehended points of fact or law. The petition must be filed within 14 days of the issuance of the written opinion.13 However, the chances of succeeding are very slim. Only about 1% to 3% of petitions are granted,14 and most petitions are granted only for the limited purpose of clarifying something in the opinion, not to change the outcome.

If the panel’s decision is unfavorable to you and you believe that the panel’s decision raises issues of exceptional importance, there is also a procedure for asking all 12 of the judges on the court to reconsider the case. It is a “petition for rehearing en banc.”15 Once again, however, the chances of success are exceptionally low. Less than 1% of such petitions are granted.16

Obviously, if the panel’s decision was in your favor and it is your opponent that has petitioned for rehearing, these statistics are promising.

The Mandate

A week after rehearing has been denied or a week after the time for petition for rehearing has expired, the Federal Circuit issues its mandate to the trial court.17 The mandate consists of a certified copy of the opinion issued in the case. Its issuance is what ends the appeal and causes jurisdiction over the case to transfer back to the trial court for further proceedings consistent with the Federal Circuit’s opinion. The average time from the filing of a notice of appeal to the issuance of the mandate is approximately 12-15 months.18

Petition for Certiorari at the U.S. Supreme Court

If the Federal Circuit’s decision is unfavorable to you, there is also the option of asking the U.S. Supreme Court to review your case. This is done by filing a “petition for certiorari” with the Supreme Court. The petition must be filed within 90 days of the Federal Circuit’s decision or, if you moved for rehearing, within 90 days of the date that the Federal Circuit denied rehearing.19 Once again, however, the chances of success are slim. The Supreme Court generally grants review in only about 1-4% of such cases.20 Cases accepted for review usually involve legal issues of exceptional importance.

Conclusion

In a patent appeal, the governing principles and procedures can have a great impact on the outcome. Understanding the basics can therefore help you assess the risks and determine the best course for resolving your patent dispute.

Endnotes

* David R. Todd is a patent attorney with the intellectual property law firm of Workman Nydegger in Salt Lake City, Utah. He is a member of the firm’s appellate practice group and has participated as counsel in over twenty Federal Circuit appeals. Mr. Todd was a law clerk to the Honorable Randall R. Rader at the U.S. Court of Appeals for the Federal Circuit from 1997-1998.

1 See Federal Courts Improvement Act of 1982, Pub.L. No. 97-164, 96 Stat. 25 (1982).

2 28 U.S.C. § 44.

3 See http://www.cafc.uscourts.gov/judgbios.html (visited Feb. 29, 2008).

4 See 28 U.S.C. § 1295.

5 Fed.R.App.P. 4.

6 Fed.R.App.P. 3.

7 Fed.R.Civ.P. 62.

8 Fed.R.App.P. 8(a)(1).

9 See http://www.cafc.uscourts.gov/pdf/courtcalFY08.pdf (visited Feb. 29, 2008).

10 See http://www.cafc.uscourts.gov/pdf/IOPs122006.pdf (visited Feb. 29, 2008) (IOP No. 8).

11 See Fed.Cir.R. 36.

12 See http://ipo.informz.net/ipo/data/images/courtcases/transcript_michel.pdf (visited Feb. 29, 2008) (explaining that opinions are issued within 90 days of oral argument about 85% of the time).

13 Fed.R.App.P. 40; Fed.Cir.R. 40.

14 Quillin & Wright, Rare Success Upon Filing Petitions for Rehearing By The Panel Or En Banc At The Federal Circuit vs. Certiorari At The Supreme Court, Corporate Counsel A6 (July 2004).

15 Fed.R.App.P. 35; Fed.Cir.R. 35.

16 Id.

17 Fed.R.App.P. 41.

18 See http://www.cafc.uscourts.gov/pdf/MedianDispTime(table)99-07.pdf (visited Feb. 29, 2008) (demonstrating that the median time from notice of docketing until issuance of opinion for appeals from district courts is approximately 12 months).

19 Supreme Court Rule 13.

20 Quillin & Wright, supra note 14, at A7.