Bold News! Apple v. Samsung: Did the Federal Circuit Change the Law of Obviousness Without Telling Anybody?

In a decision that has left patent attorneys, inventors, and holders of intellectual property rights scratching their heads, the Court of Appeals for the Federal Circuit, sitting in an eleven-member en banc panel, reversed a decision of a three-judge panel of the same Court and reinstated the District Court’s opinion.  The decision is one battle in the ongoing intellectual property war between Apple and Samsung.

Procedurally, the District Court had found in favor of Apple on infringement and invalidity issues involving several patents.  The three-judge appellate panel, on the initial appeal to the Federal Circuit, ruled that the jury’s findings were not supported by substantial evidence and reversed.  The en banc panel found otherwise – that there was indeed substantial evidence supporting the District Court’s findings.  And therein lies the rub: Was the en banc panel simply restating settled law (due deference to fact finding in the lower court,) or was it subtly making new obviousness law?

Why are patent attorneys puzzled?  Because, seen in one light, any en banc opinion is thought to be especially important and a document commanding great deference.  It usually marks an important change in the law.  But in this case, the majority announced:

“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 Court went on to emphasize its role as an appellate court – in particular, that appellate review should be limited to the facts of record.  This is hardly big news, however, and a surprising issue upon which to expound en banc.  Thus, the opinion leads many patent attorneys and patent holders to suspect that something deeper was going on regarding the law of obviousness, and the dissents explicitly claim as much.  The en banc panel sought to quash any such thoughts:

“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.” (emphasis added.)

Seen in a different light, however, the opinion reveals a tension between the doctrine that obviousness is a question of law, and the doctrine that deference must be paid to a jury’s findings of fact.  Moreover, at least implicitly, the majority did decide substantive issues in the case by revisiting the fact record and ruling that the jury’s findings were supported by substantial evidence.

It remains to be seen what the effects of this Apple v. Samsung decision will be.  It may be that the decision is limited to the particular facts of this case.  In the meantime, patent litigators will debate whether the law of obviousness has been changed, signaling greater deference to juries (especially on the issues of motivation to combine and secondary considerations.)  And they will no doubt be encouraged to present strong factual showings in jury trials involving intellectual property issues.

Author: John McGuirk, Patent Attorney

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