Last Week in the Federal Circuit (April 19-23): Contingent Findings v. Alternative Holdings

As many of you probably saw, Chief Judge Prost’s tenure as Chief Judge of the Federal Circuit is coming to a close, with Judge Moore set to become the new Chief Judge on May 22. But the upcoming transition doesn’t seem to have slowed down the Court. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest. 

Precedential opinions: 1

Non-precedential opinions: 3

Rule 36: 0

Longest and shortest (non-Rule 36) pending case from argument: Morse v. McDonough, No. 20-1838 (75 days) 

Shortest pending case from argument (non-Rule 36): Sebela Ireland Ltd. v. Prinston Pharmaceutical Inc., No. 18-1036 (46 days)

Case of the week: Sebela Ireland Ltd. v. Prinston Pharmaceutical Inc., No. 18-1036 (April 20, 2021)

Panel: Judges Taranto, Chen, and Stoll, with Judge Chen writing the opinion

You should read this case if: you want to better understand the preclusive effect (or lack thereof) of contingent findings and alternative holdings.

In this week’s featured case, the Federal Circuit resolved an interesting case where a patent-owner appellant appealed a district court judgment holding its patent claims invalid but asked the Federal Circuit to affirm invalidity. That perhaps surprising situation arose because the district court’s opinion supporting its judgment appeared to address multiple invalidity grounds, and the patent owner was seeking to protect against potential preclusive effects of some of those grounds. Ultimately, though, the Federal Circuit held that the district court had made only contingent findings rather than alternative holdings and dismissed the appeal for lack of constitutional standing.

Sebela filed a number of patent infringement actions against Prinston and others in the District of New Jersey. In one of those actions, the district court found claims of the Sebela asserted patents to be invalid as obvious. The court also made certain findings about lack of written description and utility. Because Sebela was concerned those other invalidity findings would have preclusive effect under Third Circuit law on another of its actions involving a related patent, Sebela decided to attempt an “unusual” appeal. Particularly, Sebela asked the Federal Circuit to affirm the district court’s finding as to obviousness and make clear that it was not reaching the findings on lack of written description and utility so that those findings would have no preclusive effect.

The Federal Circuit dismissed the appeal. It began by explaining that “there is good reason to think that, where alternative holdings are challenged on appeal and the appellate court does not reach them, preclusive effect would not be given to those holdings.” But the Federal Circuit read the district court’s opinion as reaching a “single holding for invalidating the patent” and found that the findings on lack of written description and utility were contingent and not alternative holdings.

Several factors supported that conclusion. First, the district court’s obviousness discussion was “highly detailed” while the discussion about utility and written description was “brief[].” Second, the opinion’s final conclusion referenced only obviousness. Third, the findings on lack of written description and utility used “contingent and inconclusive language”—“if [it] had found . . . [it] would have concluded that . . .”—and not language that usually introduces alternative holdings—“even if . . .” or “even were . . . .” Finally, the district court itself in the other Sebela action had confirmed during the preliminary injunction hearing that obviousness was the lone holding: “But given the Court’s ruling which was on obviousness . . . .” Because the district court made just one holding which Sebela did not challenge, the Federal Circuit dismissed the appeal for the lack of constitutional standing.

Although the Court dismissed Sebela’s appeal, Sebela may have still accomplished its goal. In discussing the difference between alternative holdings and contingent findings, the Federal Circuit indicated that “a contingent finding does not amount to an alternative holding, and therefore could not have preclusive effect” based on Third Circuit law. That may mean the Federal Circuit’s holding that the district court made only contingent findings will protect Sebela against a preclusion argument going forward.