Today, the Federal Circuit issued a decision en banc that reversed a three-judge panel decision because it erroneously had relied on evidence outside of the record from the trial court below to change the claim construction and hold claims invalid on obviousness grounds.  This decision may lead to more deference to the district court and increase the likelihood that a district court’s decision on claim construction, infringement or validity will survive appellate review.   But the decision’s ambiguous procedural posture may lead to confusion and litigants debating what portions of the decision are cloaked with the binding deference due an en banc decision of the court.

The Majority summarized its decision as follows:

We granted Apple’s en banc petition to affirm our understanding of the appellate function as limited to deciding the issues raised on appeal by the parties, deciding these issues only on the basis of the record made below, and as requiring appropriate deference by applied to the review of fact findings.  … The panel reversed nearly a dozen jury fact findings including infringement, motivation to combine, the teachings of prior art references, commercial success, industry praise, copying, and long-felt need across three different patents.  It did so despite the fact that some of these findings were not appealed and without ever mentioning the applicable substantial evidence standard of review.  And with regard to objective indicia, it did so in ways that departed from existing law.

The decision, however, may not be without controversy.  Specifically, several dissents in this en banc decision took issue with (1) the Majority opinion conflicting with current obviousness case law and (2) the court making this en banc decision without prior public notice or seeking briefing from the parties or the public.

The Majority sought to clarify that the en banc aspect of its decision was limited to the appellate procedural issue of deference to the district court and staying within the district court record, not substantive patent law such as the law of obviousness:

The dissents, and Judge Dyk’s dissent in particular, raise big questions about how aspects of the obviousness doctrine ought to operate.  But no party–at the panel or the petition for rehearing en banc stage–invited this court to consider changing the existing law of obviousness.  We did not take this case en banc to decide important legal questions about the inner workings of the law of obviousness.  We have applied existing obviousness law to the facts of this case.  We took this case en banc to affirm our understanding of our appellate function, to apply the governing law, and to maintain our fidelity to the Supreme Court’s Teva decision [that claim construction has factual components entitled to appellate deference].

The Majority also sought to defend its decision to make its en banc ruling without prior public notice or comment, because the issue of appellate limitations was clear:

There was no need to solicit additional briefing or argument on the question of whether an appellate panel can look to extra-record extrinsic evidence to construe a patent claim term.  The Supreme Court made clear that the factual components [of claim construction] include the background science or the meaning of a term in the relevant art during the relevant time period.  After Teva, such fact findings are indisputably the province of the district court.  We did not need to solicit additional briefing or argument to conclude that the appellate court cannot rely on extra-record extrinsic evidence in the first instance or make factual findings about what such extrinsic evidence suggests about the plain meaning of a claim term in the art at the relevant time or how such extra record evidence may inform our understanding of how the accused device operates.  We likewise did not need additional briefing or argument to determine that the appellate court is not permitted to reverse fact findings that were not appealed or that the appellate court is required to review jury fact findings when they are appealed for substantial evidence. [internal citations and quotations ommited]

Some of the confusion that may follow this decision will be later citations to the obviousness or other substantive law aspects of this decision as being cloaked as “en banc” rulings of the court that trump prior Federal Circuit decisions and to which future three-judge Federal Circuit panels, district courts and agencies are bound.  This potential future confusion may arise because the Majority decision did not simply address the procedural appellate limitation issue, but went on to decide the substantive issues presented in the appeal such as obviousness.

In prior decisions where en banc review was limited to just a portion of the appeal, the Federal Circuit issued an en banc decision and then returned the case to the original Federal Circuit three-judge panel for a do-over in light of the en banc court’s decision and guidance.  But the Majority decision did not do that here.  Rather, the Majority addressed the reason for granting en banc review–i.e., appellate limitations–and then continued to decide the substantive appealed issues.

Another way the Federal Circuit has sought to distinguish the en banc issues from other aspects on appeal is to have a section of the opinion that is specifically designated as the en banc portion.  But in this case, the Majority opinion specifically describes “The En Banc Decision” as encompassing its ultimate substantive rulings, stating:

B.  The En Banc Decision

We affirm and reinstate the district court’s judgment as to the ‘647, ‘721, and ‘172 patents.  We conclude that the jury verdict on each issue is supported by substantial evidence in the record and that the district court did not err when denying Samsung’s respective JMOLs.  Accordingly, we vacate the panel opinion and affirm the district court’s judgment with respect to these patents.  We reinstate the panel opinion regarding U.S. Patent Nos. 6,847,959, 7,761,414, 5,579,239, and 6,226,449.  In all other respects, the panel decision is vacated.  We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Add onto the foregoing that at least three dissenting judges of the court were concerned that the en banc court has made changes to substantive law.  This may will lead to confusion on whether and to what extent portions of the Majority decision are cloaked with binding en banc authority.