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Full Court Patent Review Bids Often ‘Waste of Time,’ Judge Says

Feb. 23, 2021, 10:55 AM

The full bench for the lone appeals venue for patent cases gets asked far too often to review decisions made by its three-judge panels, Federal Circuit Judge Todd M. Hughes says.

The losing party seeks en banc rehearing in a majority of patent cases heard by the U.S. Court of Appeals for the Federal Circuit. The court’s 12 active judges have to wade through them to see if they merit reconsideration. Few are granted.

Certain patent issues so deeply divide the judges that rehearing isn’t likely to clarify the law, Hughes told Bloomberg Law. Most petitions for rehearing are “a waste of time and a waste of money,” he said.

Hughes pointed to the court’s 2017 en banc decision in Aqua Products Inc. v. Matal, which held that patent owners trying to amend patent claims don’t have to prove the new claims are valid. The court’s judges wrote five opinions spanning 148 pages, and no single opinion had enough votes to be controlling.

“That case almost broke me,” Hughes said. “It didn’t really decide anything, and I don’t want to do that anymore.”

Avoiding Another Aqua Products

“It seems to me that not every issue needs to be decided by 12 judges, even really important ones,” Hughes said. “Three judges is good enough for most things.”

A case with a well-reasoned panel decision with a majority and a dissent doesn’t benefit from a drawn-out en banc process, he said. After a few experiences with cases like Aqua Products, Hughes decided that going en banc isn’t a useful exercise unless he’s pretty sure the full court decision will help make the law clearer and provide certainty for litigants.

Hughes came to Federal Circuit in 2013 after a nearly 20-year career as an appellate lawyer at the Justice Department. The government almost never asks for en banc rehearing.

Hughes said he was surprised by how often the petitions are filed in patent cases, which account for about 60% of the Federal Circuit’s docket.

For really thorny patent issues like what is eligible for patent protection under Section 101 of the Patent Act, en banc rehearing isn’t likely to advance the ball, he said.

“Not to pick on 101 but the Supreme Court does not need another set of opinions from us on 101,” he said, referring to previous eligibility cases that have drawn multiple divergent opinions from the court.

If an issue is important enough that the Supreme Court is going to take it, there’s no reason for the Federal Circuit to spend another year taking it en banc just to issue another fractured opinion, he said.

Arthrex Inc. v. Smith & Nephew Inc., the case currently before the Supreme Court about whether Patent Trial and Appeal Board judges are constitutional, is “precisely that kind of case” that should go straight to the high court, Hughes said. The Federal Circuit denied en banc review last March.

At least seven of the active judges must vote in favor for a case to be heard en banc.

The only two cases the court has taken en banc recently have been on veterans issues. That may be because there are two distinct sides, and not as many shades of gray as in patent cases, Hughes said. And the Supreme Court is less likely to chime in on veterans issues than on patent cases, he said.

No Easy Answers

Hughes doesn’t think further en banc consideration of patent eligibility under Section 101 would be illuminating to parties or the Supreme Court.

“I know the industry and the patent bar would love us to take it up and some day we may, but the last big decision on that was Alice and if you’ve read Alice recently, it also doesn’t have any real opinion,” he said.

The Federal Circuit’s 2013 en banc decision in CLS Bank International v. Alice Corp. had seven opinions spanning 135 pages. It led to the 2014 Supreme Court decision that laid out the current test for eligibility.

Since then, the Federal Circuit judges have explained their varying takes on the Alice test. The Supreme Court has enough decisions to know what the judges are thinking, and still the high court has declined to take another 101 case in the intervening seven years, he said.

Hughes said parties aren’t going to get the “definitive answer” they are looking for. “If there was an easy solution to 101, or even a moderately reachable solution that could garner a majority of the court, I think we’d be there,” he said. “Like many of us have said in our concurrences and dissents, it seems like this is an issue for Congress now.”

Hughes hopes his entire judicial tenure won’t be defined by 101 as the reigning patent issue. But “I’m seven years in and it’s still going strong,” he said.

Attorneys’ Views

The losing party seeks rehearing in most patent cases, even when the court doesn’t issue an opinion.

Clients want to make sure they’ve exhausted their options, and the cost to file a rehearing petition is a drop in the bucket by the time a case has been appealed, Matthew Dowd of Dowd Scheffel PLLC in Washington said.

If parties only get a one-line affirmance from the court, they may see en banc as a chance to pick up a judge or two and get more of an explanation that they can use if they ask for Supreme Court review, he said.

Parties also may use en banc as a delay tactic, according to Jonathan Stroud, the chief IP counsel at Unified Patents, a membership group that seeks to deter patent assertions from nonpracticing entities. “Many of the appeals, once final, will cancel patent claims or finalize a judgment,” Stroud said in an email.

“Parties know they are unlikely to prevail, but it is hard for lawyers to concede that to their clients,” Stroud said. “So it’s a way to temporarily save face.”

Mel Bostwick of Orrick, Herrington & Sutcliffe LLP in Washington said it’s not surprising parties would try for rehearing when there’s at least a perception of inconsistency in panel decisions on so many patent issues.

“I don’t think most litigants are cavalierly filing rehearing petitions, especially when the cost is often not negligible,” she said in an email.

Three Piles

Hughes said if the panel affirmed without an opinion, he puts the petition down and waits to hear from his clerks if it’s worth considering. If the panel wrote a nonprecedential decision without a dissent, he may flip through the table of contents to make sure he’s not missing anything.

But the only en banc petitions Hughes said he reads seriously are the precedential decisions, particularly with dissents. “Those are the only ones that are going to be en-banc-worthy,” he said.

Briefs from outside parties are rarely influential unless they provide a broader factual perspective, Hughes said.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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