Inventor Advocacy Groups File Amici Briefs Supporting Centripetal’s Claim Construction Challenge at SCOTUS

Last week, the entrepreneur advocacy organization Alliance for U.S. Startups and Inventors for Jobs (USIJ) filed an amicus brief in support of the petition for writ of certiorari before the U.S. Supreme Court filed by patent owner Centripetal Networks challenging late changes to claim construction wrought by the district court without notice or opportunity to be heard in its patent infringement case against Cisco Systems.

The USIJ’s filing follows one week after inventor advocacy group US Inventor filed its own amicus brief in support of Centripetal’s petition, arguing that a modest remedy to the deprivation of Centripetal’s due process rights would improve fairness for both patent owners and accused infringers alike.

Centripetal’s petition, filed last month, argues that the decisions of the district court and U.S. Court of Appeals for the Federal Circuit (CAFC) conflicted with settled norms surrounding the Markman process for claim construction. On remand to the Eastern Virginia district court, U.S. District Judge Elizabeth Wilson Hanes admitted new briefing from inter partes review proceedings (IPR), and in light of that briefing held that Cisco’s networking products did not meet certain limitations of the patents at issue. The Federal Circuit affirmed, and Centripetal argued in its petition for cert that Judge Hanes improperly viewed the remand as restarting the trial.

USIJ: Forcing Recusal Over Unactionable Conflict Further Weakens Patent Reliability

Attacking the apparent conflict of interest that undermined the more than $2 billion verdict awarded in October 2020 to Centripetal by an Eastern District of Virginia jury, USIJ’s brief contends in a footnote that “it is easy to conclude… that [U.S. District Judge Henry C. Morgan, Jr.] did not have an actionable conflict at all.” In June 2022, the Federal Circuit vacated the jury verdict for Centripetal after finding that the ownership of about $5,000 in Cisco stock by Judge Morgan’s wife required the judge’s recusal and reassignment of the case on remand. According to USIJ, the staggering unfairness of this ruling over a de minimis investment runs counter to Judge Morgan’s appropriate decision to place his wife’s Cisco stock in blind trust. The footnote added:

“The suggestion in the opinion that Judge Morgan might have bent over backwards to favor Centripetal is devoid of a factual basis and runs counter to the entire tenor of his 167-page opinion, most of which he had already completed.”

As Judge Morgan’s ruling makes clear, Centripetal is a cybersecurity pioneer that made the business mistake of engaging in good faith negotiations with Cisco under a non-disclosure agreement Cisco ignored when convenient. The landmark jury verdict for Centripetal reflected both Cisco’s egregious behavior as well as the value of cybersecurity, a tech sector critical for national security where innovative startups are finding it difficult to compete against companies entrenched in global tech markets.

Citing several studies, USIJ argued that while small startups drive innovation, that innovation can be stagnated by market incumbents in the absence of strong IP rights. Noting that the current state of patent jurisprudence is casting an ominous economic shadow in the long term, USIJ cited findings from its 2020 study on the economic impacts of weaker patent reliability showing that venture capital into patent-intensive industries has been falling. At the same time, patent owners have increasingly brought infringement cases to fora like the Unified Patent Court (UPC) where injunctive relief is readily available for patent owners, unlike in U.S. district courts where the Supreme Court’s eBay v. MercExchange (2006) ruling makes such relief extremely difficult to obtain.

As to the Federal Circuit decision on appeal, USIJ said that Judge Morgan’s claim construction order “was expressly preserved by the Federal Circuit’s vacatur decision, and should not have been revisited by Judge Hanes, particularly in light of its signal importance to how the Centripetal case had been presented at trial.” The brief added: “For the Federal Circuit to allow the new judge to ‘move the property line’ after the record was closed cannot be called an objective application of the rule of law.”

US Inventor: Same Due Process Concerns Faced By Accused Infringer Would Lead to Vacatur

Recasting the due process issues presented in Centripetal’s petition, US Inventor’s brief argued that if Cisco, as the accused infringer, faced more than $2 billion in infringement liability due to revised claim construction following a rehearing after the first trial was already concluded in Cisco’s favor, and that revised construction came with no advance notice, a reasonable appellate court would absolutely vacate that ruling. Echoing the words of former Circuit Judge Giles Rich from 1998’s In re Hiniker Co., US Inventor underscored that “the name of the game is the claim,” noting that claim construction organizes most patent infringement cases and is critical for infringement theories and defenses alike.

Whereas settled claim scope aid both patentees and industry actors, tending to bring about more out-of-court resolutions to infringement matters, US Inventor argues that the Federal Circuit’s ruling adds to the “haze of meta-uncertainty” hanging over U.S. patent infringement proceedings today. Acknowledging that Markman rulings are not carved in stone and sometimes must be changed even late in infringement cases, US Inventor urged that parties must be told and heard when such changes come after the evidentiary record has closed.

The Federal Circuit’s ruling below found Centripetal had adequate notice because the revised claim construction by U.S. District Judge Elizabeth Hanes, who found that Centripetal’s claimed data filtration techniques required a two-stage filtering process, was consistent with Cisco’s position throughout trial. However, “[n]otice of what an adversary wants is not notice of what the court will do,” US Inventor contended. In reaching its decision, the Federal Circuit erroneously placed weight on prior decisions in cases like Hamilton Beach Brands v. f’real Foods (2018), where the patentee could have addressed revised claim construction in reply briefing.

US Inventor notes that small patentees like Centripetal Networks cannot brief every contingency that a court might revisit following a settled ruling, adding that cases setting such a rule only benefits the best-funded litigants on either side of an infringement case. The notice requested by Centripetal is modest, US Inventor argues, and could have been provided as part of the proceeding under Federal Rule of Civil Procedure 63 following Judge Morgan’s recusal. Such additional briefing would have added days, not months, to that process, and would eliminate the Federal Circuit’s unworkable “clarification” standard that attempts to draw a line between new claim construction from mere elaborations that don’t require notice.