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Appellee’s Conditional Cross-Appeal on Claim Construction Dismissed as Improper

05-1577
February 15, 2006
Parker, Aaron L.

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Last Month at the Federal Circuit - March 2006

Judges: Michel, Newman (dissenting), Bryson (per curiam)

In Nautilus Group, Inc. v. ICON Health & Fitness, Inc., Nos. 05-1577, -1603 (Fed. Cir. Feb. 15, 2006), the Federal Circuit granted appellant The Nautilus Group, Inc.’s (“Nautilus”) motion to dismiss appellee ICONHealth and Fitness, Inc.’s (“ICON”) cross-appeal from the district court’s claim construction order “in the event that Nautilus prevails on appeal.”

Nautilus filed a patent infringement suit in the U.S. District Court for the Western District of Washington, asserting that ICON infringed two patents. ICON filed a counterclaim for DJ of noninfringement of both patents. The district court dismissed with prejudice Nautilus’s claims for infringement of both patents and entered judgment in favor of ICON. Nautilus appealed and ICON filed a conditional cross-appeal. Nautilus then moved to dismiss ICON’s cross-appeal.

In dismissing ICON’s cross-appeal, the Court likened this case to Bailey v. Dart Container Corp., 292 F.3d 1360 (Fed. Cir. 2002), in which a similar cross-appeal was dismissed. Dart Container Corporation (“Dart”), like ICON, sought review of certain claim construction rulings in the event the Federal Circuit reversed on the issue of noninfringement. The Court noted that an appellee like Dart, and ICON, can “make appropriate arguments regarding claim construction [on appeal] that would result in affirmance of the judgment of noninfringement.” Slip op. at 2. The Court noted, however, that a conditional crossappeal “unnecessarily expands the amount of briefing that is otherwise allowed, as well as giving the appellee an unfair opportunity to file the final brief and have the final oral argument, contrary to established rules.” Id. at 3. The Court held that the principles of Bailey apply squarely to the facts of this case. The Court also cited language from the panel’s decision in Phillips v. AWH Corp., 363 F.3d 1207, 1216 (Fed. Cir. 2004), in which the panel dismissed a similar cross-appeal. The panel stated that a “party has no right of crossappeal from a decision in its favor. Similarly, a party who prevails on noninfringement has no right to file a ‘conditional’ cross-appeal to introduce new arguments or challenge a claim construction, but may simply assert alternative grounds in the record for affirming the judgment.” Id. The en banc court in Phillips specifically adopted the panel’s disposition of the cross-appeal and underlying reasoning. Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). Accordingly, the Court dismissed ICON’s conditional cross-appeal.

Judge Newman dissented, pointing out that ICON’s conditional cross-appeal is not requested as an alternative ground for SJ of noninfringement, but as a basis for further proceedings should the Court order further proceedings. Judge Newman noted that dismissal of ICON’s cross-appeal is problematic because, if the Court reverses or vacates the district court’s judgment on appeal and remands for trial, the district court’s claim construction that was not relied on in the judgment on appeal will be the law of the case, despite lack of review by the Federal Circuit. Accordingly, such a remand for trial on potentially incorrect law will simply lead to additional appeals, remands, and retrials. Because conditional cross-appeals of claim construction-based judgments in patent cases present a significant chance of requiring further proceedings, Judge Newman concluded that when such a cross-appeal can significantly advance those further proceedings, the procedure should not be discouraged.