Federal Circuit Rejects District Court’s Attempt at Judicial Efficiency

RealTime Data v Reducio Systems, Appeal No. 2019-2198, 2019-2201, 2019-2202, 2019-2204, decided October 23, 2020

Background

Realtime Data (“Realtime”) is the owner of US  Patent Nos. 7,415,530, 8,717,203, 9,054,728, 9,116,908 and 9,667,751 (“the asserted patents”) with 159 issued claims between them directed to digital data compression.  Realtime filed claims of infringement against Fortinet, Reduxio Systems, Panzura and Aryaka (collectively “Defendants”) from 2017 through 2018.  In 2019, the defendants filed motions to dismiss alleging, among other things, that all 159 claims of the asserted patents are directed to ineligible subject matter under 35 USC §101.   The asserted patents had been the subject of litigation before, in the Eastern District of Texas, wherein the Magistrate Judge overseeing the proceedings issued detailed reports and recommendations regarding subject matter eligibility, which reports had been fully adopted by two different district court judges.

Based upon just over 2 hours of oral argument, the District Court of Delaware issued an opinion from the bench declaring all claims of the patent in suit patent ineligible, and advised that he would not be issuing written opinions.  Rather, the Court indicated that the transcript of the proceedings would serve as its ruling.

Federal Circuit Decision

The Federal Circuit was not impressed, and not only for lack of a written opinion.  Rather, the Federal Circuit expressed concern that District Court had focused on factual questions that were not suitable for resolution at the pleading stage, did not address the reports and recommendations of the Magistrate Judge adopted by other District Courts, and failed to address the closest precedent identified by the Plaintiff.  The Federal Circuit thus vacated and remanded with instructions to the District Court to provide a written decision that provides sufficient reviewable detail and rationale:

To be clear, we do not hold that a written order is always necessary.  There are indeed times, even on a case dispositive motion, where an oral order is enough.  We have seen and affirmed several such orders in the past.  This case is unique, however, in its paucity of analysis and the closeness of the underlying legal issue.  Our conclusion that the district court much do more in this case is reinforced, moreover, by the fact that through its abbreviated process the district court eviscerated five of Realtime’s patents and completely resolved four separate district court actions.  While much can be said on the benefits of judicial efficiency, the process used here strays beyond efficient to the realm of insufficient.