“Rule 36 as written permits affirmance in cases that should be reversed, negatively impacts development of both the public and the private patent law, and systematically biases cases toward affirmance through stymying ‘vote fluidity’ among Circuit Judges.” – USI amicus brief
Yesterday, US Inventor, Inc. (USI) filed an amicus brief in Island Intellectual Property LLC v. TD Ameritrade, Inc., urging the U.S. Court of Appeals for the Federal Circuit (CAFC) to reconsider its use of Rule 36 when affirming decisions.
The underlying district court decision was issued in November 2022 by Judge Rodney Gilstrap, who adopted Magistrate Judge Roy Payne’s September 2022 Report and Recommendation and granted TD Ameritrade’s (TD) Motion for Summary Judgment on the patent infringement claim. The district court reasoned that multiple claims throughout the patent in question amounted to “managing client funds to circumvent federal banking regulations and capitalize on high interest rates associated with FDIC accounts through the use of generic computer functionality” and thus were patent ineligible as abstract under Section 101.
Island appealed, and in May 2024, the CAFC released a one-word opinion affirming the district court’s decision under Rule 36. USI’s amicus brief now argues that the CAFC’s “controversial use of one-word affirmances merits [a review] en banc.”
A Logical Dilemma
USI criticized the CAFC’s implementation of Rule 36, suggesting that its failure to include a written opinion hinders the development of patent law jurisprudence while unfairly affecting parties in patent disputes. The brief said:
“Rule 36 as written permits affirmance in cases that should be reversed, negatively impacts development of both the public and the private patent law, and systematically biases cases toward affirmance through stymying ‘vote fluidity’ among Circuit Judges.”
According to USI, Rule 36 effectively bestows an authority to the appellate court to affirm cases that should be reversed. Rule 36 allows for a judgment of affirmance without opinion if the opinion would have no precedential value and one of five conditions exist:
- The judgment, decision, or order of the trial court appealed from is based on findings that are not clearly erroneous;
- The evidence supporting the jury’s verdict is sufficient;
- The record supports summary judgment, directed verdict, or judgment on the pleadings;
- The decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review; or
- A judgment or decision has been entered without error of law.
USI asserted that condition (e) presents a logical dilemma – the CAFC may affirm without opinion if a judgment or decision were entered without error of law, but the rule does not address judicial misinterpretation of fact. And in a summary judgment ruling, factual errors may have a drastic and prejudicial impact on a court’s ultimate finding.
A Burden for Future Litigants
USI next raised the concern that Rule 36 does not resolve litigated issues. It cited to TecSec, Inc. v. International Business Machines Corp, a separate CAFC case in which TecSec accused IBM of infringement. The district court in TecSec granted summary judgment of noninfringement for IBM, which the CAFC subsequently affirmed via Rule 36. After another judgment on remand of noninfringement for the other defendants, TecSec once again appealed, but this time, the CAFC reached a different conclusion, finding that collateral estoppel did not apply since claim construction was “neither actually determined by nor critical and necessary to [the] summary affirmance in the IBM appeal.”
In TecSec, the CAFC recognized that “a Rule 36 judgment simply confirms that the trial court entered the correct judgment. It does not endorse or reject any specific part of the trial court’s reasoning.” In its brief, USI argued that this acknowledgement is yet another reason that the CAFC needs to address its implementation of Rule 36, theorizing that continued affirmations will present a burden on future litigants trying to settle the private law of patent infringement.
Finally, USI argued that the use of Rule 36 systematically and unfairly biases outcomes in favor of affirmance, since appellate panels typically experience “vote fluidity,” or a judge changing their vote between the initial conference vote and publication of the opinion. The process of writing a legal opinion, USI opined, provides a chance for all judges on the appellate panel to engage in thoughtful reconsideration – by “showing their work,” judges are forced to explain their logic, and could potentially sway other members to change their vote.
For now, Rule 36 remains an appellate avenue for affirmance. Island petitioned for a rehearing en banc on June 17, and both parties currently await a ruling on the motion.
Image Source: Deposit PHotos
Image ID:103763568
Copyright:bigfatnapoleon
