Federal Circuit Flexes Procedural Muscles
By Michael Bonella // August 19, 2014
Medisim Ltd. v. BestMed, LLC
In Medisim Ltd. v. BestMed, LLC, No. 2013-1451 (Fed. Cir. July 14, 2014), Chief Judge Prost authored a unanimous decision in which the Court ruled that defendant BestMed had not properly moved for judgment as a matter of law (“JMOL”) on anticipation before the jury verdict, thus precluding any post-trial motions for JMOL under the Federal Rules of Civil Procedure (“F.R.C.P.”) 50(b). However, the Federal Circuit found that BestMed was entitled to a new trial under F.R.C.P. 59(a).
F.R.C.P.’s 50(b) and 59(a) provide different procedural attacks on a jury verdict, but a F.R.C.P. 50(b) motion requires a previously filed F.R.C.P. 50(a) motion. … Under F.R.C.P. 50(b), a party can obtain JMOL on an issue or a new trial on the issue, while the only relief available under F.R.C.P. 59(a) is a new trial.
The Federal Circuit demonstrated the distinctions between F.R.C.P. 50 and 59 and what steps are needed in order to preserve the right for relief under these rules in the face of an adverse jury verdict. Under F.R.C.P. 50(b), a party may move for JMOL on a claim or defense based on a lack of sufficiency of the evidence if that party previously brought such a motion under F.R.C.P. 50(a) before the case was submitted to the jury. Defendant BestMed moved under F.R.C.P. 50(a) for JMOL on anticipation grounds, but after the jury had already ruled that there was no anticipation. Similarly, BestMed did not move for JMOL on anticipation at the close of Plaintiff Medisim’s case-in-chief under F.R.C.P. 50(b).
The District Court granted BestMed’s post-verdict Rule 50(a) JMOL motion, holding there that had been anticipation (based on Medisim’s commercial activities). But on appeal, the Federal Circuit ruled that BestMed had not properly raised the issue pre-jury verdict as demanded by F.E.C.P. 50(b). In fact, when Medisim filed a pre-trial motion for no anticipation, BestMed had explicitly stated on the record that this was not a matter for JMOL, but rather a matter for the jury to decide.
However, F.R.C.P. 59(a) does not require filing a motion prior to a verdict. Therefore, the Federal Circuit affirmed the District Court’s grant of BestMed’s Rule 59 motion for a new trial on the issue of anticipation. Thus, F.R.C.P.’s 50(b) and 59(a) provide different procedural attacks on a jury verdict, but a F.R.C.P. 50(b) motion requires a previously filed F.R.C.P. 50(a) motion. Moreover, the relief available under the two rules differs. Under F.R.C.P. 50(b), a party can obtain JMOL on an issue or a new trial on the issue, while the only relief available under F.R.C.P. 59(a) is a new trial.
VirtualAgility Inc. v. Salesforce.com
In a 2-1 decision in VirtualAgility Inc. v. Salesforce.com, No. 2014-1232 (Fed. Cir. July 10, 2014), the Federal Circuit took the rare step of reversing a district court’s decision not to stay proceedings. Judge Gilstrap of the Eastern District of Texas decided that the proceedings should continue on schedule, with jury selection to commence in 2014, denying defendant Salesforce’s motion to stay the district court suit pending post-grant review of VitrualAgility’s business method patent under the Transitional Program for Covered Business Method Patents.
In discussing one of the main interests of a proposed stay, streamlining litigation and lessening the burden on the interested parties, the majority noted that a PTAB decision invalidating all the claims at issue would likely dispose of the litigation altogether.
The District Court’s decision had attracted some attention among commentators, as the Patent Trial and Appeal Board (“PTAB”) had already granted the petition for post-grant review based upon its conclusion that the claims were, more likely than not, patent ineligible.
The Federal Circuit held that the District Court had abused its discretion when rejecting the stay, by improperly reviewing the merits of the PTAB’s preliminary decision that the patent claims at issue were more likely that not patent ineligible. In discussing one of the main interests of a proposed stay, streamlining litigation and lessening the burden on the interested parties, the majority noted that a PTAB decision invalidating all the claims at issue would likely dispose of the litigation altogether. Thus, according to Judge Moore, it made little sense to continue with discovery and other costly litigation while the PTAB proceeding was ongoing.
In addition, the Federal Circuit explained that a stay motion is not the proper procedural time for the District Court to consider the merits of the PTAB’s decision. The Federal Circuit held that the District Court clearly erred in finding that the undue prejudice factor weighed heavily against a stay, finding, at best, this factor weighed only slightly against a stay. Moreover, Plaintiff’s argument that it would be irreparably economically harmed while Defendant continued its infringing actions did not weigh as heavily as the District Court had held because there was no evidence that the parties competed for the same contracts or customers. The Federal Circuit further held that since the stay motion was brought well in advance of the close of fact discovery and before claim construction proceedings had substantially begun, a stay was warranted.
In dissent, Judge Newman argued that nothing in the America Invents Act (“AIA”), the legislation that created the procedure for review by the PTAB, required a district court to stay proceedings while review is ongoing. She warned that the decision by the majority would effectively create a precedent requiring that all district court litigation be stayed while review proceeds before the PTAB. Further, Judge Newman explained that there was substantial evidence that VirtualAgility would be irreparably harmed by the infringing action of SalesForce.com because of the competition between the parties.
* Special thanks to CRK summer clerk, Michael C. Bonella, for his work developing this post