Don't punt back to the Federal Circuit

On Feb. 23, the U.S. Supreme Court held combined oral argument for two patent cases: Halo Electronics v. Pulse Electronics and Stryker Corp. v. Zimmer Inc. Unless the justices tie 4-4 (a possibility, given Justice Antonin Scalia's recent death), the court likely will issue a legal standard governing the question raised by these cases (when to award enhanced damages following a finding of patent infringement).

But after it announces this standard, will the court apply it to the facts of these cases? The court has been inconsistent in previous patent cases: often yes, but sometimes no. As I explain below, the court should apply its new standard to the facts of Halo and Stryker, assuming all relevant information is in the record. In other words, the court should not "punt" to the U.S. Court of Appeals for the Federal Circuit the less-glamorous work of applying law to fact.

When the Supreme Court announces a legal standard, it has several choices on what to do next. For instance, it can remand to the lower court to do any additional fact-finding required under the new standard. This type of remand is appropriate, as the Supreme Court is not a fact-finding body; if new facts are needed, the lower courts should find them first.

But what if all relevant facts are before the court, even in view of the new standard? Then the court has two paths.

The first is for the court to remand to the lower courts for application of the standard it created. For instance, in the Nautilus case, the court set forth its new "reasonable certainty" rule for patent indefiniteness, but then remanded the case to the Federal Circuit to apply that standard for the first time. Nautilus Inc. v. Biosig Instruments Inc., 134 S. Ct. 2120, 2131 (2014). On remand, the Federal Circuit simply decided the case, rather than sending the case to the trial court for additional factfinding. 783 F.3d 1374 (2015). I call this type of remand "punting."

The second is for the court to apply its legal analysis to the facts in the case - just as trial courts do. A good example of this is in KSR Int'l v. Teleflex, 550 U.S. 398 (2007). There, the court clarified the patent obviousness standard, and then applied this clarified standard to the facts at hand. See id. at 422-26.

Sometimes the court grants certiorari on only one of multiple issues in a case. In that situation, the court can apply law to fact to that issue, and then remand to the lower court to decide the remaining issues. For instance, in Limelight Networks v. Akamai Techs., the court applied its legal analysis to the facts for the one issue before it and remanded so the lower court could consider a different issue not before the court. 134 S. Ct. 2111, 2120 (2014). I do not consider that "punting," since the court directly employed the legal standard it crafted.

Note that patent obviousness and indefiniteness are both questions of law with underlying factual determinations. Graham v. John Deere Co., 383 U.S. 1, 17 (1966); HTC Corp. v. IPCom GmbH & Co., 667 F.3d 1270, 1279 (Fed. Cir. 2012). Yet in Nautilus, the court punted, while in KSR, it didn't. The court never explained this discrepancy, nor is a reason for it readily apparent.

So what should the court do in Halo/Stryker? In my view, it should pick the second choice and not punt.

First, applying law to fact provides better guidance to the lower courts than merely announcing law. And as shown by its recent, numerous reversals of the Federal Circuit, the Supreme Court seems concerned that the Federal Circuit is not following the court's past decisions. Explicitly demonstrating how to apply a legal standard would help keep the Federal Circuit in line with the court.

Applying law to fact also speeds disposition of the case. Rather than waiting for several months for the Federal Circuit to apply the standard to the facts, the parties will get resolution immediately from the court.

In addition, if the court is smart enough to create a new standard, it should be smart enough to employ that standard to the relevant facts, regardless of the complexity of the technology in the case. (And if it can't, maybe the standard is flawed and needs reworking.) In any event, intricate technology is not the issue in Halo/Stryker - the legal standard for enhanced damages is.

There are two main arguments for punting, but I disagree with both. First, Nautilus stated that remanding for the lower court to apply the court's new standard to facts is "the ordinary practice," since the court is a "court of review, not first view." 134 S. Ct. at 2131 (internal quotation marks and citation omitted). But since 2005, the court has decided 31 patent-focused cases. See "Supreme Court Patent Cases," posted at writtendescription.blogspot.com (checked March 8, 2016). Of those cases, the court punted in fewer than 10, by my count. In the remaining cases, the court applied its new standard to the facts, remanded for additional fact-finding, or remanded so the lower court could consider a legal issue not before the court. Hence, punting is not the normal course, at least for patent cases.

Second, parties may want to file briefs explaining how the court's new standard should be applied. But unless the standard crafted by the court is substantially different from either standard proffered by the parties - which is unlikely - such supplemental briefing won't be much different than previous briefs. And such supplemental briefing will delay the case for months, maybe years.

In the end, I believe that once the court announces a governing legal standard in the Halo/Stryker cases, it should apply that rule to the facts in the case, provided that all relevant facts for that standard have been developed. After all, an abstract legal rule becomes real only when applied to a specific factual situation, and it's best for the court that made the rule to apply it as well.

Sunil R. Kulkarni is a Santa Clara County Superior Court judge. From 1997 to 2011, he practiced patent and securities litigation with Morrison & Foerster LLP. Judge Kulkarni thanks UC Davis Law Professor Ash Bhagwat and Marc Pernick for their helpful comments.