O’Malley criticises Fed Circ ‘warped’ authority over appeals

In a patent dispute involving  LG, soon-to-retire Federal Circuit judge Kathleen O’Malley has criticised her fellow judges in a dissent, after they decided to not rehear the case.

LG sought a rehearing on a Federal Circuit ruling that dismissed its bid to appeal a New Jersey court’s decision, which denied LG relief after it had missed deadlines.

The majority of the Federal Circuit panel  denied LG’s request for a rehearing en banc in an order handed down Yesterday, December 23.

O’Malley, who is set to retire next March, offered a lengthy dissenting opinion, claiming that the other judges had “warped” the court’s jurisdiction over interlocutory appeals.

She said that the circuit had misapplied Supreme Court precedent and adopted an “atextual interpretation” of the Federal Rule of Appellate Procedure, compounding a previous error it had made to dismiss Robert Bosch v Pylon Manufacturing in 2013.

“We should correct that error before it sows confusion among litigants and to prevent us from straying even further from the fundamental jurisdictional and procedural rules that govern all Article III Courts,” O’Malley said.

Bosch error

Clarifying the error O’Malley claimed the circuit made in Bosch, she argued that the judges misinterpreted Section 1292(c)(2), which gives the court a “narrow exception” to the final judgment rule.

The final judgment rule, Section 1295(a)(1), grants the Federal Circuit exclusive jurisdiction over “an appeal from a final decision of a district court… in any civil action arising under… any Act of Congress relating to patents or plant variety protection”.

Under this rule, this court additionally has jurisdiction to entertain an appeal ‘‘from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.”

In Bosch, O’Malley reasoned that the majority found that the trials on damages and willfulness are “merely ‘accountings” and that cases in which such trials are outstanding are final.

This, O’Malley argues, gives the Circuit a “broad jurisdiction” to consider interlocutory appeals from patent infringement liability and validity cases when a damages trial is yet to occur.

“I disagreed with that decision when it was rendered, and I continue to disagree with it now,” O’Malley said.

She added: “For nearly a decade we have operated under the erroneous interpretation of Section 1292(c)(2) established in Bosch. For nearly a decade, we have exercised jurisdiction never contemplated by Congress.

“In the present case, the panel applied that erroneous understanding of § 1292(c)(2) and further allowed that erroneous understanding to infect a separate provision restricting our jurisdiction.”

Mondis proceedings

In the LG case, both LG and Mondis had filed several post-trial motions for a new trial and Mondis filed motions seeking enhanced damages, interest and attorneys fees.

On September 24, 2019, the district court denied LG’s motions regarding infringement, invalidity, and willfulness, deferred judgment on LG’s motions regarding damages. But on April 22, 2020, the district court granted LG’s motion for a new trial on damages.

LG then filed a notice for interlocutory appeal, looking to challenge the district court’s decision denying post-trial motions regarding infringement, invalidity, and willfulness.

However, the panel found that, under Bosch, “accounting” includes a trial on damages, that, “for the purposes of appeal under Section 1292(c)(2), this case was final except for an accounting after the September order and LG had 30 days from the September order to file a notice of interlocutory appeal”.