Wow, this one — Tecsec, Inc. v. IBM (Fed. Cir. 2013) — may have huge repercussions for appellate strategy, and also for the legal impact of hundreds of existing judgments. It deserves a read in full. Judge Reyna's dissent captures what happened:
The majority concludes that the district court misconstrued various claim terms from three TecSec, Inc. patents. It reaches this conclusion notwithstanding that the same claim terms, same constructions, same arguments, and same summary judgment order were previously before this court and reviewed on January 9, 2012. See TecSec, Inc. v. Int’l Bus. Mach. Corp. (“TecSec I”), 466 Fed. App’x 882 (Fed. Cir. 2012). In TecSec I, this court summarily affirmed the district court’s grant of summary judgment of noninfringement pursuant to Rule 36. Id. After TecSec lost its case against IBM, and without offering any additional evidence against the other defendants now before us, TecSec stipulated to noninfringement and has once again appealed the same district court’s claim constructions to this court. I respectfully dissent because I believe that entertaining this appeal gives TecSec a second bite at the apple and undermines the utility of Rule 36.
The key paragraph to the majority's basis for reaching a different result is this:
The Rule 36 judgment in the IBM appeal summarily affirmed the district court’s judgment that IBM did not directly or indirectly infringe TecSec’s patents. The district court’s judgment was based on two independent grounds. The district court first ruled as a matter of law that TecSec’s direct and indirect infringement claims failed for failure of proof that IBM itself or any of its customers performed every claimed step or made, used, sold, offered for sale, or imported any system containing all of the limitations of the asserted claims. As the dis- trict court stated in its opinion, without questioning TecSec’s construction of the terms now at issue, “TecSec has utterly failed to come forward with any evidence that IBM itself performed any of the steps of the method claims,” and “even if some user-implemented system were to meet all of the asserted claim limitations—which, as explained below it cannot . . . —TecSec has provided no evidence that IBM ever made, used, sold, offered to sell, or imported that entire claimed system . . . .” Summary Judgment Order, 769 F. Supp. 2d at 1010, 1012 (first emphasis added). The district court drew a similar conclusion regarding indirect infringement, as to which it found, as well, insufficient proof of the required intent. Given the absence of evidence that any steps were per- formed by IBM or that an entire claimed hard- ware/software system was ever made, used, sold, offered to sell, or imported by IBM or its customers, the district court was compelled to find no direct or indirect infringe- ment. Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 949–50 (Fed. Cir. 1987) (en banc) (“Every Supreme Court decision which has addressed the issue of infringe- ment of a patent claim, beginning with Prouty v. Draper, 41 U.S. (16 Pet.) 335, 10 L.Ed. 985 (1842)—and the prece- dent is voluminous—has held that where a part of the claimed invention, that is, a limitation of the claim, is lacking in the accused device exactly or equivalently, there is no infringement.”) The district court, in finding a complete failure of proof regarding any act of infringe- ment by IBM or its customers, did not rely on any rejec- tion of TecSec’s constructions of the terms at issue here. Indeed, IBM represented to the court that we could affirm the district court’s judgment solely based on TecSec’s “complete failure of proof” and did not “need to get to claim construction.” TecSec, Inc. v. Int’l Bus. Machs. Corp., No. 2011-1303, Oral Arg. at 19:30–24:55, available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20 11-1303.mp3. While the district court also ruled in the alternative that TecSec failed to show that IBM’s software met various claim limitations, as construed, our Rule 36 decision does not articulate a basis for affirmance, let alone an explication on claim construction. On this record, it cannot be concluded simply on the basis of this court’s summary affirmance that we expressly or by necessary implication decided the claim construction issues in the IBM appeal .
The majority later reasoned: "Had claim construction been the only issue in the IBM appeal, and had that claim construction been essential to sustaining the judgment of noninfringement, the preclu- sive effect of our Rule 36 judgment would have been undeniable. But that was not the case."
I have a lot of questions. If infringement can be found, or not, only after claim construction (I think that's right, absent marginal odd-ball cases), then claim construction was necessary to the judgment. I also wonder how this fits in with the general rules about the impact of an affirmance of a judgment on alternate grounds, which the court does not discuss (perhaps the defendants did not appreciate these obscure doctrines; I don't know).
If the panel decision is correct, doesn't it mean that a lot of appealable judgments that were "affirmed" on appeal have no impact, even on the parties to that appeal? Suppose the district court clearly construes the claims, and based on that finds the patent both invalid and non-infringed. The case is Rule 36'd. Is nothing decided except claim construction? Isn't the patent, once again, "valid" because there is no binding judgment of invalidity? I may be missing something…
I bet there are an enormous number of fact patterns that might be implicated by this. I am trying to get my head around how a district court's order, which is binding on the parties, becomes non-binding when affirmed on appeal?
I know that this may have huge impact on Rule 36; if a panel's decision does not resolve claim construction, unless it is somehow more "necessary" than it was here, then perhaps a panel should not use Rule 36 very often? Interesting case with lots of systemic ripples, perhaps.