Rule 36 v. Section 144: Will the Supreme Court Answer the Call?

In early 2017, Peter Harter and Gene Quinn co-authored six articles for IPWatchdog about the Federal Circuit’s (CAFC’s) excessive use of Rule 36. They observed that the CAFC was “placing America’s inventors under siege” by habitually affirming decisions on appeal with one word—“affirmed”—thus dispensing with any opinion or reasoned analysis. The CAFC has shown no signs of curbing this practice, and it’s time for the U.S. Supreme Court to address it.

This starts with a cert petition filed last November by Amit Vora of Kasowitz Benson Torres on behalf of ParkerVision, in ParkerVision v. TCL, No. 24-546. The petition stems from the appeals of two Patent Trial and Appeal Board (PTAB) decisions in which all challenged claims of two patents were invalidated. IPWatchdog first illuminated the ParkerVision petition shortly after its filing, noting its focus on how the CAFC’s use of Rule 36 in appeals from PTAB decisions violates Section 144 of the Patent Act, which requires an “opinion” be issued. 35 U.S.C. § 144. The case has generated plenty of interest, drawing no less that nine amicus briefs representing thirteen amicus parties.

The Supreme Court is expected to confer about the petition next month. It should grant review, as ParkerVision’s petition strikes the right balance.

PTAB Appeals Are Different

Specifically, ParkerVision argues that, even if the CAFC may properly issue Rule 36 judgments in appeals from district courts, it categorically may not issue Rule 36 judgments in appeals from the PTAB—and especially not appeals from inter partes reviews (IPRs). Otherwise, patent holders can lose their property rights in issued patents through IPR proceedings (that already raise a host of serious due-process concerns), and no court would ever say anything substantive about it. Yet that’s exactly what’s been happening.

The petition also places Section 144 in a compelling historical context: the Federal Circuit’s predecessor, the Court of Customs and Patent Appeals (CCPA), was statutorily required to decide appeals from the U.S. Patent and Trademark Office’s (USPTO’s) predecessor, the Patent Office, by issuing opinions. Nothing has changed, as Section 144 carries this forward to the CAFC.

Particularly interesting at this juncture is the fact that two former CAFC judges have weighed in: The Honorable Kathleen O’Malley and The Honorable Paul Michel, who is no stranger to criticism of the CAFC’s Rule 36 practice. Judge O’Malley served on the CAFC from 2010 to 2022. Prior to that, she spent 26 years as a judge for the U.S. District Court for the Northern District of Ohio, often serving by designation on the Sixth Circuit. Judge Michel served on the CAFC from 1988 to 2010 and was Chief Judge from 2004 to 2010.

For her part, Judge O’Malley has emphasized that Rule 36 is not per se unlawful. As she put it over email, “the Federal Circuit has been criticized unfairly for its entry of Rule 36 judgments. After all, Rule 36 is only used where the parties have been given the opportunity for full briefing, an equally full work up of the case in chambers, and an oral argument where counsel has the opportunity to address concerns expressed by the assigned panel.”

“In most cases,” she adds, “the appeal involves a decision from a lower court or tribunal based on a full record with attendant procedural and constitutional safeguards. That is more process than many circuits provide when using expedited methods to control their active dockets.”

Nevertheless, she believes “appeals from IPRs are different”:

“IPRs provide few of the due process safeguards that guide district court proceedings. And appeals from those decisions provide fewer still. The burden of proof below and the mandated lenient standard of review on appeal are just a couple of the places where guardrails against unduly depriving a party of property rights break down in IPRs. In those cases, the Federal Circuit should provide greater oversight and assure that the rationale for its stamp of approval is clear. Where it would not be from the face of the record, more should be said. The ParkerVision case is of particular concern.”

Judge O’Malley further notes that, in ParkerVision, “there is an important statutory question that remains unaddressed—i.e., whether the PTAB panel has the authority to consider foreseeable matters not raised until the reply. Court guidance on this question is of great importance.”

Judge Michel, who has made prior statements about Rule 36 reported by IPWatchdog in 2019 and 2020, is the rare hat trick public servant: he not only served as an Article III judge, but he served the U.S. Department of Justice as its Watergate and Koreagate prosecutor, and he served on the U.S. Senate’s Intelligence and Judiciary Committees. On the issue at hand, he states over email: “The Federal Circuit’s regular practice of issuing judgments without opinions in appeals from PTAB reviews contravenes the literal terms of Section 144, which contains no exceptions and warrants immediate Supreme Court scrutiny.”

Rule 36 Disadvantages American Companies

It bears mention that ParkerVision is unique because respondent TCL is a prolific smart-display maker partly owned by the Chinese Government—a relevant fact in light of America’s growing economic and national-security concerns with China. Indeed, during his recent Senate confirmation hearing, Commerce Secretary Howard Lutnick declared he wants to stop China from taking advantage of the USPTO and wants to put Americans first. ParkerVision is a publicly-traded U.S. company. Its management and inventors are all “Little Tech” Americans. This makes ParkerVision precisely the type of American enterprise deserving of the full benefit of the CAFC’s attention and reasoned decision-making.

Here’s hoping that the CAFC will answer the call that Peter Harter and Gene Quinn issued back in 2017. The Supreme Court should grant review in ParkerVision’s case and finally stop the CAFC’s Rule 36 practice, at least in PTAB appeals.

Image Source: Deposit Photos
Author: BlueJay18
Image ID: 253938270