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The Federal Circuit Reinstates an Apple Victory and Reestablishes the Limits of the Court's Fact-Finding Function



Sitting en banc, the Federal Circuit recently issued its decision in Apple v. Samsung, a stunning rebuke of a panel of that same court, vacating the panel's February 26, 2016 opinion, reinstating a $119.6 million jury award for Apple, and—perhaps most importantly—holding unequivocally that the court's factual determinations must be confined to the record on appeal.

The appeal stems from the second Apple v. Samsung lawsuit—another installment in the ongoing smartphone patent wars—this time relating to patents covering Apple's slide-to-unlock, autocorrect, and “quick link” features. The District Court for the Northern District of California granted summary judgment that Samsung's accused devices infringed, and the jury found further infringement and that the infringed claims were not invalid as obvious. Thereafter, Samsung moved for judgment as a matter of law (JMOL), the district court denied the request, and Samsung appealed to the Federal Circuit.

On February 26, 2016, a panel of the Federal Circuit Court reversed the denial of JMOL with regard to the jury verdict of infringement and nonobviousness. In so doing, the panel looked at extrinsic evidence outside the appellate record to modify certain agreed upon—and not appealed—claim terms, and in making factual determinations about the function of Samsung's phones. Apple filed a petition for rehearing en banc, arguing that the panel had reversed the jury's finding of infringement "by relying on extra-record evidence 'none of which was of record and that the panel appears to have located only through independent research.'" Apple asserted that, "'in an unprecedented decision,' the panel reversed nearly every fact finding by the jury which favored Apple."

In its 8-3 decision (with only the three original panel members dissenting) on October 7, 2016, the Federal Circuit agreed, noting that it had agreed to rehear the matter "to affirm our understanding of the appellate function as limited to deciding the issues raised on appeal by the parties, deciding these issues only on the basis of the record made below, and as requiring appropriate deference be applied to the review of fact findings." The court held:

There was no need to solicit additional briefing or argument on the question of whether an appellate panel can look to extra-record extrinsic evidence to construe a patent claim term. "The Supreme Court made clear that the factual components [of claim construction] include 'the background science or the meaning of a term in the relevant art during the relevant time period.'" Teva Pharms., Inc. v. Sandoz, Inc., 789 F.3d 1335, 1342 (Fed. Cir. 2015) (quoting Teva Pharms., Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841 (2015)). After Teva, such fact findings are indisputably the province of the district court.

We did not need to solicit additional briefing or argument to conclude that the appellate court cannot rely on extra-record extrinsic evidence in the first instance or make factual findings about what such extrinsic evidence suggests about the plain meaning of a claim term in the art at the relevant time or how such extra record evidence may inform our understanding of how the accused device operates.

We likewise did not need additional briefing or argument to determine that the appellate court is not permitted to reverse fact findings that were not appealed or that the appellate court is required to review jury fact findings when they are appealed for substantial evidence.

The panel reversed nearly a dozen jury fact findings including infringement, motivation to combine, the teachings of prior art references, commercial success, industry praise, copying, and long-felt need across three different patents. It did so despite the fact that some of these findings were not appealed and without ever mentioning the applicable substantial evidence standard of review. And with regard to objective indicia, it did so in ways that departed from existing law.

Allowing the factual record appropriate deference, the Federal Circuit affirmed the district court's denial of the JMOL, reinstating Apple's victory over Samsung, and—critically—doing its part to rein in what many commentators see as a circuit court run amok, reestablishing that the Federal Circuit is an appellate court that must not consider evidence outside the appellate record or engage in independent fact-finding. Whether the court actually follows its own prescription remains to be seen.

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