Lazare Kaplan v. Photoscribe: Make Sure to Always File a Cross-Appeal (Except When You Shouldn’t)

By Jason Rantanen

Lazare Kaplan Int'l. v. Photoscribe Technologies, Inc. (Fed. Cir. 2013) Download Lazare Kaplan v Photoscribe
Panel: Lourie (author), Dyk (dissent), Reyna

Deciding which issues to appeal can sometimes be a challenging process.  One quirky rule of appealing patent judgments is that when a district court has entered a judgment of invalidity on all asserted claims, it is improper to file a cross-appeal based on either (1) additional claims for invalidity or (2) claims of noninfringement, and doing so can potentially subject the cross-appellant to sanctions.  As Lazare Kaplan illustrates, however, when a district court has entered a judgment that the claims are not infringed and not invalid and the patent holder appeals noninfringement, the patent challenger must file a cross-appeal challenging the no invalidity judgment.  Failing to do so in this situation terminates the patent challenger's ability to raise invalidity arguments, even on remand following a broadening claim construction by the Federal Circuit. 

Background: Lazare Kaplan is the owner of Patent No. 6,476,351.  In 2006, Lazare Kaplan sued Photoscribe for infringement of the '351 patent; Photoscribe responded by filing invalidity counterclaims.  After the district court construed a key claim term, Photoscribe obtained summary judgment of no literal infringement and prevailed at jury trial on the doctrine of equivalents.  The jury also found that the claims were not invalid under the court's construction. The district court entered judgment that the claims were not infringed and not invalid. Lazare Kaplan appealed the judgment of noninfringement but Photoscribe did not appeal the judgment that the claims were not invalid.  On appeal, the Federal Circuit broadened the district court's construction and remanded for further proceedings on infringement.

Following remand, the district court agreed with Photoscribe that both infringement and validity should be retried "because the validity decision of the jury in the first trial was on the basis for a claim construction which the Court of Appeals has reversed."  Slip Op. at 4 (quoting district court).  The district court granted Photoscribe's motion for relief from the prior judgment under Rule 60(b) and its motion for summary judgment of invalidity. Lazare Kaplan appealed. 

Rule 60(b) relief:  While the majority's analysis technically involves determining whether the district court abused its discretion in granting Photoscribe's Rule 60(b) motion, because the majority concludes that the issue before it is unique to patent law, it reviews that decision without deference to either the district court or the law of the regional circuit in which the district court sits (although it does find Second Circuit decisions to be persuasive).  To the majority, the issue is simply "whether, on remand, a district court may reopen a prior final judgment as to patent validity, not appealed by either party, based on a claim construction modified by" the Federal Circuit, a pure question of patent law.  Slip Op. at 6. Framed in those terms, the majority concludes that the answer is no.

Judgment of Validity Must Be Appealed: "It is well-settled that a party must file a cross-appeal if, although successful in the overall outcome in the district court, the party seeks, on appeal, to lessen the rights of its adversary or to enlarge its own rights."  Slip Op. at 6.  An offshoot of this requirement is that "“[A] party will not be permitted to argue before us an issue on which it has lost and on which it has not appealed, where the result of acceptance of its argument would be reversal or modification of the judgment rather than affirmance.”  Id., quoting Radio Steel & Manufacturing Co. v. MTD Products, Inc., 731 F.2d 840, 844 (Fed. Cir. 1984).  In  Odetics, Inc. v. Storage Technology Corp., 185 F.3d 1259 (Fed. Cir. 1999), the Federal Circuit drew on this foundation to affirm a district court's decision that the challenger's invalidity arguments were barred in procedural circumstances similar to here.

Lazare Kaplan goes a step further, holding that a district court cannot address validity on remand where the challenger failed to appeal the judgment that the claims were not invalid, irrespective of the modified claim construction.  In reaching this conclusion, the majority expressly rejects the argument that separate appeal of validity and infringement was not necessary because the issues of validity and infringement were closely interrelated.  "Whether or not the concepts of invalidity and infringement are “closely interrelated” is irrelevant; the relevant issue is whether a ruling reversing the validity holding would expand Photoscribe’s rights or lessen Lazare Kaplan’s rights."  Slip Op. at 9.  Ultimately, regardless of the district court's view that it "makes no sense" not to entertain validity challenge on remand following a new claim construction that potentially raises new validity issues, "rules are rules, and the cross-appeal rule is firmly established in our law."  Id. at 14. 

Judge Dyk: Judge Dyk's dissent criticizes the majority for failing to adhere to the fundamental principle of patent law that “claims must be interpreted and given the same meaning for purposes of both validity and infringement analyses.”  Slip Op. at 17, quoting Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001).  Here, the district court attempted to eliminate the inconsistency of allowing the patent holder "to assert infringement on a broad claim construction while permitting it to defend against invalidity using a different and far narrower claim construction" by applying Rule 60(b)(5).  Slip Op. at 17-18. 

Judge Dyk's argument focuses on the majority's lack of any support for its conclusion that "failure to file a contingent cross-appeal bars Rule 60(b) relief." Id. at 20.  This is "not a situation governed by the traditional “cross-appeal rule”—that is, the rule that “a party must file a cross-appeal if . . . [it] seeks, on appeal, to lessen the rights of its adversary or to enlarge its own rights.” Maj. Op. 6 (citing El Paso Natural Gas Co. v. Neztsosie, 526 U.S. 473, 479 (1999)) (emphasis added). Here, Photoscribe sought on appeal not to modify the rights established by the district court judgment but to preserve them."  Id.

30 thoughts on “Lazare Kaplan v. Photoscribe: Make Sure to Always File a Cross-Appeal (Except When You Shouldn’t)

  1. A sua sponte broadening of a claim on appeal? I’ve never heard of such a thing — have you? Unless the appellant seeks a broader construction, or a construction different in some way that raises new validity issues, then I don’t think a contingent cross-appeal on invalidity is necessary.

  2. “should have known” = notice; above hypothetical, no notice.
    Facts needed for malpractice: (1) they eventually lose the case; and (2) they would have won the invalidity argument based on the broadened claim construction had they filed a cross appeal.
    For (1) – only time will tell; For (2) – we would need a separate trial. :)

  3. it didn’t conditionally cross-appeal that adverse decision.

    Do you agree that a “conditional” or “contingent” cross-appeal on invalidity should be made by defendents in every case, then? You know, just in case the Federal Circuit broadens the claims sua sponte in some respect.

  4. if the fed. cir. were to broaden the claim construction sua sponte (when claim const. was not the issue of appeal), then that would mean the respondent was not on notice.

    The justification for the result here is that the attorneys for the accused infringer “should have known” that the claim might be broadened by the Federal Circuit. Well, that’s always a possibility. So why take the risk and not file the contingent cross-appeal on invalidity?

    regarding malpractice, I’m unaware of the facts to comment on that.

    If the attorneys understood the law to be what Judge Dyk understood the law to be, would that be malpractice? What other likely facts are relevant to your opinion on that issue?

  5. I can’t think of any at this point. The issue of validity was decided against Photoscribe, and it didn’t conditionally cross-appeal that adverse decision. Sometimes a litigant discovers that its role in a case is to serve as a warning to others.

  6. MM, please forgive my naivety, but if the fed. cir. were to broaden the claim construction sua sponte (when claim const. was not the issue of appeal), then that would mean the respondent was not on notice.
    And regarding malpractice, I’m unaware of the facts to comment on that.

  7. With the benefit of hindsight, though, not filing it looks like a strategic error.

    What steps, if any, could Photoscribe take now if they wish to see this patent invalidated?

  8. I wouldn’t call it malpractice not to file the conditional cross-appeal. For all we know, the Federal Circuit might have flatly rejected the accused infringer’s invalidity arguments in a cross-appeal. With the benefit of hindsight, though, not filing it looks like a strategic error.

  9. I think those are good points, Andrew. I’m not entirely convinced that they compel the result reached by the majority … but more convinced than I was earlier. ;)

    Do you think it was malpractice not to file the cross-appeal in this instance? What about the hypothetical (but I believe realistic) situation I described below where the Federal Circuit construes a claim term sua sponte and no cross-appeal was filed? Should all such constructions be anticipated?

    I’m also not sure that presenting the Federal Circuit with new invalidity analyses (required by the new claim construction) that were not presented to the lower court is more “judicially economic” compared to returning the case to the lower court. The lower court would seem to have better command of the facts in most cases (the instant case included). In general, the proper balance of efficiency and accuracy is better achieved when the Federal Circuit’s involvement in any patent case is kept to a minimum.

  10. If the reading is now correct, the patent is NOT “broader than before” with the implicit twist that you are trying to suggest.

    You act as if something unfair is being given to the patent holder, when in fact all that is being done is that the PRIOR patent is merely being recognized for the breadth that it ALWAYS had.

    And that’s not even touching on the procedural matter here that you are simply wrong about (the party, did quite in fact, have its opportunity, according to well established rules).

    Double Calvinball face sp1ke for you.

  11. It’s not like party was ripped off and cannot do something that it previously had the power to do.

    Right. It’s not like the patent is suddenly broader than before and prevents him from doing something he previously had the power to do.

  12. The lawyers should have taken proper action as per the FRCP.

    So it was malpractice not to assert the counterclaim of invalidity here?

    Hypothetically, what if claim construction was not contested but the Federal Circuit broadened the construction anyway. Are the defendants required to have argued invalidity based on some hypothetically broader construction or lose their rights to contest invalidity under that construction? If not, why not? After all, there’s always a possibility of that happening.

  13. I think it is judicial economy. With the conditional cross-appeal re validity on file, there are three possibilities after the Federal Circuit broadens the claim: 1) the accused infringer’s basis for invalidity fails as a matter of law, 2) the record shows invalidity as a matter of law and 3) additional fact-finding is necessary to resolve validity under the broadened claim.

    With the first two possibilities, the case ends right there with the first appeal. If we don’t apply the cross-appeal rule, however, the first two possibilities result in a remand and maybe another year or two of litigation for the parties.

  14. Retrying cases because the lower court was not perfect is ridiculous.

    Sure, why let a little thing like getting the case right get in the way?

    D’Oh! (said in the best Homer Simpson tones)

  15. Agreed, this does not seem fair. But who said the FRCP is about fairness? Photoscribe was on notice and very well knew there was a probability (no matter how small) that this could happen. The lawyers should have taken proper action as per the FRCP.

  16. Malcolm, what should have happened is this:

    The defendant, winning on infringement with a narrow construction, but losing on validity, should have cross appealed on validity. When the Feds overruled the claim construction, both validity and infringement should have been remanded for trial.

    However, all this illustrates, I think, is that the Feds need to give the District Court some deference and overturn their claim construction ruling only if clearly erroneous. Retrying cases because the lower court was not perfect is ridiculous.

    Then of course we have the broader context where Congress has now mandated multiple lawsuits against different infringers so that there cannot be one claim construction and one validity trial. What are we going to have when the sundry, perhaps 10-20, different constructions of the very same term reach the Federal Circuit?

  17. what should be assumed to be simply just and in accord (presuming the court now has it right).

    HUMPTY HAS SPOKEN!!!!!! BOW DOWN!!!!!!

  18. What’s the policy of any technical rule?

    Especially when you divest the assumed conclusions and claptrap that Malcolm throws out there in support of any other preferred mode of operation?

    the public now has less freedom

    Said as if this was somehow “wrong,” instead of what should be assumed to be simply just and in accord (presuming the court now has it right).

    precluded from doing so

    Obtuse. Is it on purpose? (said in the best Andy Dufresne tones). The only reason for ‘preclusion’ is because the party didn’t do the right thing.

    In this field you better get used to it – it happens all the time. It’s called reality. It’s not like party was ripped off and cannot do something that it previously had the power to do.

    Geesh, stop your QQ’ing that a patent was kept in place.

  19. That directly affected member of the public denied itself the opportunity to challenge the validity of O

    Okay, you’ve correctly restated the outcome of this case as articulated by two out of three of the Federal Circuit judges selected to be on the panel.

    What’s the policy underlying this technical rule as it applies to the rather unique situation of a patent case where (1) the Federal Circuit has discarded the District Court’s claim construction and substituted a new broader claim construction and (2) the public now has less freedom than it did before and (3) the district court in the best position to determine validity/invalidity is precluded from doing so? It surely isn’t “judicial economy” or any desire for a final, settled outcome.

  20. “… and at the same time denying a directly affected member of the public the opportunity to challenge the validity of the broader claim in court.”

    That directly affected member of the public denied itself the opportunity to challenge the validity of the more broadly construed claim. All it had to do was file a contingent cross-appeal arguing that assuming, arguendo, the broader construction is correct, then such a claim would be invalid for reasons X, Y & Z.

  21. That “new invalidity attack” with the broader claim construction should commence in the first appeal. Then the Federal Circuit, having broadened the claim, can consider whether a remand is necessary on validity, or if the record shows that the issue can be resolved as a matter of law one way or the other.

    I get that the Federal Circuit can generally only decide what they are asked to decide (except when they decide sua sponte to decide something they weren’t asked to decide). But I don’t get the policy behind broadening a claim, which is effectively creating a new law that limits what you or I (and every other member of the public) can freely do, and at the same time denying a directly affected member of the public the opportunity to challenge the validity of the broader claim in court.

    What would you advise Photoscribe to do now, assuming that their primary goal is to invalidate this patent?

  22. That “new invalidity attack” with the broader claim construction should commence in the first appeal. Then the Federal Circuit, having broadened the claim, can consider whether a remand is necessary on validity, or if the record shows that the issue can be resolved as a matter of law one way or the other.

  23. Lazare Kaplan goes a step further, holding that a district court cannot address validity on remand where the challenger failed to appeal the judgment that the claims were not invalid, irrespective of the modified claim construction.

    That is absurd.

    Since claim construction is a “matter of law,” it seems that a change in claim construction is a change in the controlling law and thus grounds for a new invalidity attack on the newly construed claims at the district court level. I get that the rights to attack validity based on the district court’s claim construction are lost. That makes sense. This holding makes no sense.

    An en banc rehearing might fix this nonsense.

  24. Background: Lazare Kaplan is the owner of Patent No. 6,476,351. In 2006, Lazare Kaplan sued Photoscribe for infringement of the ’351 patent; Photoscribe responded by filing invalidity counterclaims,

    that says all.

  25. Judge Dyk makes some persuasive points, but I thought Deanne Maynard, on behalf of Lazare Kaplan, had the better argument. Her point was that reversal of a claim construction is hardly an extraordinary event at the Federal Circuit (we all know that too well).

    Once Lazare Kaplan set forth in its opening brief (of the first appeal) what it contended was the correct construction, Photoscribe was on notice that the Court might agree with that broader construction. That’s when the appellee needs to go into contingency-planning mode; that planning here should have included a contingent cross-appeal, written with the assumption that the Court will agree with the appellant’s broader construction.

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