Thursday, January 26, 2017

Tinnus, CGI and filing objections to a magistrate's order

In Tinnus v. Telebrands, 2017 U.S. App. LEXIS 1198, a preliminary injunction was granted based on a report and recommendation by a Magistrate Judge:

Tinnus filed its patent infringement suit against Telebrands on the day the '066 patent issued and filed a motion for a preliminary injunction nine days later. The Magistrate Judge reviewed the briefing and held a hearing to evaluate evidence on the preliminary injunction factors before recommending that Tinnus's motion be granted.


The Magistrate Judge also concluded that the balance of hardships and public interest factors weighed in Tinnus's favor due to the relative size of the parties and the strong public interest in enforcing valid patents. Because Tinnus established all four factors required for a preliminary injunction, the Magistrate Judge recommended granting Tinnus's motion.

Telebrands timely filed its objections to the Magistrate Judge's R&R, alleging that it erred (1) by failing to provide a claim construction for the "attached," "connecting force," "elastic fastener," and "shaking" limitations; (2) by improperly shifting the burden of proof to Telebrands on infringement and invalidity; and (3) by relying on insufficient evidence to support findings of commercial success and copying.4 Notably, Telebrands did not object to the Magistrate Judge's indefiniteness ruling or its rejection of Telebrands' obviousness arguments. The district court overruled each of the objections, adopted the R&R's findings, and entered a preliminary injunction.

Of the standard of review by the appellate court, the CAFC noted:

Under Fifth Circuit law, where a party fails to object to a magistrate judge's findings of fact, conclusions of law, or recommendation to the district court, plain error review applies to those unobjected-to factual findings and legal conclusions adopted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc), superseded by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending time to file objections from ten to fourteen days). "To prevail under [the plain error] standard, the appellant 'must show (1) that an error occurred; (2) that the error was plain, which means clear or obvious; (3) the plain error must affect substantial rights; and (4) not correcting the error would seriously impact the fairness, integrity, or public reputation of judicial proceedings.'" Ortiz v. City of San Antonio Fire Dep't, 806 F.3d 822, 825-26 (5th Cir. 2015) (quoting Septimus v. Univ. of Hous., 399 F.3d 601, 607 (5th Cir. 2005)). "When the nature of the claimed error is a question of fact, however, the possibility that such a finding could rise to the level of obvious error required to meet part of the standard for plain error is remote." Casas v. Aduddell, 404 F. App'x 879, 881 (5th Cir. 2010).

CA5 in Douglass has a lengthy discussion of "unobjected to" findings/conclusions which includes the text:

As stated, Nettles offered no explanation for changing the appellate waiver rule announced in Lewis to a forfeiture rule applicable only to factual findings. Nor can we perceive any valid reason for distinguishing between proposed factual findings and proposed legal conclusions when parties fail to object to a magistrate judge's report and recommendation. In both instances, the point that should have been stated in an objection is later made for the first time on appeal. There is no basis for excepting such accepted unobjected-to proposed legal conclusions from our longstanding practice of [*1423] refusing to consider issues raised for the first time on appeal, absent plain error. See Calverley, 37 F.3d at 162-64. Pursuant to our new appellate forfeiture rule for accepted unobjected-to proposed findings and conclusions, we no longer will make such an exception for such legal conclusions.

The efficacy of our rule applying to legal, as well as factual issues, is even more so for review of a summary judgment (the subject of this appeal), because a summary judgment involves only legal issues, not findings of fact. 11 The salutary purposes underlying summary judgment, and the procedures used in considering it, see FED. R. CIV. P. 56, are thwarted, if not destroyed, by this aspect of our former rule. Moreover, in the larger scheme of things, this aspect of our former rule flies in the face of FED. R. CIV. P. 1 ("to secure the just, speedy, and inexpensive determination of every action"), and of the growing judicial recognition of the many benefits of summary judgment. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) ("summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole"); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1075-76 (5th Cir. 1994) (en banc).

- - - - - - - - - - - - - - Begin Footnote 11- - - - - - - - - - - - - - -
Footnote 11. A summary judgment requires determining not only whether there are material fact issues, but also, if there are none, whether the prevailing party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). Both considerations are legal issues (questions of law); neither is a finding of fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted". Id. at 248. A court having decided which facts are material, the next "inquiry performed is the threshold inquiry of determining whether there is the need for a trial -- whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party". Id. at 250. Along this line, it is well to remember that summary judgment is simply another form of judgment as a matter of law, as reflected in the 1991 amendments to FED. R. CIV. P. 50. As the advisory committee's note to Rule 50 explains,

the expressed standard makes clear that action taken under the rule is a performance of the court's duty to assure enforcement of the controlling law and is not an intrusion on any responsibility for factual determinations conferred on the jury by the Seventh Amendment or any other provision of federal law. Because this standard is also used as a reference point for entry of summary judgment under 56(a), it serves to link the two related provisions.

FED. R. CIV. P. 50(a), advisory committee's note (1991).

- - - - - - - - - - - - End Footnote 11- - - - - - - - - - - - - -


The second significant change made today deals with the exception to our new appellate forfeiture rule for accepted unobjected-to proposed findings and conclusions. As quoted earlier, Nettles held that the exception was "upon grounds of plain error or manifest injustice", implying that those two terms have different meanings, but not explaining the difference, if any. 677 F.2d at 410 (emphasis added). However, as also quoted earlier, in Hardin, decided only a month after Nettles, our court, after quoting the preceding language from Nettles, omitted "manifest injustice", stating that the exception to our former rule was "a plain error review". 678 F.2d at 591 (emphasis added). See also Griffini v. Mitchell, 31 F.3d 690, 692 (8th Cir. 1994) (citing Nettles, but reviewing magistrate judge's unobjected-to findings of fact only "for plain error").

END text from Douglass

As the CAFC noted, 28 USC 636(b)(1)(C) was changed after Douglass and currently states:

Within fourteen days after being served with a copy, any party may serve and file written objections to such proposed findings and recommendations as provided by rules of court. A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.

FRCP 72 notes for

nondispositive motions: A party may not assign as error a defect in the order not timely objected to. The district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law.

dispositive motions: The magistrate judge must enter a recommended disposition, including, if appropriate, proposed findings of fact. (...) The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to.

Although the Douglass court stated -- even more so for review of a summary judgment (the subject of this appeal), because a summary judgment involves only legal issues -- , an issue in Tinnus, infringement, is a question of fact.

Of legal matters, the failure to object to the indefiniteness conclusion had consequences. The CAFC noted:

"[A] patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope [*22] of the invention." Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120, 2124, 189 L. Ed. 2d 37 (2014). Because Telebrands did not object to the R&R's indefiniteness determination, we review the district court's determination on indefiniteness for plain error. Douglass, 79 F.3d at 1430.

Telebrands attempts to circumvent this deferential standard of review by arguing that objecting to the R&R's claim construction, or lack thereof, put the Magistrate Judge on notice that it was contesting the definiteness of "substantially filled." We disagree. Nowhere in its objections to the R&R does Telebrands mention the word "indefinite," J.A. 1986-88, and "substantially filled" is not even among the terms flagged by Telebrands—"attached," "connecting force," "elastic fastener," and the "shaking" limitation—as requiring construction. Id. We fail to see how seeking the construction of different, albeit related, claim terms would put the district court on notice of Telebrands' objection to the R&R's conclusion that "substantially filled" was not indefinite.


For these reasons, the district court's conclusion that Telebrands' indefiniteness argument failed to raise a substantial question of validity does not suffer from a "clear or obvious" error, Ortiz, 806 F.3d at 825-26, requiring reversal under plain error review. Because we find no clear or obvious error, we need not address the other plain error factors articulated by the Fifth Circuit in Ortiz

The CAFC did not discuss any specific findings of fact made by the Magistrate. The CAFC's reference to 2015 U.S. Dist. LEXIS 178418 in the CAFC's text --The district court overruled Telebrands' objections to the R&R, adopted the R&R's findings, [*3] and granted Tinnus's motion. Tinnus Enters., LLC v. Telebrands Corp., No. 15-00551, 2015 U.S. Dist. LEXIS 178418, 2015 WL 11089480 (E.D. Tex. Dec. 2, 2015) would seem to be in error. Lexis 178418 concerns a Motion to Dismiss pursuant to the first-to-file rule and a venue motion AND does not concern objections to the R&R. In the order of December 13, 2016, 2016 U.S. Dist. LEXIS 172471 , the magistrate judge presented claim constructions. On January 3, 2017, the district court judge adopted the magistrate's recommendations. 2017 U.S. Dist. LEXIS 390, which includes -- Having considered each of the Retailers' objections, the Court ADOPTS the Report and Recommendation of the Magistrate Judge (Doc. No. 182) as the findings of this Court. All objections are OVERRULED. -- There is no explicit reference to "findings of fact."

In a post titled Federal Circuit Closes the Door on CGI Preliminary Injunction , PatentlyO stated

Following on the heel of the Federal Circuit’s approval of preliminary relief in the water balloon case [Tinnus], the court here [CGI case] has reversed a lower court’s preliminary injunction – finding its claim construction error led the district court to incorrectly conclude that the patentee (CGI) was likely to prevail on the merits.


In their briefs, both parties agreed that the district court relied upon factual evidence in the form of expert testimony (from both sides) for its claim construction conclusions. However, the order apparently does not follow Fed.R.Civ.Pro. 52(a), by separately finding facts and stating conclusions of law butu instead “mingled factual and legal conclusions with no distinction between the two.” (patentee brief).

Contradicting both parties, the Federal Circuit on appeal held that it need not give any deference to any of the district court conclusions since “there is no indication that the district court made any factual findings that underlie its construction.”

Unfortunately, the district court order is under seal and therefore not available. As such, we cannot know who is right in this instance. Update: I found a redacted version of the district court opinion in the appendix filed to the Federal Circuit. [cgi_appendix] In its claim construction, the court repeatedly refers to and relies upon competing expert testimony, but doesn’t appear to make any straight-up factual findings. I have to think about my – conclusion here, but I have crossed-out the “aggressive” undermining from above.

One notes that a "review of findings of fact" is not so clear in the Tinnus case. Moreover, as a general question, how can an appealing party object to "findings of fact" when the magistrate judge issues an order without findings of fact or conclusions of law?

**As a practice pointer, one notes that 14 days is not a long time to perform a comprehensive analysis to make thorough objections to a magistrate's order. If nothing else, the Tinnus case illustrates the later consequences of not making an objection.

**In terms of deadlines, the rule on interlocutory appeal under 1292, as enforced in D.N.J., is even more onerous.

** There was an "analogous art" issue in Tinnus:

A prior art reference is analogous and thus can be used in an obviousness combination if it "is from the same field of endeavor, regardless of the problem addressed" or "is reasonably pertinent to the particular problem with which the inventor is involved," even if it is not within the inventor's field of endeavor. Unwired Planet, LLC v. Google Inc., 841 F.3d 995, 1000-01 (Fed. Cir. 2016) (quoting In re Clay, 966 F.2d 656, 658-59 (Fed. Cir. 1992)). The particular problem confronting the inventor here was how to rapidly fill multiple containers with fluid. This is far removed from the problems associated with an endoscopic balloon insertion device for treating obesity, and Telebrands has not demonstrated that Lee is reasonably pertinent to the problem addressed in the '066 patent. Therefore, under a plain error review, we cannot say that the district court committed a clear or obvious error when it found insufficient motivation to combine these disparate references. Absent a motivation to combine, Telebrands' remaining obviousness arguments are unavailing.

**The CAFC noted parallel PTAB proceedings:

Operating in parallel to the district court proceeding was Telebrands' [*13] PGR petition seeking to invalidate the '066 patent. The PTAB, relying on the same evidence and arguments before the district court, instituted review on all claims of the '066 patent shortly after the district court granted Tinnus's request for a preliminary injunction.


The PTAB also found that a combination of Cooper, Saggio, and Lee would likely render claim 1 obvious. Id. at *14. According to the PTAB, a POSA would have combined Saggio with Cooper to create a multi-balloon filling assembly by "attach[ing] balloons to the ends of the flexible tubes of Cooper's sprinkler" and would have added Lee's mechanism for clamping and sealing the balloons once filled because it was "reasonably pertinent to a particular problem the inventor of the '066 patent was trying to solve." Id. at *13.


We are aware that the PTAB issued a Final Written Decision on December 30, 2016, concluding that the claims of the '066 patent are indefinite. The PTAB's decision is not binding on this court, and based on the record before us and the applicable standard of review, it does not persuade us that the district court abused its discretion in granting the preliminary injunction. The parties are, of course, free to ask the district court to reconsider its preliminary injunction in light of the PTAB's Decision.


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