Argument Recap / Panel Activity

Last month, the court heard oral argument in Centripetal Networks, Inc. v. Cisco Systems, Inc., in which Cisco appeals a finding that it infringed four patents held by Centripetal Networks, resulting in a judgement of over $2.75 billion. An amicus brief was filed by High Tech Inventors Alliance in support of Cisco. Before oral argument, the Federal Circuit issued an order limiting the scope of the oral argument to “the question whether the judgment should be vacated because the district court judge was required to recuse himself from the matter under 28 U.S.C. § 455.” Judges Dyk, Taranto, and Cunningham heard the argument. This is our argument recap.

Mark C. Fleming argued for Cisco. Judge Dyk first clarified that Cisco was waiving its arguments under 28 U.S.C. § 455(a) and arguing before the court under 28 U.S.C. § 455(b). Fleming agreed and argued that there was a clear violation of 455(b) when the financial interest, ownership of Cisco stock, was discovered and not divested by the district court judge. As a result of not divesting, Fleming maintained, all orders and opinions after discovery of the financial interest should be vacated. Moreover, Fleming argued, the case should be remanded to another district court judge to rehear the case.

Fleming argued that it is not in dispute that owning Cisco stock is a financial interest. He contended that the only question is if moving it to a blind trust was “divesting” the stock. Fleming contended to divest is to dispossess or give up ownership as defined by the Judicial Ethics Conference and the House Report for amendments to 28 U.S.C. § 455. That definition, he argued, precludes use of a blind trust. He maintained that Centripetal doesn’t cite any underlying authority in their favor to allow blind trust usage in this case. On the topic of remedy, Fleming contended vacating orders after discovery would follow Federal Circuit precedent.

Paul J. Andre argued for Centripetal. He first argued there has been no allegation that the judge was biased in the case. Andre also contended that the request to define divest makes this a case of first impression. Andre maintained the judge went above and beyond by hiring a lawyer to assist in divesting his interest in this case. As such, Andre argued, without a clear-cut definition of divest the judge in this case went above and beyond what was necessary.

Judge Cunningham asked for a definition of divest that supported Andre’s position. Andre responded that divest means removing the right to control or influence. He argued the statute allows for a flexible definition of divest. Andre further argued that without a clear-cut definition of divest, the judge’s action, even if he failed to divest, was not egregious and therefore fails to meet the standard to vacate. Andre said the three factors (injustice to Cisco, if it will produce injustice in other cases, and if public confidence in the judicial process will be undermined) all weight in Centripetal’s favor. Judge Taranto asked if an ownership interest could have impacted the judge’s mental decision making and potentially resulted in a harsher result for Cisco due to the judge wanting to appear unbiased. Andre disagreed and contended that the judge was finished with his opinion at the relevant point. Andre argued that the judge only edited his opinion after discovering the financial interest. Judge Taranto, however, was quick to ask if Andre had ever altered a draft late in the process, and Andre agreed.

Judge Cunningham asked if Andre agreed with Fleming’s argument regarding the proper path for a remand. In response, Andre argued that the case would not necessarily have to be remanded to a different judge because that is an extreme measure to take. Andre also argued that any orders and opinions did not have to be vacated because the opinion was mostly drafted before discovery. Judge Taranto asked if Andre had any case law to back up sending a case to a judge after a § 455(b) violation. Andre responded that he did not, but he noted this it was a case of first impression on this issue.

Fleming in rebuttal argued that by the plain language of the statute there was a financial interest, and the interest was not divested by the judge. He maintained that an egregious violation or actual bias is not needed in this case and has not been needed in prior cases. Fleming finally argued that the three factors of vacatur, discussed by Andre, weighed in Cisco’s favor.

We will continue to monitor the case and report on any developments.