[Guest Post] Is this the end of patent claim construction as we know it?

The "Markman Hearing" related to claim interpretation has been one of the defining innovations of US patent litigation. Kat reader Robert Isackson provides insights into an on-going case, which may change the way claim construction issues are dealt with in US civil proceedings. Over to Robert:

I only accept my own Local Rules

The U.S. District Court for the Northern District of California (“NDCA”) has adopted its Patent Local Rules (“PLRs”) to facilitate case management of patent litigation. Its PLRs in turn have been a model for other district courts that also have adopted PRLs. As well, the NDCA PLR’s have been adopted by individual judges in districts that do not have PLRs. PLRs generally seek to level the playing field by burdening both sides with some limited technical discovery and disclosure obligations going to the merits of the patent claims early in the case. PLRs require that the patent owner disclose detailed infringement contentions about what patent claims are asserted against which products or services, and how to apply the claim limitations to the products or processes to assert infringement. The accused infringer is obliged to develop and disclose its invalidity contentions, namely arguments why the asserted patent claims are invalid or unenforceable. The timetable is designed to move the case along towards trial and inform the parties about the real strength of their positions.

More specifically, the NDCA PLRs provide a default schedule that starts with the patent owner disclosing its initial infringement contentions after the initial case management conference. The accused infringer responds by developing and disclosing its invalidity contentions. After exchanging their proposed constructions for the terms identified to be most significant for resolving the dispute (including any supporting evidence), the parties develop a joint claim construction and prehearing statement, addressing the agreed upon and disputed constructions. The subsequent briefing of the claim construction is then followed by a claim construction or Markman hearing.

Generally, the court will issue a claim construction order before the end of fact discovery. Accordingly, the experts will have the benefit of using the court’s constructions in developing their expert opinion, reports and testimony. In a significant number of cases, a claim construction decision is determinative of the case and may lead to a summary judgment motion that will cause one side or the other to quit (or at least consider whether to quit).

Against this background, on September 6, 2019, Fluidigm Corp filed suit against Ionpath Inc. in the NDCA, Case No. C 19 05639, asserting three patents, containing collectively 45 claims. Ionpath denied any infringement and counterclaimed for non-infringement and invalidity of the asserted patents. The court held an initial case management conference on April 16, 2020. Judge Alsup then issued a rather conventional Case Management Order, setting dates for completing fact discovery in January 2021, expert discovery in February 2021, filing summary judgment motions by March 4, 2021, and holding trial on June 14, 2021.

But he also issued a potentially ground-breaking (at least to this author) Patent Showdown Scheduling Order. In just two pages, the Patent Showdown Order (“PSO”) cancels the conventional claim construction Markman hearing and replaces it with a limited early summary judgement proceeding. The PSO relies on Rule 16 of the Federal Rules of Civil Procedure and the NDCA’s Local Rule 16-10, which allow judges the discretion to set procedures to manage a particular case.

Specifically, Judge Alsup’s PSO allows each party to pick one patent claim from among the asserted claims of the three patents, and then to move for summary judgment on it by September 3, 2020. Notably, the PSO briefs are due in the middle of the period allowed for fact discovery and will be argued on October 22, 2020. This is about when the conventional claim construction Markman hearing would have occurred under the PLRs.

Judge Alsup cogently explained his reasoning:

For many years, the Court conducted a claim construction hearing about mid-way through the fact discovery period. While this timing gave some guidance to counsel and experts, it had the distinct disadvantage of requiring abstract rulings without the benefit of a more complete record, thus increasing the risk of a claim construction error and a retrial (and, for that matter, subsequent second appeal). Instead of a stand-alone claim construction hearing, claims will be construed as needed along with the parties’ motions for summary judgment or at trial. Any proposed claim constructions shall be included in the parties’ summary judgment briefs – no separate briefs will be accepted. In this way, the Court will better understand the as-applied meaning of terms advanced by counsel as claim constructions. Dkt. 75 at 2.

In a sense, Judge Alsup is borrowing a page from the old District of Delaware playbook, where certain district judges had deferred claim construction until summary judgment and otherwise at trial. This was primarily done to put claim construction in the context of the material facts of the case. It is entirely consistent with the Supreme Court’s Markman decision, which spawned the Markman claim construction hearing, because in that case the claims were not construed until the jury instructions were finalized at trial. Thus, there is long precedent for determining any claim construction together with summary judgment to avoid the problems which context Judge Alsup has recognized.

Where Judge Alsup’s PSO beneficially and brilliantly differs from Delaware’s practice is in moving the showdown to midway through the case. It provides an opportunity for early summary judgement and claim construction, even if limited to two patent claims, and it may well provide just the merits-based instruction from the court to inform the parties about their respective positions well before they have paid for full fact, and often expert, discovery.

This early decision aspect avoids the primary complaint with the conventional Markman hearing and the old Delaware process, which is that parties cannot get any merits-based instruction from the Court until right before trial. In other words, the PSO allows for finding out before the end of discovery whether a party’s alleged silver bullet issue is actually case dispositive.

So it looks like an innovative approach to patent case management that could change when and how claims are construed. Time will tell whether it is a meaningful evolution, or merely a frolic and detour. 

Picture on the left (c) by Dr. Judit Banhidi