Support IPWatchdog with an individual sponsorship: Click here
“Brumfield noted that the Federal Circuit uses Rule 36 extensively, much more than the three circuit courts of appeal that have local rules expressly authorizing summary affirmances.”
On Friday, November 22, the U.S. Supreme Court received several amicus briefs as well as the respondent’s brief in Island Intellectual Property LLC v. TD Ameritrade, Inc., a case challenging the federal judiciary’s application of procedural rules in patent cases. The petition argues that both district courts and the U.S. Court of Appeals for the Federal Circuit are misusing federal and local rules in a manner that results in summary affirmance of flawed determinations made at the summary judgment stage. While respondent TD Ameritrade focused on the abstract idea determination invalidating Island IP’s claims to methods for fund management, amici argued that erroneous legal standards at both the trial and appellate level deny due process to patent owners.
TD Ameritrade: Section 101 is a Question of Law That Might Have Factual Issues
After noting that the specifications of the challenged Island IP patents do not disclose innovations specific to computer systems, respondent TD Ameritrade argued that Island IP’s patent claims are directed to abstract financial ideas like those invalidated in the Supreme Court’s 2014 ruling in Alice Inc. v CLS Bank International. Alice’s method for mediating settlements used computers to track and transfer money in ways similar to Island IP’s tiered interest rate system and method of managing funds in aggregated accounts, TD Ameritrade contended.
Arguing that the Federal Circuit established in Berkheimer v. HP (2018) that the abstract idea inquiry under 35 U.S.C. § 101 is a question of law that might have underlying factual issues, TD Ameritrade noted that Island IP’s evidentiary claims did not point to specific improvements in computer functionality. Analogizing the present case to Parker v. Flook (1978), TD Ameritrade stated that claim elements on calculating and applying interest rates to accounts were not patent-eligible under Alice’s legal standard.
TD Ameritrade further urged the Supreme Court to reject Island IP’s challenge to the Federal Circuit’s practice of Rule 36 summary affirmances. Although Island IP argued that the Supreme Court’s 1972 ruling in Taylor v. McKeithen undermines the Federal Circuit’s application of Rule 36, TD Ameritrade noted that the appeal in that case involved a summary reversal, not an affirmance. Not only do Rule 36 judgments receive the full consideration of the appellate court and meet the wide discretion given to summary affirmances, TD Ameritrade noted that each circuit court of appeals has procedural rules enabling the entry of summary rulings affirming a lower court’s decision.
Association of Amicus Counsel: Ignoring the Evidentiary Record Destroys Due Process
In its amicus brief, the Association of Amicus Counsel (AAC) noted that the Federal Circuit’s Rule 36(a) creates several preconditions for summarily affirming a lower decision, including that the opinion would create no precedential value. In the context of summarily affirming the invalidation of patent claims under Section 101, AAC argued that the high rate of Rule 36 affirmances undercuts the Federal Circuit’s mandate of bringing predictability to patent law and fails to identify which Rule 36(a) preconditions are met, including whether the record supports summary judgment or whether the judgment appealed from is not clearly erroneous.
AAC also argued that the Eastern Texas district court’s application of Alice/Mayo deprived petitioner Island IP of due process, adopting a magistrate judge’s report and recommendation that did not reference 1,400 pages of factual evidence on the validity of Island IP’s patent claims. This occurred despite the district court’s obligation to construe factual inferences in Island IP’s favor at the summary judgment phase, AAC points out. The Federal Circuit’s heavy use of Rule 36 affirmances in cases appealed from the Patent Trial and Appeal Board (PTAB) also creates tension with statutory provisions at 35 U.S.C. § 114, which requires the Federal Circuit to review PTAB decisions on appeal and issue its opinion to the USPTO’s Director.
Harris Brumfield: Federal Circuit Affirms Decisions Under Improper FRCP 56 Standard
Although inventor Harris Brumfield has seen the invalidation of his patent claims upheld by summary affirmance under Rule 36, his amicus brief primarily focused on the Federal Circuit’s improper application of the summary judgment standard under Federal Rule of Civil Procedure 56. Disagreeing with TD Ameritrade’s view of Berkheimer, Brumfield contended that the Federal Circuit erred by ignoring factual disputes raised by Island IP as to its claimed inventive concept.
Along with the present appeal, Brumfield argued that the Federal Circuit has routinely and wrongly affirmed summary judgment rulings of invalidity despite genuine disputes of material fact. This includes cases involving Brumfield’s patent claims to electronic trading tools despite 800 pages of evidence directed to Alice/Mayo Step 2 filed by patentee Trading Technologies. Finally, Brumfield noted that the Federal Circuit uses Rule 36 extensively, much more than the three circuit courts of appeal that have local rules expressly authorizing summary affirmances.
BIPLA: Rule 36 is Exercised on One-Quarter of Federal Circuit’s Merits-Based Decisions
Limiting its arguments to the second question in Island IP’s petition regarding Rule 36 affirmances, the amicus brief filed by the Boston Intellectual Property Law Association (BIPLA) noted that several circuit courts have mechanisms for disclosing which Rule 36 precondition justified the entry of a summary decision. The Federal Circuit exercises Rule 36 on about a quarter of its merits decisions and while court precedent supports the validity of such rulings, BIPLA argued that such reasoning comes from dicta and does not address the disputed impact of such rulings.
BIPLA contended that requiring the Federal Circuit’s to issue opinions for every decision on the merits would not only approve the appearance of the appellate court’s procedural decision-making, it would improve judicial accountability by requiring judges to render more reasoned decisions. These disclosures of judicial reasoning would not only benefit the public, but BIPLA argued that the federal appellate judiciary also benefits by confirming to the public that the judiciary’s decision-making is reasoned and principled.
Image Source: Deposit Photos
Author: maxxyustas
Image ID: 205970290
