Fed Circ Cisco hearings to focus on judge’s recusal
The US Court of Appeals for the Federal Circuit will hear arguments on whether a district court judge should have recused himself from proceedings before handing down a $1.9 billion patent infringement judgment against Cisco when he discovered his wife held shares in the tech company.
In an order handed down on Friday, March 18, the appellate court said that it will limit an upcoming oral argument to whether Virginian senior judge Henry Morgan should have recused himself after discovering his spouse held 100 shares of Cisco stock.
Following final arguments in Centripetal Networks v Cisco in June 2020, the court’s administrative assistance discovered that the judge’s spouse owned 100 shares of Cisco stock, valued at $4,687.99. She claimed that she had “no recollection of approving the transaction”.
The judge notified the parties on August 12 via an email that claimed that a full draft of the final opinion had been prepared prior to receiving this information and that it “did not and could not have influenced my opinion”.
Cisco filed an instant motion for recusal, and Centripetal objected to the motion in a rebuttal brief.
On an oral argument hearing on September 9, 2020, the court informed the parties that the shares had now been divested into a blind trust.
Cisco held that Morgan was required to disqualify himself from proceedings under 28 USC § 455(a), which lays out situations where the impartiality of a judge might be questioned.
Cisco points to Section 455(b)(4), which states that a judge's impartiality can be questioned if they, or any other family members living in their household, have a “financial interest in the subject matter” of the proceedings.
Cisco also pointed to precedents set in prior cases, specifically in a Supreme Court decision in Lilieberg v Health Services Acq Corp. (1988) which stated that recusal should be required even if the judge “lacks actual knowledge” of the circumstances.
As well as the Cisco shares, it was later discovered that Morgan’s Spouse owned 100 shares of Crowdstrike, which had struck business agreements with both parties.
“Due to the indirect nature of Crowdstrike as a potential competitor of both parties, the court did not disclose this transaction until the hearing date,” Cisco said.
The oral arguments for the appeal are scheduled for April 4, 2022.
The timeline
Centripetal Networks sued Cisco Systems in February 2018, alleging infringement of 11 of its US cybersecurity patents.
In response, Cisco requested inter partes reviews for nine of the patents. The US Patent Trial and Appeal Board (PTAB) invalidated claims on several of the patents.
Proceedings went ahead on five of the patents not under inter partes review: US patent numbers 9,137,205, 9,203,806, 9,500,176, 9,686,193 and 9,917,856.
Judge Morgan issued a ruling in favour of Centripetal, finding that Cisco willfully infringed four of the five asserted patents, awarding Centripetal $1.9 billion in damages, as well as a running royalty of 10% on the apportioned sales of Cisco products related to the patents for three years.
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