Opinion ID: 858518
Heading Depth: 2
Heading Rank: 1

Heading: reopening validity in the prior remand

Text: When reviewing a ruling under Rule 60(b), 1 we generally defer to the law of the regional circuit in which the district court sits, here the Second Circuit, because that rule is procedural in nature and not unique to patent law. See, e.g., Louisville Bedding Co. v. Pillowtex Corp., 455 F.3d 1377, 1379–81 (Fed. Cir. 2006) (applying Sixth Circuit law to review a ruling on a Rule 60(b) motion); Univ. of W. Va., Bd. of Trs. v. VanVoorhies, 342 F.3d 1290, 1294 (Fed. Cir. 2003) (applying Fourth Circuit law); Engel Indus., Inc. v. Lockformer Co., 166 F.3d 1379, 1384 (Fed. Cir. 1999) (applying Eighth Circuit law); Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1550 (Fed. Cir. 1987) (applying Tenth Circuit law). We do not accord such deference, however, when a district court’s ruling under Rule 60(b) turns on substantive issues unique to patent law. See, e.g., Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed. Cir. 2002) (“[T]he issue before us— whether a lost profits damages award should be set aside because post-trial sales data may show the acceptability of a non-infringing alternative product—turns on a substantive area of patent law.”); Broyhill Furniture Indus., Inc. v. Craftmaster Furniture Corp., 12 F.3d 1080, 1083 (Fed. Cir. 1993) (“The issues before us are whether a consent judgment enjoining infringement of a patent should be set aside pursuant to certain subsections of Rule 60(b) following a judicial determination that the 1 Rule 60(b) provides, in relevant part, as follows: “On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: . . . (5) the judgment . . . is based on an earlier judgment that has been reversed or vacated . . . ; or (6) any other reason that justifies relief.” 6 LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. patent was procured through inequitable conduct in the [U.S. Patent and Trademark Office].”). Here, the issue is 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 this court. Because this issue requires consistent and uniform application by district courts when handling patent cases, we resolve it as an issue of the law of this court. Fiskars, 279 F.3d at 1381; Broyhill, 12 F.3d at 1083. We find persuasive, however, certain decisions of our sister circuits, particularly the Second Circuit, on issues relevant to this appeal. Broyhill, 12 F.3d at 1083 n.1. We review a district court’s ruling under Rule 60(b) for an abuse of discretion. Browder v. Dir., Ill. Dept. of Corrections, 434 U.S. 257, 263 n.7 (1978). An abuse of discretion exists “when the trial court’s decision is clearly unreasonable, arbitrary or fanciful, or is based on clearly erroneous findings of fact or erroneous conclusions of law.” Fiskars, 279 F.3d at 1382 (citing Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc)). 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. El Paso Natural Gas Co. v. Neztsosie, 526 U.S. 473, 479 (1999) (“Absent a cross-appeal, an appellee . . . may not ‘attack the decree with a view either to enlarging his own rights thereunder or of lessening the rights of his adversary.’”) (quoting United States v. Am. Ry. Express Co., 265 U.S. 425, 435 (1924)); see also Bailey v. Dart Container Corp. of Mich., 292 F.3d 1360, 1362 (Fed. Cir. 2002) (“It is only necessary and appropriate to file a cross-appeal when a party seeks to enlarge its own rights under the judgment or to lessen the rights of its adversary under the LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. 7 judgment.”). The Supreme Court has long recognized this cross-appeal rule as “inveterate and certain,” Morley Constr. Co v. Md. Cas. Co., 300 U.S. 185, 191 (1937), and the rule’s application has been noted since the Court’s earliest years, McDonough v. Dannery, 3 U.S. 188, 198 (1796). See Greenlaw v. United States, 554 U.S. 237, 244– 45 (2008); El Paso, 526 U.S. at 479. Application of the rule promotes orderly functioning of the appellate courts by providing “notice of issues to be litigated and encouraging repose of those that are not.” El Paso, 526 U.S. at 481–82. Not long after the creation of this court, we clarified the application of the cross-appeal rule in Radio Steel & Manufacturing Co. v. MTD Products, Inc., 731 F.2d 840 (Fed. Cir. 1984). In that case, the district court found the asserted claims not invalid and not infringed, with the patent owner appealing from the judgment of noninfringement, but with the alleged infringer taking no crossappeal. Radio Steel, 731 F.2d at 842–43. Acknowledging lack of uniformity in the prior practice of the regional circuits on whether a cross-appeal must be filed by a similarly situated alleged infringer arguing invalidity, we set forth our current rule: “[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. at 844. More recently, we applied the cross-appeal rule in Odetics, Inc. v. Storage Technology Corp., 185 F.3d 1259 (Fed. Cir. 1999). Prior to the first of two appeals in that litigation, the district court entered judgment that the asserted claims were not invalid and not infringed. Odetics, Inc. v. Storage Tech. Corp., Nos. 96-1261, -1301, 1997 WL 357598, at  (Fed. Cir. June 25, 1997). In the first appeal, we broadened the construction of a claim term and remanded to assess infringement under the new construction. Id. at , . Because the alleged infringer 8 LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. had failed to file a cross-appeal, we declined to address certain invalidity arguments. Id. at  (citing Radio Steel, 731 F.2d at 844). Following remand, in which the district court found the invalidity arguments barred, the alleged infringer filed a cross-appeal. Odetics, 185 F.3d at 1263. In the second appeal, we affirmed the district court’s decision not to address invalidity, finding that, by failing to file a cross-appeal from the distinct judgment of “not invalid” after the first trial, the alleged infringer was precluded from further raising the issue. Id. at 1275. In both Odetics and Radio Steel, we highlighted the distinctness of the judgments of “not infringed” and “not invalid.” Odetics, 185 F.3d at 1275; Radio Steel, 731 F.2d at 843. Here, the district court found that “[i]n this case, the issues of invalidity and infringement cannot be said to be distinct; they are closely interrelated.” Lazare Kaplan IV, 2012 WL 505742, at . The district court concluded that, because the issues of validity and infringement “cannot be said to be distinct, it was not necessary for defendants to appeal the validity issue in order for the court to hear the issue on remand.” Id. Based on that reasoning, the district court granted relief under Rule 60(b). Lazare Kaplan argues that the cross-appeal rule should have barred reopening the prior judgment on validity because Photoscribe seeks to lessen the rights of Lazare Kaplan under that prior judgment but failed to file a cross-appeal. In addition, Lazare Kaplan asserts that the cross-appeal rule has no equitable exceptions permitting the relief granted by the district court. Photoscribe responds that prior decisions of this court permitted the district court to address validity on remand. Further, Photoscribe asserts that the granted relief was proper under either Rule 60(b)(5) or 60(b)(6). We agree with Lazare Kaplan and conclude that the district court erred by allowing Photoscribe to address LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. 9 validity on remand despite its failure to file a cross-appeal from the adverse final judgment on validity in Lazare Kaplan II. The cross-appeal rule is normally applied not by district courts, but by appellate courts to assess the availability of arguments before those tribunals. See, e.g., El Paso, 526 U.S. at 479–82. To the extent that the crossappeal rule can be applied to preclude certain arguments in a district court on remand after a failure to file a crossappeal, however, we find the district court’s application to be in error. 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. It certainly would, as a holding of invalidity would extend beyond the determination that Photoscribe’s accused machines do not infringe the asserted claims of the ’351 patent. Indeed, no accused products can be found liable for infringement of an invalid claim. See Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed. Cir. 1983) (“[A]n invalid claim cannot give rise to liability for infringement . . . .”). Both before the district court and in this appeal, Photoscribe has sought relief under Rule 60(b)(5) and 60(b)(6), although the district court did not specify which section of Rule 60(b) provided the basis for its ruling. Lazare Kaplan IV, 2012 WL 505742, at –9. The Second Circuit has stated that “Rule 60 of the Federal Rules of Civil Procedure prescribes procedures by which a party may seek relief from a final judgment.” House v. Sec’y of Health & Human Servs., 688 F.2d 7, 9 (2d Cir. 1982). Rule 60(b)(5) provides, in relevant part, that a district court “may relieve a party . . . from a final judgment, order, or proceeding” that “is based on an earlier judgment that has been reversed or vacated.” Under Rule 60(b)(6), a district court may relieve a party 10 LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. from a final judgment for “any other reason that justifies relief.” The Second Circuit has characterized Rule 60(b)(6) as a “grand reservoir of equitable power to do justice in a particular case,” but cautioned that the “reservoir is not bottomless.” Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012). Relief under this provision has long been limited to “extraordinary circumstances.” Ackermann v. United States, 340 U.S. 193, 199 (1950); see also CTS Corp. v. Piher Int’l Corp., 727 F.2d 1550, 1555 (Fed. Cir. 1984) (“Unless exceptional or extraordinary circumstances are shown, a Rule 60(b)(6) motion is generally not granted.”). Under the facts presented here, we conclude that Rule 60(b) cannot provide the relief granted by the district court. As the language of the rule indicates, any relief provided by a district court is discretionary. See Fed. R. Civ. P. 60(b) (“On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons . . . .”) (emphasis added); see also Stevens, 676 F.3d at 67 (“The decision whether to grant a party’s Rule 60(b) motion is committed to the ‘sound discretion’ of the district court.”). Both the cross-appeal rule and Rule 60(b), however, share a common underlying rationale of promoting repose. See El Paso, 526 U.S. at 481–82 (noting that the cross-appeal rule puts “opposing parties and appellate courts on notice of the issues to be litigated and encourag[es] repose of those that are not”); House, 688 F.2d at 9 (“Properly applied, [Rule 60(b)] preserves a balance between serving the ends of justice and ensuring that litigation reaches an end within a finite period of time.”). When the potential outcomes of applying Rule 60(b) and the cross-appeal rule conflict, failure to steadfastly apply the cross-appeal rule invites unjustified relief under Rule 60(b), thereby undermining the common repose rationale underlying both of those rules. Moreover, it would allow a movant to circumvent the cross-appeal rule LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. 11 in a manner contrary to its well-established history. See El Paso, 526 U.S. at 480 (“[I]n more than two centuries of repeatedly endorsing the cross-appeal requirement, not a single one of our holdings has ever recognized an exception to the rule.”). Photoscribe does not argue that any factors precluded it from appealing from the adverse judgment on validity in Lazare Kaplan II. Instead, Photoscribe asserts that the possibility that a different claim construction could be applied to assessing validity and infringement inherently presents an “extraordinary circumstance.” Appellee Br. 22. The cases cited by Photoscribe, however, do not involve Rule 60(b)(6), and only recite the familiar axiom that “claims are construed the same way for both invalidity and infringement.” Id. at 21 (quoting Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1330 (Fed. Cir. 2003)). That axiom, however, does not trump the Federal Rules or the cross-appeal rule, and cannot save Photoscribe from its deliberate decision not to file a crossappeal from an adverse judgment. See El Paso, 526 U.S. at 480. Moreover, reversal of a claim construction is hardly an “extraordinary circumstance.” In similar situations, in which a movant under Rule 60(b)(6) made a deliberate choice not to appeal or to pursue a particular litigation strategy, courts have found relief unwarranted. For example, in Ackermann v. United States, 340 U.S. 193, 194–95 (1950), the Supreme Court addressed whether the Fifth Circuit properly affirmed denial of the Ackermanns’ motion under Rule 60(b)(6) seeking to vacate a district court’s judgment cancelling their certificates of naturalization. After entry of judgment, a co-defendant appealed while the Ackermanns did not. Id. at 195. The Fifth Circuit reversed the judgment against the co-defendant, and the Ackermanns sought relief. Id. The Supreme Court affirmed the denial of relief, noting that Ackermann “made a considered choice not to appeal” and that he “cannot be relieved of such a 12 LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong.” Id. at 198; see also Cruickshank & Co. v. Dutchess Shipping Co., 805 F.2d 465, 468 (2d Cir. 1986) (“Failure to properly assess the risks and potential gains of taking an appeal is not an extraordinary circumstance that would justify relief under rule 60(b)(6).”); House, 688 F.2d at 10 (noting that reversing the grant of relief under Rule 60(b)(6) was “particularly appropriate” where the movant could have appealed but did not); Rinieri v. News Syndicate Co., 385 F.2d 818, 823 (2d Cir. 1967) (reversing the grant of relief under Rule 60(b)(6) where the movant chose not to appeal or present reasons for not prosecuting his prior claim); Whiteleather v. United States, 264 F.2d 861, 863 (6th Cir. 1959) (“Rule 60(b)(6) . . . has no application to a case such as this, where a defendant is represented by counsel, is not deprived of the opportunity of appealing from an adverse judgment, and voluntarily for reasons of his own elects not to appeal.”); see also Fiskars, 279 F.3d at 1383 (finding Rule 60(b)(6) did not apply, in part, because the alleged infringer could have put on its best available evidence of noninfringing alternatives but “apparently chose not to do so”). Photoscribe asserts that two decisions of this court support the requested relief, aside from the application of Rule 60(b). See Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348, 1355–57 (Fed. Cir. 2009) (en banc); Exxon Chem. Patents, Inc. v. Lubrizol Corp., 137 F.3d 1475, 1477–79 (Fed. Cir. 1998). We disagree. Both of those decisions involve the mandate rule—a concept relating to, but distinct from, the cross-appeal rule. The mandate rule dictates that “an appellate mandate governs only that which was actually decided.” Exxon, 137 F.3d at 1478. Photoscribe seeks to broaden this rule in arguing that, because we did not address validity in Lazare Kaplan III, that issue must have been eligible for review on remand. That interpretation, however, would enable LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. 13 appellees to revive any issue not addressed in an appellate decision, thereby rendering nugatory the cross-appeal rule. Indeed, here, the reason validity was not addressed in Lazare Kaplan III was that Photoscribe failed to file a cross-appeal from the judgment adverse to it. For these reasons, we see no conflict between the decisions concerning the mandate rule relied on by Photoscribe and those concerning the cross-appeal rule discussed above. In addition, Photoscribe asserts that it should be excused from failing to appeal because it could not have known the issues to raise in a cross-appeal. Photoscribe acknowledges, however, the importance of the “controlling the directing” limitations to both infringement and validity. Claim construction is crucial to any analysis of validity over prior art. Photoscribe admits that “the sole basis of [Lazare Kaplan’s] challenge to the noninfringement judgment was the construction of ‘controlling the directing.’” Appellee Br. 17–18. Photoscribe also admitted that those limitations were “the only disputed claim element for anticipation” by one of the alleged prior art machines. Id. at 18–19. In addition, the district court’s construction of those limitations provided the sole basis for summary judgment of no literal infringement. Lazare Kaplan I, 2008 WL 355605, at . With such focus on those limitations, the issues relevant to Lazare Kaplan’s thenupcoming appeal—and any cross-appeal potentially filed by Photoscribe—were apparent. After Lazare Kaplan II, Photoscribe could have filed a conditional cross-appeal arguing that the asserted claims of the ’351 patent would be invalid if we broadened the construction of the “controlling the directing” limitations. The outcome of the claim construction issues would have determined whether that conditional cross-appeal was reached. See Power Mosfet Techs., Inc. v. Siemens AG, 378 F.3d 1396, 1414 n.3 (Fed. Cir. 2004). We recognize the logic of the district court’s decision to entertain the validity challenge on remand in light of 14 LAZARE KAPLAN INT’L, INC. v. PHOTOSCRIBE TECHS., INC. the broadened claim construction by this court, based on which the district court stated that it “makes no sense” not to. Lazare Kaplan IV, 2012 WL 505742, at . After all, a new claim construction potentially raises new validity issues. Nonetheless, rules are rules, and the cross-appeal rule is firmly established in our law. The district court thus erred in relying on Rule 60(b) as a substitute for a cross-appeal. See Stevens, 676 F.3d at 67 (“In no circumstances . . . may a party use a Rule 60(b) motion as a substitute for an appeal it failed to take in a timely fashion.”); see also Cruickshank, 805 F.2d at 468 (“Having failed to appeal, movants cannot achieve the same result under the guise of a rule 60(b)(5) motion.”); Rinieri, 385 F.2d at 822 (“[Rule 60(b)(6)] is not to be used as a substitute for appeal when appeal would have been proper . . . .”); 11 Charles A. Wright et al., Federal Practice and Procedure § 2851 (3d ed. 1998). Because the district court abused its discretion by granting relief under Rule 60(b), we reverse that ruling. We also vacate the finding of invalidity, and remand with instructions to reinstate the original judgment on validity.